Keeping The Tax Cuts & Jobs Act From Expiration: Jonathan Williams on American Radio Journal
A majority of Americans support making the Tax Cuts and Jobs Act permanent.
In his latest American Radio Journal commentary, ALEC Executive Vice President of Policy and Chief Economist Jonathan Williams warned of the threat to economic opportunity if the Tax Cuts and Jobs Act is allowed to expire.
Prior to the government mandated economic shutdowns during the COVID-19 pandemic and the disastrous inflation due to the out-of-control federal spending, the Tax Cuts and Jobs Act of 2017, known as TCJA, or sometimes known as the Trump Tax Cuts, spurred steady economic expansion across the United States. The tax cuts which were the largest remake of the federal tax system since the Reagan tax reform is more than three decades before allowing the spirit of entrepreneurship to flourish while creating new jobs, increasing real wages and advancing opportunities for millions of Americans.
Several key provisions of the Tax Cuts and Jobs Act for individual taxpayers are now set to expire at the end of 2025 allowing these essential tax relief provisions to do so would harm hardworking American taxpayers, slow the growth of the United States economy at a time of economic uncertainty and reduce America’s ability to compete on a global stage.
The TCJA brought a reduction in federal personal income tax rates for households across every income level, while the standard deduction was nearly doubled, resulting in a savings of more than $1,500 for the average middle-income earner. The $1.5 trillion net tax cut was followed by historically low unemployment rates, an increase in business investment and a $6,000 increase in real median household income over two years. Which included scores of raises and bonuses for workers immediately after the TCJA was adopted. More than 100 million American taxpayers from all income groups but especially middle- and working-class American taxpayers, have enjoyed real tax relief at the federal and state level due to TCJA.
Now our friends at Americans for tax reform kept a tally of 1,233 examples of pay raises, new job creation, facility and product line expansions. special bonuses utility rate reductions 401K match increases in employee benefit increases attributed to the Tax Cuts and Jobs Act. However, the untold story of federal tax reform success is the opportunity the new law has provided policymakers across America’s 50 laboratories of democracy. Where the unexpected tax receipts that are directly linked to changes in the federal tax code have been an absolute game changer in state capitals.
These ongoing surpluses and state budgets contributed greatly to the state tax cut revolution that has swept the nation in recent years. As states have used those surplus dollars to enact historic tax relief. Making additional gains at the state level could be put in jeopardy if the Tax Cuts and Jobs Act is allowed to expire. One of the reasons why is because the TCJA set an annual cap of $10,000 on the so called state and local tax deduction (SALT). If the current $10,000 cap on the SALT deduction is allowed to expire after 2025 the federal tax base will be narrowed. Moreover, this federal deduction acts as a subsidy for states and localities with high tax rates. Wealthy Californians and New Yorkers for instance, with their larger state tax bills can take larger SALT deductions against their federal income.
Meanwhile, many of the state’s embracing pro-growth taxation, lower tax burdens and fiscal responsibility, their residents see minimal benefits from the SALT reduction in many cases, should Congress failed to extend these provisions. The return of an unlimited SALT deduction would be a perverse incentive for many states to implement higher taxes and spend at higher levels under the guise of lowering federal tax burden. In the years following 2017, state level conformity with the 2017 tax cuts resulted in significantly lower state tax burdens for many Americans. State saw revenue booms in the wake of conformity to the federal law and that led to these surpluses.
A majority of Americans support making the Tax Cuts and Jobs Act permanent. Tax relief saved, enhanced take home pay and boosted the nation’s economy. Allowing the TCJA to expire would result in a massive tax increase on these hardworking American taxpayers, a significant decline in American competitiveness, fewer jobs, reduced wages, income for workers and of course, increase prices on top of Bideninflation. Extending the provisions of the monumental tax cut is crucial to the American taxpayer in enhancing economic growth. Once again, this isn’t a topic you’ll hear every night on primetime television, but it’s one that could impact all Americans in the months ahead.