In December 2017, President Donald Trump’s tax reforms monikered TCJA (Tax Cuts and Jobs Act) came into effect. This meant that the year 2018 was going to print a different picture from the perspective of IRS personal and corporate tax reports.

And in February of this year, the changes were confirmed with the IRS collecting more than $91 billion lower in corporate taxes for the Federal year 2018 compared to the previous year. On the other hand, personal income taxes edged higher by more than $93 billion.

The changes were mainly due to a reduction in the corporate tax rate as per the TCJA reforms from 35% to 21% which increased tax breaks for big businesses. Last year, the IRS had gross collections (the amount before tax refunds) of $1.97 trillion compared to $1.87 trillion in 2017. And while tax refunds increased marginally to $398 billion from $386 billion in 2017, still, individual taxpayers ended up forking out more by $93 billion compared to the huge reduction of $91 billion in business taxes.

While several people did realize an improvement in tax cuts, some saw a significant reduction in tax refunds especially to families with children. One of the reasons behind this weird scenario can be easily illustrated by comparing previous tax breaks with the current ones using a hypothetical family. According to tax experts at Tax Defense Partners a married couple filing jointly with two children saw their standard deductions increase from $12,700 to $24,000. However, with tax refunds decreasing from $16,200 to $0.00 in the current system, this implies a net tax break of $24,000 for the couple. In the previous system, this hypothetical family would have received a tax break of $28,900.

When you add the tax credits for the two children, the total tax break adds to $28,000 (new system) and $30,900 (old system). This includes a tax credit of $1,000 per child in the old system and $2,000 per child after Trump’s reforms.

Following these changes, many Americans expressed their grievances via social media complaining about the impact the reduction of tax refunds has had on their income. In the US, like in many countries around the world, the practice of disciplined saving is not common. In fact, the latest statistics from last year show that the average American saves 2.2% of their income. Some rely on the annual tax refund to top up their savings while others spend it on some special household projects.

What the new growth-centric tax reforms did is that tax breaks increased for people of various income levels while others saw theirs reduce significantly. The new tax reforms are designed in such a way that people receive high regular paychecks from their income sources while reducing refunds.

This essentially puts more money in circulation during a calendar year, which increases consumer spending. From the perspective of business taxes, the lower corporate tax rate was also introduced to stimulate job creation, which in turn drives economic growth. And over the last few years, the US economy has experienced steady growth outperforming the rest of its peers among developed economies. In the most recent quarter ended March, the US GDP grew by 3.1% (revised), which compares strongly to the global average of about 1.8% for advanced economies according to the IMF.

In summary, President Trump’s tax reforms may be causing short-term pain to some taxpayers but it looks like the long-term goal will work out well for everyone. The 2017 reforms are rewarding taxpayers with more money in the present and little at the end of the year, which stimulates consumer spending.

Furthermore, with corporations now saving even more from tax breaks, the labor market will create more employment opportunities, which in turn will help to drive the US economic growth.