A new report from the Joint Committee on Taxation shows that the Tax Cuts and Jobs Act (TCJA) succeeded in promoting business investments in plants and equipment, increased employment, and encouraged businesses to return to the U.S. These gains would be reversed by President Biden’s pledge to repeal TCJA and raise the corporate rate.
As POLITICO notes, “The study also found that business investments in things like plants and equipment, as well as employment in the U.S., increased following enactment of the law.”
- Republican tax reform increased domestic investment: “The report also shows that business investments in tangible assets in the U.S. increased in 2018 by 6.4 percent.”
- Republican tax reform boosted employment: “The number of employees here also grew, by 3 percent, while also growing by almost 14 percent at U.S. companies operating in other countries.”
- Republican tax reform discouraged offshoring. “The report indicates GILTI is successfully taxing money squirreled away in other low-tax countries. Before the TCJA, companies could avoid taxes on that money indefinitely so long as they did not bring it back to the U.S.”
TCJA did even more than that. American workers were the big winners from tax reform. Look at the results:
- From 2018 to 2019, the economy created 4.9 million jobs, nearly 750,000 more than CBO projected.
- Unemployment dropped to 3.5%, the lowest rate in 50 years, and some of our most vulnerable workers were the biggest beneficiaries:
- African American unemployment fell to 5.2%, an all-time low.
- Hispanic unemployment fell to 4%, an all-time low.
- Unemployment for worker with less than a high school education fell to 4.8%, an all-time low.
- Under-employment also dropped from 9.3% in January 2017 to 6.7% at the end of 2019, an all-time low.
- Wages and income were rising for millions of families.
- Wages grew at over 3% per year, the fastest rate in a decade.
- Wage growth was fastest for lower-wage workers—those at the lowest 25-percent of the wage distribution–saw increases of 4.4% in 2018 and 4.6% in 2019.
- Workers had greater wage growth than their supervisors and managers.
- Household incomes increased across-the-board, with lower-income households achieving the greatest gains.
Republican tax reform declared that America was “open for business”
- Before 2017, U.S. businesses struggled to deal with a broken tax code that carried hundreds of companies and greater numbers of jobs overseas.
- Tax reform stemmed the tide – instead of leaving our shores, companies started coming back. And businesses across the country were investing in America and hiring new workers.
During the Obama-Biden Administration, America’s high corporate tax rates among developed nations meant lost jobs and businesses overseas to foreign competitors with lower tax rates. Tax reform finally put America in the middle of the pack, triggering other nations to drop their own rates to be competitive.
President Biden and congressional Democrats have repeatedly threatened to go backwards and use a corporate tax hike to pay for partisan spending bills–an idea that Republicans discussed in their roundtable on Tuesday about President Biden’s recovery-killing cash grab.