U.S. Rep. Jason Smith (R-MO) said a new study from the Council of Economic Advisers said extending President Donald Trump’s 2017 tax cuts would boost the American economy for working families and small business owners.
Smith, chair of the House Ways and Means Committee, urged Congress to make the tax cuts permanent.
“Extending Trump’s tax cuts means a stronger economy, saved jobs, and higher wages according to this latest economic study,” Smith said. “We will save over 6 million full-time jobs and raise take-home pay for working families by up to $5,000. Congress has an opportunity to lock in the most pro-worker, pro-growth tax policy in a generation that will keep businesses hiring and help rural Americans thrive. We cannot afford to wait until the last minute. Americans need certainty today that their tax rates won’t go up next year.”
The CEA report found that extending the tax cuts would boost the level of short-run real gross domestic product by 3.3. to 3.8 percent and boost long-run real GDP by 2.6 to 3.2 percent. Additionally, the report found that making the tax cuts permanent would raise annual wages by $2,100 to $3,300 per worker and increase real annual take-home pay for a median-income household with two children by between $4,000 and $5,000. The tax cuts would also “facilitate $100 billion of investment in distressed communities” in Opportunity Zones.
According to the study, while many of Trump’s Tax Cuts and Jobs Acts reforms were made permanent, many others are scheduled to expire at the end of 2025. When they do, the CEA said, individual marginal tax rates will increase, the standard deduction will fall by nearly half, the child tax credit will be cut in half, small businesses will lose a 20 percent pass-through deduction and businesses will have to deduct investment slowly over time rather than immediately.
Restoring and expanding the tax cuts would create 1 million new jobs, create $150 billion in economic growth and create $284 billion in new economic growth for American manufacturers. If the cuts are allowed to expire, the study said 6 million jobs will be lost, the average taxpayer would see a 22 percent tax hike and 91 percent of all taxpayers would see their tax deduction cut in half.