The TCJA is a Reward, not a Rebuff

It has been over a month now since Americans across the country filed their taxes, and Democrats are starting to come out of the woodwork to criticize the “shortcomings” of the Tax Cuts and Jobs Act. Their favorite talking point is claiming that the middle class was “left behind” this tax season. However, all of the data demonstrates otherwise. Let us look at the facts to get a real sense of the positive impact of the TCJA.

Thanks to the TCJA, average hourly earnings have grown 3.2% over the past year, with GDP rising 3.2% as well in the first quarter of 2019. Unemployment has consistently been at or below 4% over the past year, reaching lows for women, veterans, Hispanics not seen in decades. This economic success and spike in jobs growth would not have been possible without the tax reductions provided by the TCJA.

According to Senator Chuck Grassley, approximately 90% of middle-class households paid nearly $900 less than they would have without the passage of tax reform, and with the adjustment in tax withholdings, people were able to keep more of their hard-earned money each paycheck. These statistics demonstrate just how helpful the TCJA was for average Americans, and offer clearer picture of how much people of all walks of life benefited from tax reform.

The Democrats’ misrepresentation of the facts make for a good campaigning, but there talk is cheap and the claims are unsubstantiated. These numbers are proof that tax reform did not leave the middle-class behind. If anything, it finally rewarded them.

 

 

Tax Reform: Good for Main Street, Good for Small Biz

On May 23, the House Ways and Means Tax Subcommittee held a hearing (“Growing Our Economy and Creating Jobs”), which focused on the (many) benefits of the Tax Cuts and Jobs Act (TCJA)—aka, tax reform—for Main Street small businesses, the hardworking Americans they employ, and the communities they serve.

Subcommittee Chairman Vern Buchanan provided a great overview of the purpose and impact of the tax reform legislation, which was passed by Congress and signed into law by President Trump late last year. He noted in his statement that the TCJA “lowered tax rates across the board,” including for small businesses, and “introduced full and immediate expensing for most capital expenditures by firms of all sizes.”

The law also includes several small-business-specific provisions, such as “expanded availability for cash accounting, and flexibility for choosing between pass-through and corporate taxation.”

Buchanan rightly notes that these reforms benefit businesses of all sizes, drive economic growth, and are already producing results. “Back in 2016, CBO [the Congressional Budget Office] projected that GDP growth in 2018 would slow from 2.3 percent in the first quarter down to 2.1 percent in the fourth quarter,” Buchanan said. “Now, after growing 2.9 percent in the first quarter of 2018, GDP growth is projected to accelerate to 3.3 percent in the fourth quarter.”

But that’s not all. At the same time, “unemployment forecasts are being revised down,” with the CBO expecting the unemployment rate “to drop to 3.5 percent by the end of this year—the lowest unemployment rate since 1969.” Additionally, investment growth is “exceeding expectations”—capital spending S&P 500 companies “grew by 24 percent in the first quarter of 2018—the fastest pace since 2011 and the best first quarter since 1995.”

There’s also plenty of good news that is specific to Main Street businesses: “The National Federation for Independent Business reported small business profit growth at a 45-year high. The percentage of small businesses that are expanding their employment is at its highest level since 1999. And the percentage of small businesses reporting plans for expansion, increased hiring and higher wages, is at or near record highs.”

Despite the ongoing negative spin by tax reform naysayers, the facts are clear. The TCJA is proving to be good for Main Street—helping to produce job creation, economic growth, and prosperity for our local communities.

April Small Business Optimism Show Power of Tax Reform

The National Federation of Independent Business’ (NFIB) most recent Small Business Optimism Index shows just how powerful and positive of an impact the Tax Cuts and Jobs Act (TCJA) is already having for America’s small businesses. Here are some highlights:

  • The Index saw “sustained record-high levels” (for the 17th month in a row) largely driven by “reports of improved profits, the highest in the NFIB Small Business Economic Trends Survey’s 45-year history.”
  • The “frequency of positive profit trends went up three points in April due to gains in operating productivity and stronger sales as well as the newly implemented tax law.”
  • Reports of capital outlays “rose three points this month to 61 percent, indicating that small businesses are confident and strong enough to make investments.”
  • Of the businesses making expenditures, “43 percent are spending on new equipment (up four points), while 27 percent are acquiring vehicles (up three points).”
  • The “share of small business owners who are hiring or trying to hire rose four points to 57 percent.”
  • New job creation “remains at historically strong levels, with a net 16 percent of owners planning to create new jobs.”
  • Significantly “more new businesses are opening than closing, providing a major boost to new employment.”
  • Worker compensation “remains at the highest level since 2000, with net 33 percent reporting increasing compensation.
  • The average family “saw wages and salaries grow last year,” and gains “are likely to increase for many families this year due to tax cuts.”

“Never in the history of this survey have we seen profit trends so high”, said NFIB President and CEO Juanita Duggan. “The optimism small businesses owners have about the economy is turning into new job creation, increased wages and benefits, and investment.” NFIB Chief Economist Bill Dunkelberg added: “There is no question that small business is booming. Consumer spending, the new tax law, and lower regulatory barriers are all supporting the surge in optimism across all small business industry sectors.”