Thanks to the Tax Cuts and Jobs Act (TCJA) of 2017, American businesses have repatriated over $1.04 trillion since its passage.
The Bureau of Economic Analysis (BEA) released the 2019 third-quarter
account deficit report,
which stated that repatriation
numbers narrowed by $1.1 billion (0.9 percent), bringing the deficit to
$124.1 billion. The second quarter deficit was a staggering $125.2 billion. The
BEA stated, “The $1.1 billion narrowing of the current account deficit in the
third quarter mainly reflected a reduced deficit on goods and an expanded
surplus on primary income”.
Prior to TCJA’s passing, the corporate tax rate was at 35 percent, which incentivized companies to keep profits overseas to avoid being taxed. TCJA’s one-time 15.5 percent tax rate on corporate cash and 8 percent on corporate non-cash offers an incentive for companies to keep their business profits in America.
On January 29, 2020, Congressional Budget Office Director
Phillip Swagel testified before the House Budget Committee. When asked if
competitive tax rates were “essential to the long term growth” of the U.S.
economy, he responded, “The lower corporate rate made the United States a more
attractive place for global investment”.
Americans have much to celebrate two years after the passage of TCJA.
The economy is starting the decade strong with a sturdy
foundation due to low unemployment and interest rates.
The U.S. added 145,000
new jobs in December, capping off the ninth straight year where the economy
created more than 2 million jobs. New hiring over the last decade has pushed
the unemployment rate down to 3.5%, a 50-year low.
Household spending could decrease in 2020 due to the
increase in hourly pay, which fell below 3% in the past 12 months. Yearly wage
growth previously peaked at 3.4% last spring but has been falling since then.
Scott Anderson, chief economist at Bank of the West, says that the lack of
growth in worker wages will “make it harder for consumers to keep spending at
their 2019 pace in 2020”. If wages continue to grow however, 2020 can produce
the same impressive results of 2019.
Fortunately, Americans are secure with their jobs, surveys
show they are confident in the economy, this was proven by a swell in holiday
spending. Economists predicted that retail sales likely rose around 0.4% in
December. In a win for Americans, the Federal Reserve cut the cost of borrowing
in the latter half of last year. Additionally, the Federal Reserve is believed
to keep U.S. interest rates low for another year or more. Despite the decrease
in wage growth and the tightest labor market in half a century, inflation is
not a substantial threat to the economy.
Sal Guatieri , senior economist of BMO Capital Markets summarized
the market saying, “The economy looks to head into the new decade with a little
more zip than we thought,” he continued, “While this may not foreshadow another
decade of uninterrupted growth, it should keep recession fears at bay.”
Many people said it wouldn’t happen. They said we were heading into a downturn or recession. They don’t believe in an economy fueled by tax cuts. But they were, and continue to be wrong and the November employment numbers prove it!
November saw 266,000 new jobs in the United States after experts best guess was between 180,000 and 190,000 new jobs for November. That is about 76,000 more jobs than expected.
The rise in jobs reduced the unemployment to 3.5% in November, from 3.6% in October. Wages were also up, as workers saw an average increase of 7 cents to $28.29 an hour.
These new jobs, higher wages and more people in work mean that roughly 76,000 people have more food on the table, more money in their back pockets and a better or new source of income just in time for the holidays!
While there are many things that lead to new jobs, the continued legacy of the TCJA is not be forgot. The 2017 act continues to drive up wages, drive down costs of businesses and overall increase the money that the average American has.
As the two year anniversary of the bill is fast approaching, it is clear that its impacts will be long and fruitful.
In the last two years, the Tax Cuts and Jobs Act has helped people all over the country. From raising wages, increasing employment and putting more money in the pockets of Americans, the TCJA has had lasting impacts. To look in more detail at these benefits we turn to Mississippians who have seen the TCJA work for them in all areas.
Firstly, according to a report by the Tax Foundation, households earning the average income of $43,529 received an average tax cut of around $829.67. This increase came in many different forms. According to Americans for Tax Reform, 211,210 Mississippi households are benefiting from the TCJA’s doubling of the child tax credit and 953,720 are benefiting from the TCJA’s doubling of the standard deduction.
Beyond just more money coming in from tax cuts, Mississippians have seen indirect benefits too. For example, on average, they paid lower utility bills in 2018. As we all know, the cost of electricity, water and gas can eat into a family’s income. With lower prices and more money as a result of the TCJA, these Mississippians were better off, improving their lives and the lives of their loved ones.
Mississippi is just one state of 50 that has seen incredible benefits like this from the TCJA. All over the country these lower costs and higher incomes are helping the American people achieve their dreams.
In another win for Tax Policy and the TCJA, The Bureau of Labor Statistics reported that 128,000 jobs were added to the US economy in October. These incredible figures surpassed all expectations and silenced those who have speculated that the US is headed for a down turn.
With more money in their pockets companies are able to raise wages. This was seen in October as the average hourly earnings increased 0.2%, up 3% from a year earlier.
Moreover, unemployment rose ever so slightly but ONLY because 325,000 Americans started looking for work, knowing that it was out there and wanting to be part of a thriving economy!
And if that wasn’t enough, the report corrected data from the summer and showed that an extra 95,000 jobs were added in August and September combined.
All of this good news is a result of the sustained results of a strong economy that is supported by even stronger tax policy! The TCJA helped create the space for more jobs, higher wages and better living. We are seeing the results every day and we will continue to see them.