When you lower tax rates and the amount people have to pay in taxes overall, it places more money into the hands of the consumer. This inevitably leads to a growing economy, job creation, investment, paying down debts, etc. It also often leads to higher consumer spending. Lower tax rates stimulate the economy. And yes, this is all good stuff.  However, lower taxes are a form of stimulus that can also fuel other things, besides raising government debt.

One of the biggest impacts of lower taxes is that when the consumer has more money to spend, often those providing the goods and services experience higher demand and raise prices.  While much of the Covid-era inflation surge can be attributed to government handouts and payments, higher spending by the government, etc, in reality the vast majority of US consumers didn't get more than $1,800 in 2020 on average and an additional $1,400 in 2021. That is a big chunk of money for someone earning $60,000 per year, but pittance to someone earning $2 million per year. Most higher earners did not benefit from COVID payments. If we look back a bit further, in 2018 when new tax laws were enacted, the total cuts amounted to over $5 trillion over 10 years. That's is real money.

Yes, the tax cuts did benefit some lower earners, but they benefitted wealthier earners and investors dramatically. Those trillions have flowed back into the US economy causing it to grow. In 2019 after one full year of lowered rates the US GDP grew a dramatic 3.35%. After 2020's lockdown and GDP decline, GDP grew an ultra-dramatic 5.76%, largely fueled by COVID stimulus and savings, but also by the 2018 tax cuts.

Covid stimulus recipients (besides fraudsters), do not buy $300,000 Bentleys with a $5,000 government stimulus check. The vast majority of Ultra-Luxe inflation that we have witnessed over the past 8 years is because most of this cohort of consumers has paid lower tax rates. And while that delivers lots of good stuff, it has also contributed notably to a dollar buying a lot less luxe than it did in 2017, including ultra-luxe homes.

Yes, an ultra-luxe home bought 7 years ago in Palm Beach has increased in value for a multitude of reasons, but a good chunk of that can be attributed to the buyer for that home having much more disposable income fueling demand and pushing prices higher. Yes, the rich may be richer today (some much richer) compared to 2017, but their dollar also buys less, lots less!