Reforming our tax code has been a priority of mine throughout my service as your Senator and has been decades in the making. In December 2017, Congress seized the opportunity to pass meaningful tax reform known as the Tax Cuts and Jobs Act. The reforms passed by Congress will produce growth not seen in generations with Idahoans in every income group seeing a reduction in their tax burdens. The largest percentage reductions benefit those in lower and middle-income tax categories. Additionally, the Tax Cuts and Jobs Act reduces the tax burden on individuals and families, strengthens America’s economy, helps us build ourselves out of our fiscal crisis, and will give Idahoans access to stronger wages and stronger job growth.
Under the Tax Cuts and Jobs Act, 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.
If Congress had not acted to reform out outdated tax system, the Congressional Budget Office projected that our economy would struggle along at just 1.9 percent annual growth for the next decade, well below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. Our old tax code was unfair, complex, expensive to comply with, and anti-competitive to our own business interests. The tax relief passed by Congress will reshape our tax policy to the benefit of Idaho’s taxpayers help make the United States more competitive.
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. 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.”
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 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.
Despite claims to the contrary, the reforms to our tax system will address our growing debt and deficits thanks to how the policy affects jobs, wages and investments when estimating revenue. The U.S. Department of the Treasury estimates that under the Tax Cuts and Jobs Act in place, revenues will increase by $1.8 trillion over ten years with only an annual 2.9 percent economic growth rate; the rate of economic growth can and will be higher than that estimate. With an economic growth rate of 2.4 percent, the legislation signed by the president will be revenue neutral.
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.”
August 07, 2022