The crown jewel of the Trump tax cut was the reduction of the tax rate on corporate profits from 35% (the highest in the world) to 21% (slightly below the global average).

Take a look at this chart from financial analyst Scott Grannis whose blog on the financial markets is a must read.

As Grannis explains:

Profits are at all-time record levels compared to the size of the economy, and they began their current surge (briefly interrupted by Covid) in 2019, following Trump’s 2018 reduction in the tax rate on corporate profits.

He also points out another hidden benefit of the corporate rate cut:

Despite the sizable cut in tax rates, corporate tax payments to Treasury rose from a low of $189 billion in the 12 months ending Jan. ’19, to $516 billion in the 12 months ending August ’24–a whopping increase of 173%! And, not surprisingly, the S&P 500 is up 130% since 2018.  

Art Laffer, take a bow!

Unfortunately, the Democrats hate profits (they think it’s a dirty word), and they want to raise the rate back to near the highest in the world. That is a very good way to kill a bull market.