My column for the Washington County Daily News is online. Here you go:
Even the most optimistic of supporters of the “Tax Cuts and Jobs Act” President Trump signed into law just before Christmas did not anticipate the immediate and substantial impact it would have in the lives of so many low income and middle class Americans. American businesses are racing to announce their plans for their tax savings and over two million Americans are already going to receive a substantial bonus thanks to tax reform.
There were two major thrusts of the Republican tax reform plan, but they rested on the same principle. That principle is that the quickest path to economic growth and prosperity for individual Americans is to allow them to keep more of their own money and spend it where they choose. This principle runs contrary to the totalitarian notion that has been popular in the past several years that a group of central planners should collect Americans’ wealth through forced taxation and redistribute it back into the economy as they see fit.
The first thrust of the tax reform plan was a reform of individual taxes to allow Americans to send less money to Washington. Individual tax rates were lowered, the standard deduction was raised, the Obamacare individual mandate was repealed, the child tax credit was increased and other changes were made to the tax laws with the goal of lowering the overall tax burden for most taxpayers.
The effect of these changes has yet to be seen. Americans are likely to see more take home pay beginning in February as the IRS adjusts withholding schedules to take less money out for the federal government. Some of the benefits of this part of the tax reform law will not be seen until 2019 when Americans file their federal taxes. As 2018 progresses, millions and millions of Americans will have a little more money in their pockets to spend on their priorities — not the priorities of politicians in Washington.
The second major thrust of the Republican tax reform plan was to lower taxes on American businesses. Corporate taxes have been lowered from the confiscatory maximum of 35 percent to a more average 21 percent. The new law also lowered taxes for other business entities like sole proprietorships and partnerships. The new law made modifications to how businesses depreciate capital investments and changed the United States to a territorial tax system to make it easier for businesses to move their foreign earnings back to our shores.
While many of the tax savings for businesses will also not be realized for a while, businesses are already announcing their plans to invest the savings in their employees, infrastructure and elsewhere. Americans for Tax Reform has been keeping a tally of the announcements. Here are a few examples:
■ Aflac is increasing its 401(k) match from 50 percent to 100 percent and kicking $500 into every employee’s 401(k);
■ U.S. Bancorp is giving a $1,000 bonus to 60,000 employees, raising their base wage to $15 an hour and is giving $150 million to charities;
■ Southwest Airlines is giving a $1,000 bonus to all of its 55,000 employees and $5 million additional charitable donations;
■ PNC is giving $1,000 bonuses to 47,500 employees, kicking in $1,500 to each employee’s pension accounts, raising their base wage to $15 an hour and giving $200 million to charities
■ Nationwide Insurance is giving a $1,000 bonus to 29,000 employees and increasing 401(k) matching contributions for 33,000 employees;
■ Fiat Chrysler is giving a $2,000 bonus to 60,000 employees and investing $1 billion in a factory in Michigan — creating 2,500 new jobs;
■ Waste Management Inc. is giving $2,000 bonuses to 34,000 employees The list goes on and on. The reasons are quite simple. Businesses operate in a competitive environment and need to invest their profits into their employees and infrastructure in order to remain competitive. And contrary to the demonizing rhetoric of Democrats, most businesses are run by decent people who do want to improve the world around them.
As tens of millions of Americans see their wages increase, receive bonuses, and spend less on taxes thanks to the Republican’s tax reform law, they will invest that money into their own lives in a billion different ways. Some will spend a little more on their kids. Some will think about starting a business. Some will give a bit more to charity. Some will buy ammo. Some will blow it on lottery tickets and booze. The point is, however, that individual Americans will be making their own choices to benefit their own lives.
And come November, I suspect that many Americans will remember that not a single Democrat voted to allow Americans to keep more of their own money.
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