A new report says the Trump tax law will boost economic growth - just probably not where Trump wants it

Joshua Roberts/Reuters

President Donald Trump and House Speaker Paul Ryan

• A new Congressional Budget Office report on the Republican tax law found a significant amount of its benefits would go to foreign investors.
• Between 2018 and 2028, 43% of the economic benefit from the tax law will go to foreign investors, the report said.

President Donald Trump and the Republican Party sold their new tax law as a big win for American workers and businesses. But a new report says a significant amount of the law's benefits could end up helping people outside of the US.

In response to an inquiry from Sen. Chris Van Hollen, a Democrat from Maryland, the Congressional Budget Office determined an average of 43% the tax law's economic benefits would go to foreign investors between 2018 and 2028.

The CBO reached this conclusion by estimating the tax law's boost to GDP growth, which measures total economic growth within the US, and Gross National Product, or GNP.

GDP measures all growth in the geographic US, including foreign investors making money in the US. while GNP measures growth attributable to US persons or corporations around the globe, including US citizens working abroad.

The CBO takes the difference of the two to determine how much of the economic boost goes toward foreign investors in the US.

The share of the tax law's boost going to foreign investors will be 48% in 2018 but drop to 31% in 2019 as various parts of the law go into effect. After that, the amount to foreign investors would remain between 33% and 39% until 2026, when the cuts for individuals expire.

Since the tax law's corporate tax cut is permanent, many foreign investors in US stocks and businesses would continue to reap the benefits of the law from 2026 onward. At the same time US individual rate cuts would end, so the percentage of the benefit going to non-US citizens would drastically jump.

According to the CBO, 48% of tax law's benefits would go toward foreign investors in 2026, then 60% in 2027 and 71% in 2028.

While foreign investors will capture a significant amount of the initial boost, American businesses could ultimately reap some of those benefits, too. Foreign investors could choose to spend the economic gain from the tax law on US goods down the road.