The Tax Cuts and Jobs Act significantly reformed the system of taxation in the United States by enacting permanent and temporary provisions to the Internal Revenue Code. These provisions encompass changes affecting U.S. individuals and entities, both domestically and internationally. Claiming that the change would “pay for itself,” the Tax Cuts and Jobs Act intends to stimulate the economy. The large tax cuts may have created short-term economic growth; however predictions suggest that in the long-run, the increased spending and the decline in tax revenue will significantly raise the U.S. budget deficit.
Regardless of Congressional intent, the Tax Cuts and Jobs Act impacts both individuals and businesses; yet, the burdens and benefits have not been distributed equally. This Comment will argue that the tax reform enacted in 2017 is not the tax reform required to address the issue of growing inequality both in the United States and on a global scale. Furthermore, this Comment will explain how tax policy should be used as a weapon to combat human suffering, a weapon policy makers should use to create a progressive system of taxation.
First, it examines several major social and economic issues faced by citizens and businesses in countries around the world, focusing on the issue of income inequality. It will specifically examine the causes and effects of these major issues. It will then parallel the issues identified on a global scale to those encountered in the United States, surveying the underlying causes and effects. Next, it will evaluate the impact of globalization on these major global issues and analyze the role that tax policy could play in mitigating some of the most commonly faced issues. This Comment will then review countries that have recently effectuated tax reforms, contrasting successful tools used by certain governments with ineffective strategies used by others.
The argument will mainly be based on analysis of several specific provisions included in the Tax Cuts and Jobs Act. These provisions will be explained and evaluated based on their purpose and ability to effectuate change for certain groups of taxpayers and for the economy as a whole. This Comment will conclude that the legislation does not meet the standards of a successful tax regime (defined as one that reduces inequality) because it fails to eliminate many of the major socioeconomic issues in the U.S. and abroad.
Finally, this Comment will suggest what a successful tax legislation should have aimed for, and how modifications to the TCJA are necessary to address the issues in the domestic and global economy. It will ultimately conclude that tax reform must aim toward the goal of multilateralism and equality among taxpayers in a given regime.
U.S. Tax Policy in Light of Globalization and Growing Inequality,
San Diego Int'l L.J.
Available at: https://digital.sandiego.edu/ilj/vol21/iss1/9