The Results Are In: Tax Reform Delivered on Promises
Four years after the 2017 Tax Cuts and Jobs Act (TCJA), the results are in: Wages grew for all Americans, business investment soared, and corporate tax revenues rose to record highs. In an op-ed for the Wall Street Journal, former Trump Administration White House Council of Economic Advisers Chairmen Tyler Goodspeed and Kevin Hassett demonstrate that tax reform delivered on its promises.
Yet Democrats misleadingly claim that tax reform was merely a corporate handout and did little for the economy. President Biden has pledged to repeal the entirety of the law in favor of crippling tax hikes, undoing historic wage and job gains and reversing the tax cuts that helped workers, families, and small businesses.
CLICK HERE to read the full op-ed.
- By encouraging investment, tax reform led to historic gains in wages for American workers. “…By enhancing worker bargaining power and increasing new investment in domestic plant and equipment, the average household would see real income gains of $4,000 over three to five years. In 2018 and 2019 real median household income in the U.S. rose by $5,000—a bigger increase in only two years than in the entire eight years of the preceding recovery combined. In 2019 alone, real median household income rose by $4,400, more than in the eight years from 2010 through 2017 combined.”
- Corporate tax revenues rose to its highest level since 2015, despite Democrats claiming tax reform was a corporate handout. “…In the 2021 fiscal year, not only did federal corporate tax revenues come in at a record high, but corporate tax revenue as a share of the U.S. economy rose to its highest level since 2015.”
- Following tax reform, corporate tax receipts beat CBO forecasts by a long shot – showing tax reform worked and that this isn’t just a transitory effect of the pandemic. “Some have attributed this good news to transitory effects related to the pandemic rather than 2017 tax reform. [President Biden’s] own baseline forecast for corporate tax revenue (i.e., before the revenue effects of its budget proposals) is now above the CBO’s pre-2017 forecast for every year from 2023 through 2027. This is true for both the level of corporate tax receipts and as a share of GDP. This optimistic forecast is consistent with our views about the long-run nature of the effects of tax reform and inconsistent with critics’ claim it has no effects.
- Tax reform reversed the loss of jobs overseas and brought more investment home. “The average annual dollar value of acquisitions by U.S. companies of foreign assets in 2018 and 2019 was 50 percent higher than in the two preceding years, while acquisitions of U.S. assets by foreign companies declined by 25 percent.”
By contrast, Democrats seek the highest sustained tax burden in American history.
- House Budget Committee Republicans’ analysis shows $58 trillion in tax hikes (an 80 percent increase over previous 10 years) that breaks President Biden’s tax pledge by hitting the middle class and small family businesses, and does even more socialist spending.
READ: House Budget Committee Analysis, “Biden’s FY23 Budget: Another Year of Crisis” (PDF)
- Democrats’ tax plan makes inflation worse when it is already 276 percent higher than predicted by Biden’s budget last year because of higher spending. But higher taxes will also result in higher prices for consumers. American families paid a $5,000 inflation tax in 2021 and view Washington spending as a big part of the problem.
- Biden’s international tax increases make it better to be a foreign company or worker. American companies will pay a global minimum tax rate higher than the 15 percent rate the Biden Administration will allow for other countries. This economic surrender will make Americans less competitive and will drive manufacturing, research, and investment overseas. Worse, America will be less competitive with a higher tax rate than Communist China, sending jobs fleeing overseas.
- Democrats’ revive their supercharged death tax that targets family-owned businesses and farms, costing at least 1 million jobs. Analysis by the Family Business Estate Tax Coalition, Democrats’ death tax will destroy over a million jobs, slash paychecks for workers by $32 for every $100 in revenue raised, and shrink our economy by $100 billion over the next decade.