Grassley on the Success of the Tax Cuts and Jobs Act
Prepared Remarks by Senator Chuck Grassley of Iowa
Chairman of the Senate Finance Committee
On the Success of the Tax Cuts and Jobs Act
Wednesday, February 6, 2019
Nearly fourteen months ago, Congress passed historic tax legislation that fundamentally reformed our tax code and provided tax relief to middle-income Americans and job creators.
The Tax Cuts and Jobs Act made good on our commitment to provide significant tax relief to middle-income taxpayers, while making the tax code simpler, fairer and more pro-growth.
Thanks to a near doubling of the standard deduction, millions of taxpayers are discovering as they file their taxes that they can pay less without spending hours sifting through receipts and extra forms.
Middle-income taxpayers can also expect to see a significant reduction in their tax bill from last year.
For example, an Iowa family of four with the state’s median income of around $73,000 stands to see their tax bill cut by more than half, or about $2,000.
This is real relief that began appearing in many taxpayers’ paychecks at the start of 2018.
Given this, the best way for taxpayers to see how tax reform affected their bottom-line is to compare this year’s tax return with last year’s, rather than on the size of their refund.
At the end of the day, the vast majority of taxpayers will see that less of their hard-earned money is going to Washington.
This tax relief stems from many pro-family and pro-middle income tax provisions in the law.
The law also enacted much needed tax relief for job creators. It provides a significant deduction on business income for small businesses, effectively lowering their top tax rate to under 30 percent in many cases.
Small businesses, down to the smallest family-owned corner store and family farmer are benefiting.
Additionally, the law lowered the statutory corporate rate down from the highest in the developed world to 21 percent. The previous corporate tax rate was putting American companies at a competitive disadvantage globally, costing American jobs.
Just as important, the law put in place immediate expensing for businesses of all shapes and sizes.
As a result, job creators will have every incentive to invest back into their business and expand operations here at home.
Nearly as soon as tax reform was signed into law, its positive effects began to be felt throughout the economy.
Hundreds of companies began announcing bonuses, pay raises, higher retirement contributions, new hiring and increased investment. This included numerous businesses in Iowa.
Utility companies across the country also responded by passing along their tax savings to their customers in the form of lower electric, gas and water bills.
Higher take-home pay, bonuses from employers and reduced utility bills were all important immediate benefits.
While tax reform has only been in effect for a little over a year, the economic signs point toward it having its intended effects.
· In 2018, the economy grew at 3.1percent, the highest growth rate since 2005;
· Wages have risen at the fastest pace in nearly a decade;
· Nearly 3 million jobs have been created since the passage of tax reform, including more than 15,000 in Iowa alone;
· Unemployment rates for Hispanic and African-American workers have hit all-time lows;
· For the first time on record, the number of job openings has exceeded job seekers for nine straight months;
· Small business optimism is near record highs; and
· Growth in business investment has been more than twice the rate it was during the sluggish Obama economy.
All this good economic news points toward continued economic growth moving forward. This is key to sustainable, long-term wage growth, which is the most powerful anti-poverty measure there is.
Thanks to tax reform, America is open for business and the economy is booming, all to the benefit of individuals and families in Iowa and every state.
Of course, all this good economic news is no reason to become complacent.
Over the next two years, I look forward to working with my colleagues on both sides of the aisle to build on the successes of tax reform.
I yield the floor.