Abstract:
A historical tax cut was one of the promises President Donald Trump made during his presidential campaign. On December 22nd, 2017 that proposal was enacted into a law that aims to revitalize the United States’ economy. To achieve this goal, there is one action that the government expects American households will respond to: savings. According to the House Speaker Paul Ryan, the H.R. 1, Tax Cuts and Jobs Act “provides particular relief to low income and middle class families to make sure they keep more of their hard-earned money” (n.d). From this Government’s perspective, saving should prevail over consumption for an economic growth in the short term. The dilemma comes when how the target audience, in this case American households will respond to this stimulus. Thus, this research addresses two questions: 1. How American households have responded regarding consumption and saving due to past tax cuts? 2. What would be the households’ response to consumption and saving with the new H.R. 1, Tax Cuts and Jobs Act enacted by President Donald Trump’s administration?
