East Idaho Times

As the Democratic National Convention commences, the Biden-Harris administration is compelled to address four years of spending and the resulting inflation crisis. With no justification for the rising prices affecting American families, the DNC platform targets the Trump tax cuts, promising another Democrat term will “make the wealthy and big corporations pay their fair share.” Vice President Harris has indicated she would raise the corporate tax rate and has previously supported repealing Republicans’ tax cuts altogether.

With many provisions of the Republican-enacted Tax Cuts and Jobs Act (TCJA) set to expire at the end of 2025, it is an opportune moment to evaluate its impact. The TCJA lowered tax rates across all income levels, contrary to claims that it primarily benefited the wealthy. The majority of benefits accrued to middle-class families, who on average received a tax cut ranging from $1,500 to $3,000. Between 2017 and 2021, the bottom 50 percent of earners saw a reduction in average tax rates by 17.3 percent, while the top 5 percent saw a reduction of 1.7 percent. Some in the top 1 percent experienced an increase in taxes. Additionally, TCJA doubled both the standard deduction and child tax credit, provided relief to lower-income workers, and supported entrepreneurs and small businesses.

The immediate effects of pro-growth tax reform included taxpayers retaining more income and an economy that facilitated median household income reaching a record high of $68,703 in 2019—a nearly seven percent increase from the previous year. The labor market also improved significantly with wage growth averaging $1,400 annually compared to pre-TCJA trends. Unemployment dropped dramatically to 3.5 percent—the lowest in half a century.

Regarding corporate taxes, TCJA reduced rates from 35 percent to 21 percent for most corporations while broadening the tax base by modifying or eliminating various corporate tax provisions. Before TCJA, U.S. corporate taxes were among the highest globally; lowering them aligned U.S. rates with those of other developed nations and trading partners.

This competitive corporate rate incentivized domestic investment and reduced foreign acquisitions of American companies. Many U.S.-based businesses repatriated their headquarters from overseas due to favorable international tax provisions introduced by TCJA. Consequently, since its passage, no U.S. company has moved its headquarters abroad for tax purposes.

Research indicates that corporate tax increases are often passed onto workers, consumers, and retirees—primarily impacting households earning less than $400,000 annually according to nonpartisan Joint Committee on Taxation data. Conversely, under TCJA’s lower corporate rates within two years post-implementation, U.S companies added approximately 4.7 million jobs and real median household incomes grew by over $5,000.

Despite these outcomes under Republican leadership benefiting all Americans economically—including historically disadvantaged groups—Democrats have expressed intentions to let TCJA expire which could lead to significant tax hikes for nearly every American family.

Recent analyses show that about two-thirds of expiring individual tax cuts benefit those making less than $400K annually who could face a collective $2 trillion hike if these cuts lapse—with an average family of four making $75K potentially seeing at least a $1,500 increase alongside reductions in child credits amid current high inflation rates attributed partially to Democrat policies.

An honest assessment is essential as discussions around improving our current system unfold heading into 2025 without imposing undue burdens on hardworking families ensuring America remains attractive globally for business operations.

Senator Mike Crapo (R-ID) serves as ranking member on U.S Senate Finance Committee.

---