Merry Christmas: Tax reform will help the economy; middle class is the big winner. | Gift ideas for late shoppers from social science.

December 23, 2017 Tax reform has become law. As a result, the middle class can expect a lower tax burden and everyone can expect a better economy. If you are still shopping for Christmas gifts, social science has some advice. Merry Christmas, taxpayers! On Wednesday, Congress passed and the President signed a tax reform bill that cuts corporate rates, cuts individual rates for most taxpayers, repeals the Obamacare individual mandate, temporarily allows full expensing of capital expenditures, limits the state and local tax deduction, and doubles the standard deduction. Parker Sheppard and David Burton estimate the economic effects: We project that the final bill will increase the level of gross domestic product (GDP) in the long run by 2.2 percent. To put that number in perspective, the increase in GDP translates into an increase of just under $3,000 per household. Though we only estimate the change in GDP over the long run, most of the increase in GDP would likely occur within the 10-year budget window. [The Daily Signal] Chris Edwards finds that the middle class receive the greatest benefit when the cuts are measured as a percentage of current income tax liability: [Cato Institute]   Good news for those still shopping: Finding the right gift isn't so hard, writes Arthur Brooks, who distills some advice from social science research:     Give experiences: While economists are busy ruining their marriages with cash and blenders, marketing experts have long found that people get the most satisfaction from "useless" experiences that have emotional impact, like going on a beautiful bike ride. Researchers believe this is especially true for older people, who derive much more pleasure from experiences than possessions. How to use this fact? Tell Grandma that you were planning to buy her a Mercedes, but after reading some social science research, you have decided to take her to the park instead. She might look a little disappointed, but no doubt in her heart she will be glad. Embrace regifting:  [S]cholars at Carnegie Mellon recently demonstrated that we're more likely to give practical gifts that seem personal (such as a jersey for the recipient's favorite football team) than sentimentally valuable ones (say, a cherished photo we have had for years). However, they also found that recipients would actually prefer to receive fewer practical gifts and more sentimentally valuable ones. So if a friend gives you something you truly love and you think it will make someone else happy as well, feel free to regift it. On the other hand, if it's a fruitcake, you're fooling no one. Toss it. Wrap it up: Early this year in the journal BMC Evolutionary Biology, researchers showed that some male spiders — Paratrechalea ornata, to arachnologists; "fuzzy brown ones" to the rest of us — give food gifts to prospective mates that are nutritionally worthless but wrapped ornately in the silk produced by their bodies. Imagine giving your beloved a chicken nugget meticulously wrapped in beautiful fabric, and you get the idea. Apparently for spiders, as for humans, it's the wrapping that counts, because the worthlessness of the gift inside did not affect the receptivity of the female. [American Enterprise Institute]   Have a Merry Christmas! The Heritage Foundation 214 Massachusetts Avenue, NE Washington, DC 20002 (800) 546-2843 Add info@heritage.org to your address book to ensure that you receive emails from us. You are subscribed to this newsletter as johnmhames@comcast.net. If you want to receive other Heritage Foundation newsletters, or opt out of this newsletter, please click here to update your subscription.

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