Senate Finance Chairman Chuck Grassley of Iowa
Partisan politics too often distorts a healthy debate and misrepresents good policy. Case in point — the Tax Cuts and Jobs Act.
For the past two years, congressional Democrats have led a campaign of misinformation about tax reform. They’ve misled the American people and promoted a narrative full of distortions, misrepresentations and even flat-out lies about what the law does and doesn’t do. What’s worse, many in the media have served as their megaphone, providing a platform to deceive American taxpayers without commensurate fact-checking or context. A recognition of a few basic facts about tax reform is long overdue.
One of the most-covered falsehoods being spread about tax reform is that it’s a middle-class tax hike. It’s even become a favorite among 2020 presidential candidates. According to the Institute on Taxation and Economic Policy, every income group in every state is paying less on average in 2019 because of tax reform. The liberal Tax Policy Center reports that, when looking at the individual income reforms only, nearly 70% of Americans earning between $30,000 and $50,000, and more than 80 % of Americans earning between $50,000 and $75,000 received a tax cut. Further, the average middle-income household paid approximately $800 less than they would have without the enactment of tax reform. If you include all major reform provisions, 80% of all taxpayers received a cut and around 90% of middle-income households received a tax cut averaging roughly $900.
Another deception being advanced by many Washington Democrats is that Americans are seeing smaller tax refunds and that equates to a tax hike. In both the House and Senate, they’ve used their platforms to mislead the American people. The fact is that returns are historically in line with past years. The new tax law adjusted withholding amounts, which means that most Americans paid less in taxes on their monthly paychecks. Opponents of tax reform initially pushed this falsehood based on very limited data points, but now that tax season has ended, a fuller picture shows this argument was nothing more than another dishonest talking point. In fact, according to the most recent IRS data, the total number of returns receiving refunds was up over last year, and the average refund amount differed by only $55.
Everyone benefited from Tax reforms
In interviews, during political rallies and on social media, Democrats enthusiastically say that tax reform has only benefited corporations and the wealthiest Americans. They refuse to acknowledge that it has actually made the tax code more progressive and that nearly everyone is benefiting from tax reform. Why? Because the facts don’t fit their party’s political agenda. However, evidence of tax reform’s benefits for American workers is overwhelming.
Every income bracket received a tax cut, and as a percentage of tax revenue paid to the IRS, the wealthiest Americans are actually paying more than before tax reform. According to the Congressional Budget Office and the Joint Committee on Taxation, three out of every four dollars in tax cuts went directly to individuals and small businesses. What’s more, it doesn’t take a tax expert to see income, wages, jobs and unemployment numbers have all improved since the enactment of tax reform, reflecting significant benefits for American workers.
Annualized growth in real after-tax personal income averaged 3.2% during the Trump administration before tax reform; it has averaged 3.5% following tax reform. Annualized growth in real average hourly earnings averaged 1.2% under Trump before tax reform and increased to 1.7% following tax reform. Monthly job gains have averaged 199,000 under President Trump before tax reform and 215,000 after tax reform. Nearly 5.4 million jobs have been created since January 2017, with more than half of that job creation having occurred since the enactment of tax reform. Prior to tax reform, the unemployment rate under President Trump averaged 4.1%; the average decreased to 3.9% after tax reform.
To say it simply, tax reform is working for Americans of every walk of life. For Democrats to suggest otherwise is to disregard the data that shows its positive impact for taxpayers, businesses and the overall economy.
Don't believe Democrats' lies
Republicans passed tax reform to invest in American workers and American business competitiveness. Before that, President Obama presided over the highest corporate tax rate in the industrialized world. That forced American businesses to go overseas and take their jobs with them. Now, tax reform lowered the corporate rate and is bringing business back to the United States. This is spurring economic growth and boosting job creation within our borders instead of in other countries. This reform was never about helping corporations, but about helping workers whose jobs were being shipped overseas and small businesses that couldn’t compete with the unfair advantage foreign countries created. The nonpartisan, independent Congressional Budget Office reported that “by lowering the corporate income tax rate,” tax reform “gives businesses incentives to increase investment.” It also projected that “heightened economic activity,” since tax reform “reduces incentives for corporations to shift profits outside the United States…” and increases U.S. and foreign investors’ incentives to invest and locate activities in the United States rather than abroad.
Despite the evidence that tax reform is working, many Democrats continue to pull the wool over Americans’ eyes about all the ways it’s improving our lives and our nation. Unfortunately, their deception is working. A recent Gallup survey revealed that 43% of Americans were unsure whether tax reform affected their federal tax bill, even though a majority of those Americans had their taxes lowered. Worse, 21% believe that their taxes increased, even though fewer than 6% were projected by the non-partisan Joint Committee on Taxation to have a tax increase.
According to an NBC News/ Wall Street Journal poll, only 17% of Americans believe their taxes decreased under tax reform, even though every analysis of the bill demonstrates that the vast majority saw a tax cut. That represents a real failure on the part of the news media to correct the record and inform the public about the very basics of major legislation.
The consistent drumbeat of negative, misleading and outright false information being spread by Democrats and many in the media about tax reform is damaging to the nation. The precedent it sets will further corrode the trust Americans put in their elected leaders. It’s time to stop playing political games and give citizens what they deserve — just the facts without the partisan spin.