Trump Signs Tax Cuts and Jobs Act - Corporate Rate Permanently Slashed from 35% to 21%, Pass-Through Deduction, Estate Tax Exemption Doubled, $1.9 Trillion Added to Deficit

On December 22, 2017, President Donald Trump signed the Tax Cuts and Jobs Act (TCJA) into law, enacting the most sweeping tax reform package in 30 years and permanently slashing the corporate tax rate from 35% to a flat 21%—a 40% reduction representing the largest corporate tax cut in American history. The legislation eliminated the graduated corporate rate schedule and repealed the corporate alternative minimum tax, allowing the most profitable corporations to dramatically reduce their tax burdens. TCJA doubled the estate tax exemption from $5.49 million to $11.2 million per person ($22.4 million for couples), allowing wealthy dynasties to pass even more wealth tax-free across generations. The Act created a 20% deduction for ‘qualified business income’ from pass-through entities (sole proprietorships, partnerships, S-corporations, LLCs) for joint filers with taxable income below $315,000 ($157,500 for single filers), lowering the effective top individual rate on business income from 37% to 29.6%. This pass-through deduction created massive opportunities for tax avoidance and gaming by wealthy individuals who could restructure compensation as business income. TCJA allowed 100% bonus depreciation (immediate expensing) for qualified new investments for five years before phasing down starting in 2023. Individual income tax changes included increasing the standard deduction from $6,500 to $12,000 for individuals ($13,000 to $24,000 for joint filers) while capping state and local tax (SALT) deductions at $10,000, effectively raising taxes on many upper-middle-class taxpayers in high-tax blue states. The corporate tax cuts were made permanent while individual provisions were set to expire after 2025—a deliberate structure designed to make future expiration politically difficult by allowing Republicans to campaign on extending ‘middle-class tax cuts’ while the real goal was preserving corporate cuts. The Congressional Budget Office and Joint Committee on Taxation estimated TCJA would add $1.9 trillion to the federal deficit over 10 years even after accounting for modest economic growth effects. The tax cuts overwhelmingly benefited corporations and the wealthy: major corporations used windfalls for stock buybacks and executive compensation rather than investment or wage increases, while the top 1% received far larger tax cuts than the middle class in both absolute and percentage terms. TCJA represented the culmination of four decades of supply-side ideology, cementing corporate tax rates at historically low levels and further entrenching the principle that investment income and business profits should be taxed at preferential rates compared to wages.