WASHINGTON, D.C. – Days after Congress took a major step in unlocking the reconciliation process to provide tax relief for working families, farmers, and small businesses, Ways and Means Chairman Jason Smith (MO-08) issued the following statement in observance of Tax Day: 

“In 2017, Republicans unleashed the greatest economy in our lifetime with tax cuts for workers, families, and small businesses. These Americans, who suffered under four years of Bidenflation and red tape chipping away at their savings, deserve to know that their tax rates won’t increase next year. Just last week, Republicans in Congress unlocked the pathway to deliver on making permanent President Trump’s Tax Cuts to unleash more jobs, higher wages, and a more competitive economy that will be the envy of the world.

“The contrast couldn’t be clearer: Democrats moved heaven and earth to give an $80 billion windfall to the IRS to hire 87,000 auditors to go after the Middle Class. They provided special tax carveouts for the wealthy and well-connected while promising to get rid of lower rates for working families. Republicans are prioritizing putting money in more Americans’ pockets by locking in the doubled standard deduction, keeping the doubled child tax credit, and providing tax relief for tips, overtime pay, and Social Security.

“From holding field hearings across the country to meeting with families and small businesses during tax team events, Ways and Means Republicans are ready to deliver on an America First tax policy.”

The Details:

The Trump Tax Cuts helped our economy and resulted in more revenues:

• In the first two years after passage of the Trump Tax Cuts, GDP growth was a full percentage point higher than CBO’s pre-TCJA forecast.
  • According to the White House Office of Management and Budget, every additional one percent of sustained GDP growth will result in $600 billion in new revenues over 5 years and $2.8 trillion over 10 years.
    
• Following passage of the Trump Tax Cuts…
  • Real median household income rose by $6,000 – a bigger increase in just two years than in the prior eight years combined. 
  • Wages increased 4.9 percent, the fastest two-year growth in real wages in 20 years. 
  • The poverty rate and unemployment rate reached their lowest levels in 50 years, with all-time lows in unemployment among African American and Hispanic workers, and those without a high-school degree.
  • The bottom 20 percent of earners saw their federal tax rate fall to its lowest level in 40 years.
  • Americans earning under $100,000 received an average tax cut of 16 percent.
  • The share of taxes paid by the top 1 percent of households increased while the tax burden paid by lower income earners decreased.

• The 2017 Trump Tax Cuts delivered results, and Congress must act to make them permanent, according to a new study from the Council of Economic Advisers (CEA). The CEA report emphasizes the important pro-growth effects that extending the Trump Tax Cuts will bring to American workers and small businesses:
  • Boost the level of short-run real gross domestic product (GDP) by 3.3 to 3.8 percent and long-run real GDP by 2.6 to 3.2 percent.
  • Raise annual real wages by $2,100 to $3,300 per worker.
  • Increase real annual take-home pay for a median-income household with two children by roughly $4,000 to $5,000.
  • Facilitate $100 billion of investment in distressed communities through Opportunity Zones.
    
    Prior to passage of the Trump Tax Cuts, CEA accurately predicted they would grow the economy and increase real wages. By contrast, the Congressional Budget Office (CBO) underestimated their economic impact, missing by a full percentage point in 2018 and 2019. And in the five years following the Trump Tax Cuts, tax revenues came in $170 billion per year above CBO’s post-2017 projections.
    
• Allowing the Trump Tax Cuts to expire will mean higher taxes on working families and businesses, including:
  • A family of four earning $75,000 will owe an additional $1,500 in taxes.
  • The Child Tax Credit will be slashed in half from $2,000 down to $1,000.
  • The guaranteed deduction that 90 percent of taxpayers use to simplify their tax filing will be slashed in half.
  • The 20 percent deduction that helps small businesses compete with larger corporations goes away leaving small businesses facing a 43.4 percent tax rate.

• Another study from the National Association of Manufacturers outlines what’s at stake for the nation:
  • Without action, nearly 6 million American jobs could be lost.
  • The United States could see a $1.1 trillion hit to gross domestic product, an extraordinary impact that would decimate American families, manufacturers, and small businesses across the country.
  • Manufacturers would bear a disproportionate amount of this impact. More than 1.1 million manufacturing jobs could be eliminated, workers could see $130 billion in lost wages, and the industry’s contribution to GDP could shrink by $284 billion.