While lowering tax rates is important, it must not be the sole measure taxpayers use for evaluating what tax reform means for them.
In the fall, I released a series of guest columns, available on my website at www.crapo.senate.gov/media/editorials, that included a discussion of the importance of considering the broad range of potential effects of tax reforms considered in Congress and having since become law.
We are already seeing the positive results of the recently-enacted Tax Cuts and Jobs Act, and the benefits go far beyond rate reductions. Companies based or operating in Idaho are announcing bonuses and wage increases. These benefits along with the long-term benefits of increased business investment, productivity and jobs are helping to move our economy in a better direction.
In addition to Idahoans in every income group receiving reductions in their tax burdens, with the largest percentage reductions benefiting those in lower and middle-income tax categories, we are hearing about wage boosts and bonuses. Melaleuca, based in Idaho Falls, announced it would give employees bonuses based on how many years they have worked with the company. Other companies that employ Idahoans, including Zions Bank, Wells Fargo, U.S. Bank, and AT&T, have also announced they would award bonuses to employees and raise wages. U.S. Bank, for example, announced it would raise its minimum wage for hourly employees to $15 per hour.
These, and numerous other announcements from coast to coast, are significant achievements made possible through the tax reform legislation passed by Congress. Those listed are a small sampling of the hundreds of decisions that have been made nationwide. Americans for Tax Reform (ATR) is maintaining a list, accessible at https://www.atr.org/list, of companies that are raising wages, paying bonuses, expanding operations and increasing 401(k) contributions due to the tax reform law. ATR reports that 3 million Americans (and counting) will receive bonuses thanks to tax reform.
But, just like tax rate reductions, bonuses--although a major boost--are not the sole measure of the success of tax reform. By doubling the standard deduction, many middle income families will see the benefit, starting this year, of no longer having to save all of their receipts and then produce them again at tax time next year. There are also long-term gains born by freeing up capital needed to expand American businesses and American jobs.
Additionally, during the Senate Finance Committee’s consideration of tax reform legislation in November, I had the opportunity to discuss how people are the direct beneficiaries of corporate tax reform with Thomas A. Barthold, Chief of Staff for the Joint Committee on Taxation. The discussion can be viewed here, https://www.youtube.com/watch?v=Iwxac5BzddM&feature=youtu.be As Mr. Barthold noted, “Fundamentally, business entities don’t pay taxes. People do.” An increasing portion of corporate ownership is being held by pensions and defined contribution retirement plans.
Therefore, even before the benefits of tax rate decreases for individuals kick in, and beyond the wage and bonus increases American workers are receiving, Americans are gaining an increase in their retirement assets and other investments, as the stock markets continue to soar to record highs and economists continue to project higher growth in our economy as a result of tax reform.
This tax reform law is proving that tired, reflexive criticisms about it being a “tax cut for the rich” and “harming the middle class” we have heard in tax debates for the past 30 years do not hold water. Reality is showing the American people that those inaccurate talking points don’t apply here. This is just the beginning of a long effort to boost the economic standing of American families and our entire nation.