Taxes
Serving on the Senate Finance Committee has given me the opportunity to shape important tax policy affecting the lives of Idahoans and all Americans. As Ranking Member of the Committee, I am always looking for opportunities to simplify our tax code, create jobs and help Idahoans save for retirement.
In 2017, Congress enacted comprehensive, pro-growth tax reform for the first time in more than 30 years. Today, the Tax Cuts and Jobs Act (TCJA) largely remains intact, and with good reason. This legislation led to one of the strongest economies in generations: unemployment dropped to historic lows, economic gains flowed to all demographic groups and income levels, and American businesses reported record R&D investment. The TCJA lowered the corporate tax rate while significantly broadening the base, including by enacting the first global minimum tax of its kind and putting an end to corporate inversions. In ensuing years, corporate tax revenues reached record highs, both nominally and as a share of the gross domestic product.
I remain committed to preserving Republicans’ pro-growth tax policies, and continuing to build on them, to create a competitive environment for U.S. businesses and ensure Americans have access to high-paying jobs.
Lower Taxes for All Americans
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 than prior to the passage of the Tax Cuts and Jobs Act. 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.”
New Jobs & Growth
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.
Deficit Reduction
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.
Improved Competitiveness
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.”
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