Kellogg column: New tax reforms brighten the new year for America
Last month, the Republican-controlled Congress passed the most significant overhaul of U.S. tax code in 30 years. President Trump signed the Tax Cuts and Jobs Act into law on Dec. 22. That means government will be taking less of our money, which enables economic freedom of choice. Even better, American businesses will be more competitive in global markets, which fuels economic growth and job creation. The new tax reforms have primed the United States for a bright and prosperous new year.
Democrats aren’t celebrating because they want government in control of economics instead of individuals and businesses. The Congressional Budget Office, the government’s in-house advocate for high taxes, asserts the bill will add $1 trillion to the federal deficit over 10 years. That’s because the U.S. government already spends close to twice as much as it confiscates in taxes. Washington, D.C., is addicted to spending our money, and big-government progressives have no desire for rehabilitation.
Despite Democrat opposition, the Tax Cuts and Jobs Act lowers taxes for Americans of all income levels. The bill also doubles the “standard deduction” and the “child tax credit.” Unfortunately, opponents of tax reform used Senate budget rules to force the tax rates cuts for individuals to expire in 2025. But the pending expirations will pressure Congress to avoid the very public decision to allow taxes to rise on ordinary Americans.
Tax treatment of American businesses is modernized by the Tax Cuts and Jobs Act with a permanent reduction in the federal corporate tax rate from 35 to 21 percent. The new rate is still higher than many of our largest global trading partners. When average state taxes are added, the U.S. will have a cumulative rate about 26 percent, compared to the worldwide average of 23 percent. Regardless, the reforms will enable corporate investment within our borders. That means more jobs with higher pay.
The new legislation also eliminates the unconstitutional Obamacare mandate that stipulated tax penalties for citizens who choose to forego health insurance. It’s a tax cut to be sure. More important, American citizens will no longer be forced to buy something they don’t want. That’s good for individual liberty. By deeming health care a right, Obamacare usurps the liberty of Americans to make free choices about their health care. Universal health care depends on forcing people to pay and participate.
Taken together, the reforms will boost the U.S. economy by enabling business and personal investment in America. Tax experts at the Heritage Foundation estimate the bill will increase the gross domestic product (GDP) by at least 2.2 percent. The increase in GDP translates into an additional $3,000 to $4,000 per household. People will be trading their skills and services for a bigger payday. Entrepreneurs will soon be harnessing a renewed spirit of ambition and optimism.
As soon as the Tax Cuts and Jobs Act was signed into law, AT&T said it will give a $1,000 bonus to more than 200,000 employees, and invest $1 billion in the economy. Comcast reacted to the tax bill by saying that 100,000 of its employees will get a $1,000 bonus. Boeing announced a commitment to invest $300 million into the economy. FedEx and CVS both said they will hire hundreds of additional workers. The actions of these companies show that tax relief will help all Americans, directly and indirectly.
Unhappy Democrats can only complain that high income-earners will see the largest “dollar value” benefit from the tax overhaul. Of course they do; “the rich” shoulder the majority of the total federal tax burden. But the highest percentage of tax reduction goes to the middle class; up to 56 percent for some people. Under this legislation, the wealthiest people in America will still pay the lion’s share of total taxes. That’s not ideal for job creation, but it’s still a net positive across the income spectrum.
Only a robust, confident, and unencumbered private sector can create jobs in the pursuit of economic opportunity. Lower tax rates and genuine government spending cuts are incentives for investment, innovation and entrepreneurship that will stimulate real job creation and a brighter future for America. Free enterprise leads to cooperative trade that creates prosperity and benefits our entire society. As the saying goes, a rising tide lifts all boats.
The Tax Cuts and Jobs Act gives more power to the people and the producers. Liberal politicians and bureaucrats don’t like giving up their control or our hard-earned money. Lower taxes give us more freedom to make choices for our economic betterment, which enhances opportunity for all. And removing excessive tax burdens from job creators leads to true economic growth and prosperity. New opportunity is in store for America in 2018 and beyond. Happy New Year.
James D. Kellogg is an engineering consultant, author, and business system advocate. He is the founder of RadicalActionForLife.com and the author of “Radical Action: A Colt Kelley Thriller”. Look for the novel on amazon.com and visit JamesDKellogg.com or email email@example.com.