Tax Facts Tuesday: You Know Who the Tax Cuts Helped? Families and Small Businesses
Here’s the news: The Tax Cuts and Jobs Act continues to fuel our economy. With the economy growing at a 4.1% pace last quarter, wages growing at the fastest pace in a decade, jobless claims at record lows, and small business optimism at record highs, American workers truly are #BetterOffNow.
Here’s the rhetoric: The partisan and factually challenged editors at the New York Times editorial board have taken it upon themselves to claim that hardworking families aren’t reaping the benefits of the GOP tax cuts.
Here’s the reality: While the New York Times editorial may provide a self-serving echo chamber for the Democratic National Committee, it spins a false narrative that misleads the public on every count. Here are just a few examples of how the editorial board gets it wrong:
Let’s start with the title: “You know who the tax cuts helped? Rich people.” This is false assertion masquerading as fact. Here are the actual facts as provided by the nonpartisan Joint Committee on Taxation:
- Over $1.1 trillion in tax relief from the Tax Cuts and Jobs Act goes directly to families and small businesses.
- Middle-income families see larger percentage reductions in their taxes than wealthier families.
- A typical married couple with two kids earning $73,000 would see a tax cut of $2,059 – a reduction in their income taxes of nearly 60%.
- The share of federal taxes paid by millionaires increased under our new tax code.
Not only do the facts not support the claims of the New York Times editorial board, their assertion is ironic given that they also recently penned an editorial stating that states could “fix” the GOP tax reform by writing legislation to restore the state and local tax (SALT) deduction.
Reinstating an unlimited SALT deduction would be a regressive change that would vastly benefit the wealthy over middle class families. According to the left-leaning Tax Policy Center, restoring the SALT deduction would result in a $31,190 tax cut for those in the top 1% by income but only a $10 tax cut for middle-class taxpayers.
After this sloganeering early on in their editorial, the New York Times editorial board pivots to a frequently used and misleading liberal talking point: stock buybacks.
We’ve explained previously that the real impacts that stock buybacks have on workers include boosts in retirement savings and a better allocation of capital among businesses. But the New York Times editorial board implies that most workers don’t own stock and therefore do not benefit from stock buybacks.
Here is the truth:
- Half of Americans are invested in the stock market.
- 4 out of every 10 dollars invested in the stock market are held in retirement funds.
The New York Times editorial board then claims that the Tax Cuts and Jobs Act has not increased investment because “investment as a percentage of economic output… [was] 17.5 percent in the second [quarter], far below the nearly 20 percent it reached in 2006 before the recession.” This claim omits the fact that business investment growth this year has exceeded – and continues to exceed – forecasters’ expectations for this year, both before and after the GOP tax cuts were incorporated into the forecast.
- For example, prior to the Tax Cuts and Jobs Act, the nonpartisan Congressional Budget Office (CBO) projected that business investment would grow 4.4% and 3.8% in the first two quarters of 2018, respectively.
- Then, after our new pro-growth tax code was enacted, CBO revised their forecast up for the first two quarters to 5.6% and 5.7%, respectively.
- The kicker: business investment growth has actually exceeded all of those forecasts – growing 6.7% in both quarters.
Finally, the New York Times editorial claims there is “no sign” of workers getting a pay raise. While that may have been the reality of the Obama years, it certainly is not true today.
- The Employment Cost Index, which is recognized by economists as a superior measure of wage growth, shows the fastest pace of wage growth in a decade.
- In addition, over 4 million U.S. workers (and counting) have seen bonuses, wage increases, or expanded benefits, with employers citing tax reform as the reason why.
- Plus, with a larger standard deduction, doubled child tax credit, and lower tax rates across the board, our workers and families get to keep more of their hard-earned dollars.
The bottom line: Tax reform is helping middle class families and small businesses, and it’s a shame that liberals are continuing to deny that fact.