How did the Trump tax cuts affect federal deficits and income inequality?

1. How big were the deficit effects? — A multi-trillion‑dollar hit

Nonpartisan budget scorekeepers and many policy analysts calculated very large revenue losses from the TCJA and extensions. The Congressional Budget Office and related estimates cited in reporting peg the direct cost of the 2017 law at roughly $1.9 trillion over 2018–2028, with additional scenarios showing that making the individual provisions permanent would add roughly $2.6 trillion more through 2023–33—leading advocates to warn of $3.5 trillion to $4.6 trillion-plus added to deficits over a decade if extensions are enacted ^{[1] [2] [3]}. Think‑tank and media coverage of later 2025 legislative packages describe even larger multi‑trillion estimates for new bills and Treasury actions that further reduce revenue ^{[6] [7]}.

2. Why deficits matter here — interest, programs, and growth trade‑offs

Advocates for higher revenue warn that the tax cuts’ revenue loss didn’t vanish: deficits rose or were projected to rise, which raises interest costs and reduces fiscal space for programs like childcare, Medicaid, or Social Security unless financed by spending cuts or taxes elsewhere ^{[4] [8]}. Some analyses note that persistently larger deficits could slow long‑run growth because higher interest rates crowd out private investment—CBO work cited by critics argues extensions would shrink the economy over time through that channel ^[5].

3. Who gained — concentrated benefits at the top

Multiple policy centers and academic studies in the sample find the TCJA’s largest dollar gains flowed to the wealthy and to corporations. Reports say more than 80% of the cuts went to corporations, partnerships, and high‑net‑worth individuals, with the top 1% receiving outsized windfalls and the top 5% capturing a large share if cuts were extended ^{[1] [2] [9]}. The Center for Budget and Policy Priorities and other groups point to studies concluding corporate provisions produced near dollar‑for‑dollar revenue losses and that the distribution of benefits skewed strongly upward ^{[4] [5]}.

4. Effects on middle‑ and low‑income households — small gains, big context

Analysts find that while many households saw modest, temporary rate cuts or larger standard deductions, the bottom and middle received much smaller long‑term gains in dollar and percentage terms compared with high earners. Some reports note very small average cuts for lowest deciles and warn that any modest tax reductions could be offset by cuts to safety‑net programs or by rising prices and reduced services if deficits are closed through spending cuts ^{[7] [10] [8]}.

5. Empirical evidence on growth and wages — promises fell short

Proponents predicted big growth and wages gains; independent studies and federal analyses in the provided materials find little evidence the law boosted GDP, investment, or wages materially for most workers. A Joint Committee on Taxation–Federal Reserve Board study cited found no earnings change for most workers below the 90th percentile, while gains concentrated among top executives and owners ^{[4] [5]}.

6. Distributional and racial dimensions — studies flag harms

Scholars writing on race and taxation argue that the TCJA amplified existing disparities: research cited finds the law disproportionately disadvantaged Black taxpayers and that the design—corporate cuts, pass‑through deductions, estate changes—tended to increase wealth and income gaps ^{[1] [11]}.

7. Competing views and limits of this sample

Defenders argue some average tax burdens fell across the income spectrum and that the TCJA simplified tax filing and could raise long‑run GDP enough to offset part of revenue losses; for instance, some analyses from revenue‑neutral reform perspectives suggest limited growth offsets ^[12]. But multiple non‑partisan and progressive policy centers in this set emphasize large revenue losses and unequal benefit flows. The provided sources do not include a comprehensive catalogue of all CBO/JCT tables or counter‑estimates from major conservative economists—available sources do not mention any specific, peer‑reviewed studies proving the cuts paid for themselves (not found in current reporting) ^{[2] [5]}.

8. Bottom line for readers

Based on the supplied reporting and analyses, the 2017 Trump tax law substantially reduced federal revenues and—by many estimates—added trillions to projected deficits, while the largest beneficiaries were corporations and high‑income households; independent studies and budget offices cited here find limited evidence of offsetting broad‑based growth or wage gains ^{[2] [1] [4] [5]}. Policymakers choosing to extend or expand those provisions face a tradeoff between immediate tax relief for some and higher deficits, potential spending cuts, and likely greater income inequality, according to the assembled sources ^{[3] [8]}.