OPINION:
Among Washington lawmakers’ most irritating habits is their inability to do the job right the first time. Former President Donald Trump’s Tax Cuts and Jobs Act was a big success, taking effect in 2018 and priming the economic growth that characterized his term — at least until the COVID hit.
Those tax cuts and the prosperity they set in motion are already vanishing. In 2020, businesses were able to invest in the future and deduct 100% of that expense upfront. As of last week, they are allowed to deduct only 40% upfront. Next year, it drops to 20% before going away entirely in 2026.
That’s bad for business and the economy as a whole. The National Bureau of Economic Research reviewed corporate tax returns to conclude in a recent study that companies taking advantage of this tax break boosted domestic investment 20% compared with firms that didn’t.
But businesses aren’t alone in feeling the pain. The personal income tax cuts championed by the former president also expire at the end of next year. That means filers earning as little as $9,525 would see Uncle Sam’s share of their paychecks rise from 12% to 15%. Contrary to the left’s tired “tax cuts for the rich” trope, the greatest relief is found in the lower brackets.
Pulling off the first major overhaul of the tax code since 1986 was no small feat. The bill squeaked through the Senate 51-48, with all Republicans voting in favor and all Democrats opposed. Left-wing protesters even interrupted congressional proceedings to shout “kill the bill” and “shame” inside the Senate chamber. Capitol Police removed 80 rabble-rousers by force, but for some reason, none were charged with insurrection.
Such antics influence squishy Republicans who fear allowing people to keep too much of their own money might be considered extreme. Last-minute holdouts whined about the impact on the deficit, fooled by the inadequate method Congress uses to calculate the budgetary impact of legislation. As a result, the only way to ram the bill through in the absence of Democratic support was to sunset the tax cuts.
We now know static scoring of the legislation got it wrong. Even though tax rates dropped across the board, federal revenue skyrocketed 18% in 2021.
Still clinging to obsolete figures, Democrats insist the reckless, ongoing spending spree that started under COVID isn’t the cause of our shocking $34 trillion national debt.
“Republican tax cuts are responsible for about 90% of it,” White House press secretary Karine Jean-Pierre asserted on Wednesday. She even tried to coin the phrase “MAGAnomics” to shift the blame for the woeful state of the economy away from “Bidenomics.”
The only upside of the tax cut expiration is the clear choice it presents in an election season that so far has been light on policy discussion. One side will restore tax relief and the prosperity it brings, while the other party needs those automatic tax increases so it can spend more of your money.
If the GOP can catch one of those elusive “red waves,” perhaps it will have the muscle needed to get the job done right for a change.
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