'Your Raise,' Courtesy of the Trump Tax Cut
Imagine getting a raise, and you didn’t even have to ask the boss for it. That’s what taxpayers nationwide can anticipate.
In fact, many are already seeing more money. Tax experts at The Heritage Foundation used IRS data to calculate the effects of last December’s Tax Cuts and Jobs Act (TCJA) and found that in 2018 taxpayers will save an average of $1,400. Married couples with two children will save more than twice that: $2,917.
And when I say “nationwide,” I mean it. A new report by Heritage’s Kevin Dayaratna, Parker Sheppard and Adam Michel shows that every U.S. congressional district will enjoy these tax benefits.
Some will see more than others, of course. According to the report:
“There is a significant range in the size of the average tax cut among all filers across the 435 congressional districts, ranging from an average of slightly above $395 (New York’s 15th district) to $3,332 (California’s 18th district). For families of four, the comparable range is from $625 (NY15) to $5,682 (CA18).”
But the main take-away is this: Not a single district will fail to see a tax benefit of some kind, thanks to the TCJA.
And the gains only grow over time: Over the next decade, thanks to a larger economy, the typical American could wind up with an added $26,000 more in take-home pay, or $44,697 for a family of four.
That’s because lower rates do more than simply reduce the amount Americans pay in taxes. They enable companies to do what they’ve already started doing: invest more, hire more, and pay their employees more.
Changes in take-home pay vary from slightly more than $14,000 for the state of Mississippi all the way up to just under $30,000 for Washington, D.C., for all tax filers.
Some critics have dismissed tax-cut gains as insignificant — House Minority Leader Nancy Pelosi called them “crumbs” — but that’s ridiculous. It really shows how out of touch they are. As the Heritage experts note, this additional income is enough to pay down a mortgage, cover daycare expenses, or increase college savings.
Only “limousine liberals” could look down their noses at this. And if you doubt it, ask any Americans who’ve seen their paychecks grow if they’d like to return their “crumbs.”
Ask those in Mrs. Pelosi’s district (CA-12), which gets the 12th largest 2018 average tax cut: $2,326. They’ll see average take-home pay increase by $40,982 over the next 10 years.
Sure, we’re not talking lottery-level winnings, but these amounts provide some honest-to-goodness relief for working Americans.
Unfortunately, there’s a caveat. The TCJA expires in 2025, so the Heritage experts had to roll this into their calculations. They also had to assume Washington will continue running large and unsustainable deficits.
Both of these factors constitute a large drag on an economy that is otherwise growing at an impressive clip. So why would Pelosi hint that she and other members of her party want to repeal the TCJA?
When Politico reporter Jake Sherman asked Mrs. Pelosi in May to respond to a Republican claim that she wants to “roll back the tax cuts they passed this year,” she labeled this “accurate.”
Who could possibly want to repeal a tax cut that’s helping so many Americans? Who could want to undo the economic gains we’re seeing now and will continue to see as long as the tax cut remains law?
Far from repealing it, we need to make it permanent. Doing so would improve any economic benefits even more dramatically. Imagine how well our economy would perform if the money currently being wasted in Washington was saved, spent and invested by the people who produce it.
Mrs. Pelosi wants to “revisit the tax legislation.” Agreed. Let’s drop the expiration date.
Republished from The Heritage Foundation.