By Grover Norquist and Alex Hendrie • The Hill
The tax cuts passed by Congress and signed into law by President Trump six months ago are already impacting our nation in these ways.
Americans are paying less in taxes
Ninety percent of wage earners around the country are already seeing increased take-home pay because of tax reform. Under the bill, a family of four with annual income of $73,000 will see a tax cut of more than $2,058, a 58 percent reduction in federal taxes. Similarly, a single parent with one child with annual income of $41,000 will see a tax cut of $1,304, a 73 percent reduction in federal taxes.
Workers are getting raises and bonuses
Immediately after passing of the GOP tax cuts bill, businesses responded by giving their employees pay raises and bonuses. AT&T announced it would provide each of its 200,000 U.S. employees with a $1,000 bonus. Altria is Continue reading
The latest monthly Treasury report on taxes and spending shows that gross tax receipts in February were $1.4 billion higher than the year before. Weren’t the Republican tax cuts supposed to explode the deficit?
According to the report, the government took in $238.2 billion in taxes in February. The year before, tax revenues were $236.8 billion.
For fiscal year 2018, which started last October, taxes are up $50.5 billion compared with the same months last year, and are at a record high level for this five-month span.
The report does show that net receipts were lower in February compared with last year, but the main reason is that individual income tax refunds jumped $13.3 billion, while corporate tax refunds went up $4 billion, neither of which is the result of the tax cuts that took effect in January.
Even so, net receipts are up by $29.6 billion for the current fiscal year — a 2.4% increase — compared with the same period last year. That’s also a record high. (See nearby chart.)
Does this mean tax cuts are “paying for themselves”?
Not exactly. Income taxes collected in February were down $2.5 billion from last year — reflecting the new withholding tables. Corporate income tax collections, however, were essentially flat.
But remember, income taxes are hardly the only source of revenue for the federal government. And a faster-growing economy means more money pouring in from these other sources.
Payroll taxes, for example, are dependent on the number of people working and their wages. In February, the economy added 313,000 jobs, unemployment levels are now at or near record lows, and wages are climbing.
As a result, payroll taxes brought in $1.5 billion more in February than they did last year, and are up $11.4 billion this fiscal year. Federal excise taxes and customs duties are up $3.8 billion and $1 billion, respectively, this fiscal year.
What these numbers do show is that all the hand-wringing about the impact of the tax cuts on federal deficits was based on wildly exaggerated estimates of revenue losses, which failed to take into account the fact that a faster growing economy would offset at least of the lost revenue. That’s a point we’ve made repeatedly in this space.
In contrast, tax hikes almost always bring in less revenue than expected, because they dampen economic growth.
Democrats once understood this truism. It was JFK, after all, who said in 1962 “it is a paradoxical truth that tax rates are too high today and tax revenues are too low — and the soundest way to raise revenues in the long run is to cut rates now.”
Today’s Democrats, in contrast, uniformly opposed the Trump tax plan, and are now pushing to repeal most of it so they can spend an additional $1 trillion on government make-work infrastructure projects.
Their plan has no chance of being enacted, but at least voters will have a clear choice this November.
Brian Ellis • Investor’s Business Daily
Employers have until Thursday to implement new tax withholding guidelines, which determine how much they withhold from pay for federal taxes.
Fortunately for many Americans, job creators are already seeing lower rates and distributing larger paychecks. Treasury Secretary Steve Mnuchin estimates more than 90% of working Americans will see greater take-home pay because of the Tax Cuts and Jobs Act’s new withholding guidelines.
It’s further proof that tax cuts are working for the middle class. To date, more than 330 U.S. employers have publicly announced tax-induced wage hikes, 401(k) increases, and generous bonuses. While Apple and Wal-Mart grab the headlines, many beneficiaries of the Republican tax bill are small businesses, which account for two-thirds of new jobs in the country.
Missouri-based Dynamic Fastener, a construction hardware supplier, is rewarding employees with bonuses of up to $1,000, while also opening a paint shop, buying new equipment and Continue reading
By Elizabeth Harrington • Washington Free Beacon
The Treasury Department plans to eliminate nearly 300 outdated tax regulations, getting tax rules off the books that in some cases have not applied since the 1940s.
The department announced its proposal to eliminate unnecessary tax regulations this week, in compliance with two executive orders signed by President Donald Trump last year to reduce regulatory burdens and simplify the tax code.
“We continue our work to ensure that our tax regulatory system promotes economic growth,” said Secretary Steven Mnuchin. “These 298 regulations serve no useful purpose to taxpayers and we have proposed eliminating them.”
“I look forward to continuing to build on our efforts to make the regulatory system more efficient and effective,” he said. Continue reading
By Ali Meyer • Washington Free Beacon
The Tax Cuts and Jobs Act, which was signed into law by President Donald Trump in December, is projected to push GDP growth higher than previously expected. Growth is forecast to rise to 2.7 percent in 2018, according to a report from the International Monetary Fund.
The changes from tax reform are expected to add to economic growth through 2020 so real GDP will be roughly 1.2 percent higher than it would be without tax reform.
The IMF previously projected that GDP would increase by 2.3 percent in 2018 and 1.9 percent in 2019. The group now projects GDP will increase by 2.7 percent in 2018 and by 2.5 percent in 2019.
“The growth forecast for the United States has been revised up given stronger than expected activity in 2017, higher projected external demand, and the expected macroeconomic impact of the tax reform, in particular the Continue reading
By Tripp Mickle • Wall Street Journal
Apple Inc. AAPL 1.65% said it would pay a one-time tax of $38 billion on its overseas cash holdings and ramp up spending in the U.S., as it seeks to emphasize its contributions to the American economy after years of taking criticism for outsourcing manufacturing to China.
The world’s most valuable publicly traded company laid out its plans Wednesday in a statement that was full of big-dollar figures, though it said that much of the money reflected Apple’s current pace of spending.
Apple said it would invest $30 billion in capital spending in the U.S. over five years that would create more than 20,000 jobs. The total includes a new campus, which initially will house technical support for customers, and $10 billion toward data centers across the country. It also will expand from $1 billion to $5 billion a fund it established last year for investing in advanced manufacturing in the U.S.
All told, Apple said it would directly contribute $350 billion to the U.S. economy over the next five years, with the bulk—about $55 billion this year, for example—coming from ongoing spending on parts and services from U.S. suppliers. That number also includes the federal tax payment and capital spending.
By Dan McLaughlin • National Review
The Republican tax plan has a lot of moving parts, but its centerpiece is a major long-term cut in corporate taxes. American businesses have been eagerly anticipating these cuts, and 2017’s strong stock performances were driven in part by an expectation in the market that they were coming. Liberal critics are apt to downplay the impact that corporate tax rates have on the competitiveness of American business — but the news from around the globe suggests that our economic competitors are very aware of the threat that the “Trump tax cuts” will lure more business back to the United States, or stem the departures of existing businesses, unless they take steps to keep up.
China: The Chinese government may not share America’s view of how to stay competitive, but it recognizes that the Republican plan improves America’s position. From the Wall Street Journal:
In the Beijing leadership compound of Zhongnanhai, officials are putting in place a contingency plan to combat consequences for China of U.S. tax changes as well as expected interest-rate increases by the Federal Reserve, according to people with knowledge of the matter. What they fear is a double whammy sapping money out of China by making the U.S. a more attractive place to invest.
by Alfredo Ortiz • Real Clear Politics
Pending tax cut legislation will eliminate the federal income tax burden on the average American family earning $59,000 a year. It will halve the tax bill for the average family earning $75,000. And it will allow the overwhelming majority of small businesses to protect nearly one-quarter of their income from taxes.
That’s the bottom line of the tax bill that needs to be said up front.
Given the critical media coverage of the bill, these benefits have largely gone overlooked. Rather than reporting on its provisions to double the standard deduction, double the child tax credit, and eliminate the 15 percent tax bracket in favor of a vastly expanded 12 percent rate, media coverage has claimed the bill is a gift to the rich. Rather than reporting on the new 23 percent tax deduction for small businesses earning less than $500,000 a year, media
coverage has claimed the bill is a budget buster.
That’s a shame because these benefits would bring long overdue relief to hardworking taxpayers who have borne the brunt of the slow growth Obama economy from which the country is finally emerging. Continue reading
By Glenn Kessler • The Washington Post
“On average, middle class families earning less than $86,000 would see a tax increase under the Republican ‘tax reform’ plan.”
— Sen. Kamala Harris (D-Calif.), in a tweet, Oct. 27
“The average tax increase on families nationwide earning up to $86,100 would be $794.00”
— Sen. Robert P. Casey Jr. (D-Pa.), in a tweet, Oct. 24
“Under GOP plan, U.S. families making ~$86k see avg tax increase of $794.”
— Sen. Jeff Merkley (D-Ore.), in a tweet, Oct. 24 Continue reading
By Ali Meyer • Washington Free Beacon
President Donald Trump’s tax reform framework could raise GDP by as much as 5 percent and wages by as much as 7 percent, according to a new study from Boston University economists.
“We find that, depending on the year considered, the new Republican tax plan raises GDP by between 3 and 5 percent and real wages by between 4 and 7 percent,” the economists explain. “This translates into roughly $3,500 annually more annual real take-home pay for the average American household.”
Economists believe this growth can happen due to the plan’s aim to reduce the marginal effective corporate tax rate from 34.6 percent to 18.6 percent, which they believe will grow the capital stock by 12 to 20 percent. Continue reading
By Peter Roff • USNews
Serious people are starting to wonder if tax reform can pass, largely because they’re only talking to people inside Washington.
Instead they should talk to the American people. Most of them are hungry for it. A quarter of small business owners surveyed by CNBC/Survey Money said taxes were the most critical issue they currently face. Overall it’s their No. 1 concern and, since small business is the engine of growth in the U.S. economy, that’s an important consideration.
Things have improved since Election Day 2016, but the economy is still not growing like it needs to if we are to have hope of ever paying down the national debt, now equal to about one year’s U.S. GDP. Continue reading
by Peter Roff • Washington Examiner
Though America has prospered since the end of the so-called “great recession,” the economy has grown by so little it’s hardly worthy of mention. The boom that began under Ronald Reagan ended with the collapse of the sub-prime mortgage industry. The country is no longer moving. Something must be done to get things going again.
The answer to our problems is simple. America needs tax reform to get moving again. There are a number of good, serious proposals out there from the Hall-Rabuska flat tax to the “Better Way” plan being pushed by House Speaker Paul Ryan. None of them is perfect but they’d all produce lower rates by eliminating deductions and credits. They’d all make the system simpler, and they’d all goose the economy to get annual growth in U.S. GDP where it should be, around three or four percent annually if not higher. Continue reading
by Ali Meyer • Washington Free Beacon
Sixteen CEOs from large companies are urging Congress to enact comprehensive tax reform that would end a tax on domestic production and make companies in the United States more competitive globally.
CEOs from companies such as Dow Chemical, Pfizer, Caterpillar, Boeing, and General Electric have written a letter to Speaker of the House Paul Ryan (R., Wis.) and Sen. Chuck Schumer (D., N.Y.) urging them to make the U.S. tax code more pro-growth and lower rates for businesses so they can actively compete with global competitors.
“We recommend enacting comprehensive pro-growth tax reform to remove a major impediment to economic growth—our outdated tax code,” the CEOs said. “We have the highest business tax rate in the developed world and are one of the few countries that taxes business income on a worldwide basis.” Continue reading
How Congress, Trump rework the tax code without abandoning conservative principles
Imagine going to your boss with your personal budget. The list would include things you want to spend money on, such as: your home, car, groceries, dining and entertainment projections, vacation plans, charitable giving goals, etc.
Now picture telling your boss he must fund your planned budget. You don’t bother to discuss your value to the company, but rather demand he fully fund your personal budget.
This is a difficult conversation to imagine because the real world doesn’t work that way. We don’t get paid based on what we want our personal budget to be, but rather the value we provide. Then based on what we receive, we budget accordingly. Yet, big government demands that it play by a different set of rules. Continue reading
Rep. Brady touts tax code built for growth
by Ali Meyer • Washington Free Beacon
Rep. Kevin Brady (R., Texas), the chairman of the House Ways and Means Committee, said Tuesday that his two top priorities for the coming year are tax reform and replacing the Affordable Care Act.
At the Wall Street Journal‘s CEO Council meeting, Brady said President-elect Donald Trump is making economic growth the pillar of his presidency and that these two issues will play key roles.
“We have two overarching goals in tax reform,” Brady said. “We want a tax code not merely designed to wring money from you, which is the one we have today, [but] a tax code actually built for growth, designed to grow wages, jobs, and the U.S. economy.”
“Our other goal is to leapfrog America from dead last among our global competitors back into that lead pack, and keep us there going forward,” he said. Continue reading