Today I wrote a piece for the Wall Street Journal responding to Senator Rubio’s recent comments on the tax reform bill.
Last Friday’s upbeat jobs report was the latest sign that the Tax Cuts and Jobs Act has strengthened the American economy and helped working families. But this success hasn’t satisfied all the skeptics. My friend and colleague, Florida Sen. Marco Rubio, argued in a recent interview that a different approach to tax reform, including a smaller corporate rate cut, would have more directly benefited workers. Based on all the evidence—including the analysis of the Joint Economic Committee, which I chair—I must respectfully disagree.
When House Republicans crafted the tax-reform law last year, our priority was to boost the economy so workers could thrive. Cutting the U.S. corporate tax rate from the highest in the developed world to a competitive 21% wasn’t a luxury. It was a crucial step to prevent the loss of American headquarters and jobs to other nations.
For proof that the gains of tax reform are already flowing to American workers, Sen. Rubio need only ask the nonpartisan analysts who advise Congress on economic matters. The Bureau of Economic Analysis recently reported that real disposable income—workers’ inflation-adjusted earnings, after taxes—rose 3.4% in the first quarter of this year. The bureau specifically credited tax reform for higher wages as well as lower taxes.
Even the Congressional Budget Office, which tends to play down the growth effects of tax relief, estimates the tax law will create nearly one million new jobs over the coming decade, along with higher wages and near-term annual growth of more than 3%. The Joint Committee on Taxation finds that cutting corporate taxes will generate long-term wage growth, and that tax reform will draw foreign investment to the U.S., producing strong benefits for workers.
The good news for workers keeps pouring in, as more than 530 companies have announced bonuses, pay raises and more-generous benefits for employees, as well as utility rate cuts for customers and corporate expansions. Americans for Tax Reform estimates more than four million workers have received bonuses.
In addition to benefits from the business side of tax reform, the tax savings on the personal side mean that a typical family of four earning $75,000 will pay $2,000 less in taxes this year than in 2017.
The Tax Cuts and Jobs Act wasn’t perfect, and Congress should continue to improve the tax code by adding more individual tax relief and making the current cuts permanent. But no matter how you slice it, working families are benefiting from tax reform. And as the pro-growth effects of the tax cuts continue to work their way through the economy, the best is yet to come.
Sen. Rubio is right to want to ensure that America’s economic policy favors working families—that’s why I supported him during his presidential primary campaign. But as we continue to work on Americans’ behalf, we should recognize the success tax reform has already achieved and use it as a foundation to go further.
Mr. Paulsen, a Republican, is U.S. representative from Minnesota’s Third District and chairman of the Joint Economic Committee.
You can read the article in Wall Street Journal here.
Sincerely,
Eric Paulsen
Filed under: American Culture, Capitalism, Communication, Conservatism, Republican Party, The Tax Business, U.S. Congress | Leave a comment »