Tax cut re­peal a bad deal for the mid­dle class

Lodi News-Sentinel - - OPINION - ADAM N. MICHEL AND TRAVIS NIX Adam N. Michel is a se­nior pol­icy an­a­lyst in The Her­itage Foun­da­tion's Her­mann Cen­ter for the Fed­eral Bud­get. Travis Nix is a mem­ber of the think tank's Young Lead­ers Pro­gram.

Re­peal­ing the 2017 tax cuts would not just hurt the wealthy and cor­po­ra­tions. It would also leave mid­dle-class Amer­i­cans tens of thou­sands of dol­lars poorer.

Re­vers­ing the tax cuts would cost the typ­i­cal Amer­i­can worker $26,900 over the fol­low­ing 10 years. And fam­i­lies would be hit even harder: A fam­ily of four would lose, on av­er­age, $45,700 in take-home pay over the same pe­riod.

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. Oth­ers want to over­turn the tax cuts to serve their pet causes. For ex­am­ple, Rep. Rosa DeLauro, D-Conn., pro­poses to undo the tax cut to help pay for an as­tro­nom­i­cally ex­pen­sive Medi­care for all pro­posal.

These pro­pos­als would hike taxes on mid­dle-class Amer­i­cans as well as busi­nesses. Not only would most tax­pay­ing fam­i­lies see more of their pay­check go­ing to Wash­ing­ton, but most busi­nesses would need to dial back plans to raise wages and add jobs — and many would have to cut back in both ar­eas.

Right now, Amer­i­cans are us­ing their higher take­home pay 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 their money away and limit their fu­ture eco­nomic op­por­tu­nity.

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 up­wards of 20% in­come tax cuts.

Re­peal­ing the tax cuts wouldn't just mean send­ing more of your earn­ings to the IRS. It would also slow the econ­omy, which would mean 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 is not a give­away to in­vestors. Sure, they ben­e­fit, but so does every sin­gle worker who is now able to find a job and pull a higher wage.

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 firms over those in the U.S. The newly low­ered cor­po­rate tax rate, and new rules for im­me­di­ate ex­pens­ing (which en­cour­age greater in­vest­ment), have re­versed that trend.

Un­em­ploy­ment is at his­toric lows, there are more job open­ings than peo­ple look­ing for work, and wages have grown above 3% for 10 straight months.

Even if re­peal ef­forts fail, the 2017 tax cuts are not safe in­def­i­nitely. The most progrowth pro­vi­sions be­gin to ex­pire in three short years. Law­mak­ers should be work­ing to con­trol the growth rate of spend­ing so that the tax cuts can be made per­ma­nent in a fis­cally re­spon­si­ble way.

Full re­peal of the tax cuts would lead to fewer jobs, lower wages, and less op­por­tu­nity for Amer­i­cans who need it most.

Pro-growth poli­cies have helped bol­ster the good eco­nomic times, it is imperative to build on the suc­cesses of the 2017 tax cuts so that taxes stay low on all Amer­i­cans and their em­ploy­ers.

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