Benefits of Tax Cut Becoming More Clear to Americans
2018 is off to a roaring start. Unemployment is down, good jobs are being created every day, and the economy is humming. And thanks to the landmark tax cut passed in December by Congress, things are only going to get better from here.
That’s especially true in our state. It’s why Vice President Mike Pence closed out America’s blockbuster January by making a personal visit to West Virginia.
“In just the past month, businesses large and small have already committed to invest an extra $425 billion into American enterprises to expand, innovate, to create jobs, to raise wages for their workers,” he told his audience in White Sulfur Springs. “And before this year is out, we believe the typical American worker will see their take-home pay rise by as much as $4,000 a year. That’s real results for the American people.”
West Virginia is a perfect example of why. Just about all of our businesses are small ones. And together, they employ just over half of our private sector workforce. When our small firms do well, we all do — particularly on Main Streets across the state.
Everyone likes a tax cut, and for many Americans, the one that’s coming this year is going to be a game changer. But small businesses play a unique — and uniquely powerful — role in our shared prosperity. And under the new code, small firms are now rewarded, not penalized, for expanding operations and growing the economic pie.
That’s because there’s now a 20 percent deduction in the tax code instead of the eye-popping rates that topped out at 40 percent of revenues, no matter how many people a small firm employed. After state and local taxes, owners could wind up with only half their annual income to allocate toward paying their own bills or investing in business improvements.
Now, small firms can do what most said last year they were ready to do: reinvest increased revenue savings in more and higher-paying jobs, new equipment, and new facilities.
With the tax cut kicking in, small businesses are primed to take growth to the next level. In December alone, they added about 95,000 jobs. Not only is small business confidence off the charts, but there’s now no big institution in American life that earns more confidence in polls than small business.
And the polls keep on coming. Before the tax code passed, most respondents looked ahead to 2018 with optimism, anticipating a lighter tax bill or an economic stimulus. Now, just since December –and despite plenty of partisan politicking — support for the new code has increased by almost 20 points. Regardless of party, majorities feel good about the economy, with approval ratings the highest since 2001.
Today, the share of Americans who mistakenly believe the tax cuts won’t reach them is sinking almost as fast. As payroll withholdings decreased last month, the truth is plain to see. At this rate the tax cuts’ continued benefits will see huge majorities singing its praises.
The numbers tell an even bigger story, too. Strangely, many in Washington thought it was a political risk to pass landmark tax relief benefiting the overburdened job creators we need to lock in growth and boost our prosperity. For everyday Americans, by contrast, the real risk was in not passing that once-in-a-generation overhaul.
They knew through experience what good economists have learned through study: When it comes to growing the economy on a solid footing, tax cuts just work. Right now, 75 percent of economists agree significant expansion is on the way this year. Studies show the vast majority of Americans will realize tax savings before the year is out.
That’s good news for small businesses –and states — like mine. But it’s really great news for all Americans. The new tax code is delivering its big benefits at a time when many communities across the country need them most. Buckle up — 2018 is just getting started.
Bill Maloney is the CEO of Drill Leader, LLC. He was the Republican candidate for governor of West Virginia in an October 2011 special election and also in 2012. He is involved with several West Virginia-based think tanks including The Center for a Brighter Future (www.cfabf.org) and The Cardinal Institute (www.cardinalinstitute.com).