During the development of the Tax Cuts and Jobs Act (TCJA) of 2017, Republicans were keenly focused on how any changes would affect the overall tax burden on any one group. The result was pro-growth reform of our business and international tax code, largely paid for by broadening the tax base and other revenue increases, all wrapped around a broad-based tax cut in which low- and middle-income Idahoans and Americans received the greatest percentage reductions.
The vast majority of the Republican tax cuts went to small businesses and individuals. The TCJA reduced rates across income brackets; doubled the child tax credit; increased the standard deduction; created the 20 percent small business deduction; and expanded the estate tax exemption, among other things. These reforms led to significant wage growth, especially for low-wage earners; historically low unemployment; and a booming economy for all Americans.
The $3.5 trillion reckless tax-and-spend spree under consideration by Democrats takes a different approach. Instead of broadening the base and reducing rates, Democrats have compiled exhaustive tax increase menus, guided not by the policy they want to accomplish, but primarily by the revenue they want to raise. President Biden has repeatedly pledged, “If you make under $400,000 a year, I’ll never raise your taxes one cent.” Yet Democrat proposals seek to tax everyone. In fact, a large portion of tax relief—if the state and local tax (SALT) cap is repealed—will go to the wealthiest one percent. Should these policies be implemented, multiple studies show large percentages of taxpayers earning less than $400,000 per year will see tax increases, breaking Biden’s promise.
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Further, Democrats want to make our corporate tax rate one of the highest rates—if not the highest—in the developed world. Raising the corporate tax rate to 25 percent would be a gift to China and other foreign competitors, putting the United States back at a significant competitive disadvantage, sending jobs and investment overseas.
A corporate tax hike would also increase taxes on Americans of all incomes and savings levels through reduced wages and lower retirement account values. The nonpartisan Joint Committee on Taxation (JCT) estimates 25 percent of the corporate income tax is borne by workers, but more recent estimates have put that number as high as 70 percent.
Another JCT analysis shows that in 2022, more than 104 million U.S. taxpayers earning less than $400,000 per year would bear the burden of an increase in the corporate tax rate to 25 percent. By 2031, nearly 168 million American taxpayers earning less than $400,000 per year—nearly one in two Americans—would shoulder the burden of that increase.
JCT also analyzed the House-reported Democratic tax bill, finding more than two-thirds of Americans would pay the same or more in taxes under the bill. JCT estimates that in 2023, taxpayers of every income level will see tax increases: nearly five percent of taxpayers earning between $40,000 and $50,000; nine percent of those earning between $50,000 and $75,000; 18 percent of those earning between $75,000 and $100,000; 35 percent of those earning between $100,000 and $200,000; and 59 percent of those earning between $200,000 and $500,000.
Idahoans know a $3.5 trillion expansion of social welfare programs will not magically pay for itself. What these analyses show, unfortunately, is that Democrats are willing to violate President Biden’s pledge against tax hikes for tens of millions of hard-working Americans in order to change the social fabric of our country. I will continue to fight against these reckless proposals, and promote policies that encourage less regulation, less government intervention, and the pro-growth spirit that is America.