OpinionTrending Commentary

Here’s Why It’s So Important For Congress To Pass The Bipartisan Tax Deal

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Working families and job creators thrive when America’s tax code works for them, not the other way around. That’s the lesson learned from the successful 2017 Republican tax reform.

Due to congressional procedure hurdles, some of the landmark legislation’s key provisions are expiring, which increases the tax burden on Main Street employers and reduces prosperity for American workers, who are already getting squeezed by high prices and interest rates. Congress must act to realign our economy on a path to growth and provide relief to millions of hardworking Americans.

The Tax Relief for American Families and Workers Act, which was approved by all Republicans and most Democrats on the Ways and Means Committee, is a focused package of tax policies to meet this moment head-on.

On the pro-growth, pro-Main Street side of the ledger, this legislation builds on the 2017 GOP tax reform’s successful blueprint that strengthened the economy, created more jobs and produced higher wages. Following its passage, economic growth was a full percentage point higher than the previous decade’s average, far outpacing economists’ projections.

The nation’s unemployment and poverty rate both fell to 50-year lows, and wages grew nearly five percent — putting more money into the pockets of working families.

The Tax Relief for American Families and Workers Act moves the ball forward by reinstating and improving existing tax policies to support American workers and job creators while encouraging American innovation to help U.S. companies compete against China. For example, by restoring the immediate expensing of research and development (R&D) investments made in the United States, the bill will generate over $70 billion in new R&D and help support over 21 million American jobs — particularly in U.S. manufacturing.

To help small- and medium-sized businesses hit by decades-high interest rates, the Tax Relief for American Families and Workers Act boosts interest expense deductions, giving job creators the tools to help meet payroll and expand their operations. This piece of the pie alone is estimated to create 867,000 new jobs and $58 billion in additional take-home pay for American workers.

Under the 2017 GOP tax reform, American companies saw their debt levels drop by 35% — lowering the cost of doing business, raising wages and generating more financial security.

The bill also allows for the 100% immediate expensing of investments in facilities, equipment and machinery. A separate provision gives special consideration to small businesses, with a permanent increase in the amount of business investment that farmers and other family-owned companies can deduct against their taxes.

After the enactment of 100% expensing in 2017, U.S. investment grew by over 20% while inflation remained at decades-low levels.

To address a concern raised by a small business owner in a Ways and Means Committee hearing last year in Peachtree City, Georgia, the bill cuts red tape for small businesses. By increasing the threshold for small business reporting of the subcontract labor they receive from $600 to $1,000, the bill updates a rule not changed since 1954 and reduces the burden on Main Street.

Working families are the ultimate beneficiaries of these reforms, as they have a proven track record of unleashing greater opportunities, more jobs and higher wages. But the Tax Relief for American Families and Workers Act also provides targeted relief with an updated child tax credit (CTC) that contains four key improvements to make the credit more flexible and beneficial to working families.

The legislation eliminates a penalty on families with more than one child, ensuring that the program’s existing work incentives apply fairly regardless of family size. It expands the credit’s refundability, benefiting the lowest income taxpayers, phasing it in over the next three years.

Additionally, the current $2,000 topline child tax credit set by Republicans in 2017, would now be adjusted for inflation. Lastly, taxpayers looking to avail themselves of the CTC in 2024 and 2025 would have flexibility in deciding which year’s earnings are used towards taking the credit.

Independent analysis has concluded that the reforms in the Tax Relief for American Families and Workers Act will have little to no impact on participation in the labor force and in some ways strengthen the work incentives in the program.

Other provisions in the bill offer tax relief to victims of recent hurricanes, wildfires, and other disasters; extension of bipartisan low-income housing provisions; and elimination of the double taxation penalty on businesses and workers operating in both the U.S and Taiwan to further counter China.

At the end of the day, we strive to both create good tax policy and eliminate bad tax policy — in this case, we address rampant fraud and cost overruns that have come to define the COVID-era employee retention tax credit program. Ending this program is long-overdue and doing so will save over $75 billion in taxpayer dollars.

Last year, the Ways and Means Committee went out into communities across the country and heard directly from Americans about the challenges of inflation and shortages, as well as the need to expand growth and opportunity. The pro-growth, pro-worker provisions in the bill represent $600 billion in tax incentives that encourage Made-in-America investments, better jobs and higher wages.

This bill expands on the success of GOP tax policies and reflects bipartisan priorities to meet the urgency of the moment by giving immediate tax relief for workers, families, farmers and small businesses and erecting pro-growth policies that will carry our economy forward.

Jason Smith is the representative for Missouri’s 8th Congressional District. He also is the Republican leader of the Budget Committee and the Ways and Means Committee.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

 

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