Grassley: Six Months After Tax Reform, America is Open for Business
Prepared Senate Floor Remarks by U.S. Senator Chuck Grassley of Iowa
Senior Member and Former Chairman of the Senate Finance Committee
6th Month Anniversary of the Tax Cuts and Jobs Act
June 20, 2018
Six months ago, Congress passed historic tax legislation that fundamentally reformed our tax code and provided tax relief to middle-income Americans and job creators.
At the time, many of my colleagues on the other side of the aisle attempted to derail our efforts through a campaign of misinformation and demagoguery. They tried to argue up was down –that tax cuts were tax increases – and even suggested the bill’s passage was a sign of “Armageddon.”
Of course, such fear mongering was always nonsense. At the time, analysis from the non-partisan Joint Committee on Taxation made it clear that the vast majority taxpayers across every income group would experience tax cuts. In fact, it made clear that middle-income groups would experience the largest percentage tax cuts.
Even looking at the liberal Tax Policy Center’s analysis of the bill, the tax relief for the middle-class is unmistakable. Their analysis found that more than 80% would experience tax cuts averaging more than $2,100.
In the Tax Cuts and Jobs Act, we made good our commitments to fix our broken tax code. It makes filing simpler, provides middle-income tax cuts, and reinvigorates our economy through pro-growth business tax reforms.
The positive effects of the tax law began almost immediately with companies announcing bonuses, pay raises, higher retirement contributions, new hiring, and increased investment as a result of the law. To date, the list of such companies has climbed to over 600 with more than 4 million employees benefitting.
This has included numerous business in Iowa.
They have ranged from the small – like Anfinson Farm Store which has invested back into its employees in the form of $1,000 bonuses and a five percent increase in wages – to the very large – like Wells Fargo which has raised its base wage from $13.50 to $15.00 per hour benefiting more than 1,300 employees.
Higher wages and bonuses are not the only way taxpayers are benefitting from historic tax relief.
Taxpayers across the country are seeing the benefit in the form of lower electric, gas, and water bills. Nationally, utility customers have experienced more than $3 billion in savings thanks to lower utility rates as a result of tax reform.
In my state of Iowa, Alliant Energy estimated its customer savings to be between $18.6 million to $19.6 million for electric and $500,000 to $3.7 million for gas. MidAmerican Energy estimated between $90.8 million and $112.3 million in customer savings and Iowa American Water Co. estimates customer savings of between $1.5 and $1.8 million.
The hundreds of business and utility company announcements was only the beginning of the positive news for American taxpayers. In February, taxpayers began seeing the effects of tax reform directly in their paychecks as less was taken out to pay the tax man. In all, about 90% of taxpayers are seeing less tax withheld from their paychecks as a result of the law.
With it becoming evident that the Tax Cuts and Jobs Act was delivering meaningful benefits to working families, our Democratic colleagues were in search for new talking points on the law. They could no longer with a straight face argue tax cuts were really tax increases.
Instead, they want hardworking Americans to believe that an extra $50 a week in their paycheck or a $1,000 bonus is “crumbs”.
With all due respect to my colleagues who believe this to be true, you don’t have a doggone clue what it’s like in the real world where people have to work for a living.
That $1,000 bonus means a lot for a father or mother whose children need new school clothes, or has a car that could use some repairs, or simply wants to take the family for a vacation.
For a family on a tight budget, every additional dollar in a paycheck counts. It means an additional dollar that can be put away for unexpected emergency expenses, for a child’s college savings, or for retirement.
As important as the immediate middle-income tax benefits afforded by the tax law are, the benefits that will accrue to all as a result of the long-term pro-growth effects of the bill are as important, if not more, important.
Thanks to this historic tax measure, as well as regulatory relief, Congress and the Administration have declared America is open for business.
When Congress delivers historic tax cuts and regulatory rollbacks, the American people enjoy the sweet taste of prosperity. That’s how the cookie crumbles.
Despite critics in this town calling it “crumbs,” I’d invite them to chew on these facts:
• National unemployment has fallen to 3.8 percent, its lowest level since April of 2000;
• Wages have risen at the fastest pace since the end of the recession;
• For the first time on record, the number of job openings has exceeded job seekers;
• U.S. manufactures report historically high investment and hiring numbers. 86% report they intend to increase investment and 77% report they
plan to increase hiring;
• Small business confidence has hit record highs;
• Consumer confidence has reached its highest level since 2000.
All this good economic news points toward higher economic growth moving forward. This is key to sustainable long-term wage growth, which is the most powerful anti-poverty measure there is.
This should be welcomed news to all after the years of stagnant wage growth during the Obama years.
But with all this positive news, Democrats have been searching for a talking point they hope will take hold.
Toward that end they have lambasted corporate stock buy-backs. Their hope is the American public will disregard all the positive signs they have seen in their paychecks and the economy generally and be outraged by benefits accruing to stockholders.
It’s a play out of their old playbook. When all else fails, engage in the rhetoric of class warfare.
But, I have news for my Democratic colleagues; that dog is not going to hunt either.
Millions of middle-class Americans own stock, if not directly, through their 401(k) or pension plan. According to the Tax Policy Center 37 percent of stock is held in retirement accounts.
Thus, the idea stock buy-backs are boon only to corporate fat cats is hogwash.
It’s a boon to the millions of middle-class Americans who are longing for a secure and comfortable retirement.
Moreover, the Democrats concerns with stock-buy-backs demonstrates a fundamental misunderstanding of economics.
Stock-buy backs are fully consistent with one of the main objectives of tax reform. That is promoting economic growth through capital formation that makes workers more productive, which in turn leads to increased wages.
When a company repurchases stock that money is not stuffed under a mattress somewhere. It frees up dollars that can be reinvested in a growing company or a new startup. This in turn promotes the type of business expansion and capital investment necessary to grow our economy, boost productivity, and increase wages over the long-term.
Although the economic landscape looks more promising than ever, there’s more work to do.
I’m particularly focused on trade agreements and renewable energy policies that impact my home state.
I hope our colleagues across the aisle will finally put an end to their tired attacks on the tax bill and begin working with us to promote economic growth for all.
I yield the floor.