Fixing tax code benefits U.S., helps economy
A typical family of four will get a $2,059 tax cut. Lower-middle and middle income families can save time and money on tax preparation due to the near doubling of the standard deduction and other simplifications. According to more than 100 economists, “economic growth will accelerate” under the tax relief legislation passed by Congress, which will give Americans access to higher wages, greater job opportunities and a more vibrant economy. There is no need to take our word for all of this; just look at your W-2 paycheck starting in February and you will see more take home pay. We were proud to support these and more reforms for all Idahoans:
- Lower taxes for all Americans — Americans in every income group will see significant reductions, not increases, in their tax burden, with those in lower-middle and middle-income categories seeing the greatest percentage reduction, according to the Joint Committee on Taxation, the official revenue scorekeeper for Congress. Lower income earners will continue to pay zero percent and those with children will see a larger tax credit of $1,400 per child from the government. The Tax Foundation also analyzed the effects of tax reform on various model families with different incomes and found “a reduction in tax liability for every scenario we modeled, with some of the largest cuts accruing to moderate-income families with children.”
- New Jobs and Growth — The National Taxpayers Union finds tax reform will create hundreds of thousands of new jobs. The Tax Foundation estimates 1.5 percent higher wages and 339,000 new jobs. In a recent survey by the National Association of Manufacturers, almost 54 percent of small and large manufacturers said they would hire more workers, and nearly half said they would increase employee wages and benefits as a result of tax reform.
- Deficit reduction — Not surprisingly, the estimates delivered by liberals and the national media have vastly understated the strong economic growth expected because archaic congressional rules require flawed static modeling instead of dynamic scoring. Dynamic scoring takes into account behavioral changes like how the policy affects jobs, wages and investments when estimating revenue. Static scoring doesn’t allow for that. To support that claim, the Treasury Department estimates that taking into account tax reform and other economic policies, revenues will increase by $1.8 trillion over ten years with only an annual 2.9 percent economic growth rate; it can and will be higher than that. Growth of 2.4 percent would make the legislation revenue neutral.
- Improved competitiveness — American businesses are taxed at the highest rate in the industrialized world. This has resulted in 4,700 companies leaving the U.S. in the past 13 years, according to the Business Roundtable. The tax relief legislation reverses that trend, creating a more competitive tax code that better enables capital formation resulting in new companies being formed, staying here and expanding job opportunities. The Council of Economic Advisers reports significantly reducing the tax burden on American businesses would increase average household income in the U.S. by, “very conservatively $4,000 annually.”
If we do nothing, the Congressional Budget Office has projected that our economy would struggle along at just 1.9 percent annual growth for the next decade, well below our historic average. This stagnates wages and wealth creation and is simply unacceptable. If we want to balance our budget, provide the necessary resources for our national defense and protect our safety net programs from looming insolvency, we need an economy growing at more than that measly rate. Historically, growth has been over three percent in every decade but one since World War II. We are Americans, we can do that again! We all want our country to be strong. We all want Americans to be able to keep more of their hard-earned income. The tax relief passed by Congress will reshape our tax policy to the benefit of the American people and help make the United States more competitive.
Sen. Mike Crapo can be reached at crapo.senate.gov. Sen. Jim Risch can be reached at risch.senate.gov.