Many Democrats would like to repeal the 2017 tax cuts. But how would that affect ordinary Americans?
If the tax cuts were reversed, the typical American could be $26,900 poorer over the following 10 years. And families would be hit even harder: A family of four could face an average loss of $45,700 in their take-home pay.
Those leading the charge against the tax cuts would have you believe it will only affect the rich. But repealing the tax cuts would hit the heart of middle America.
Former Vice President Joe Biden has now called for a repeal of the 2017 Tax Cuts and Jobs Act six times. His latest proposal is to use the higher taxes to pay for his climate change plan, which in key ways resembles the Green New Deal.
Higher taxes wouldn’t just mean Americans sending more of their paycheck to Washington. High taxes on business could lead to lower wages and limit job openings.
This is money that Americans have earned. Right now, they’re using it for things like college tuition, a down payment on a house, or to cover the costs of starting a family. Repealing the tax cuts would take this money away.
It would also hurt citizens in both of Biden’s backyards: his birth state of Pennsylvania and his home state of Delaware. Based on IRS data, The Heritage Foundation estimates that the average Pennsylvania and Delaware resident would lose nearly $20,000 if Biden has his way.
In fact, the data show that Americans in every congressional district would be worse off.
It is shameful that a simple soundbite—“Trump’s tax cut for the rich”—has eclipsed the truth. The tax cuts are benefiting Americans at every income level. Even some of the poorest congressional districts have received upward of 20% income tax cuts.
Repealing the tax cuts wouldn’t just hurt people’s take-home pay. It would also slow the economy, which would mean further lost wage growth in the coming years.
New investment is the lifeblood of a growing economy. When businesses invest, they also add jobs, increase productivity, and bring new products to market.
An important part of tax reform was to lower the corporate income tax rate to 21%. This benefits not only investors, but all the workers who are able to find jobs and be more productive. Most of the business tax cut will ultimately be passed on to workers in the form of higher wages.
Before tax reform, the U.S. had the highest corporate tax rate in the world. Because of that, businesses chose to invest in foreign workers and foreign business over those in the U.S. The newly lowered corporate tax rate, and new rules for corporate expensing (which allow for greater investment), have reversed that trend.
Unemployment is at a 50-year low, there are more job openings than people looking for work, and wages have grown above 3% for nine straight months.
A full repeal of the tax cuts would lead to fewer jobs, lower wages, and less opportunity for Americans who need it most.
Even if repeal efforts fail, the 2017 tax cuts are not safe indefinitely. They need to be extended or made permanent.
Doing so is not out of reach. The Heritage Foundation’s 2020 congressional budget proposal, “Blueprint for Balance,” responsibly corrects the course of federal spending, extending the tax cuts and eliminating the deficit by 2029.
The evidence is clear that all Americans are benefiting from the tax cuts. Making the critical provisions of the 2017 tax bill permanent is the best way to solidify our current economic growth and all the economic benefits that are still to come.