OP-ED: My View: Tax cuts needed to help middle class, small business owners
Since 2014, more than 25 state legislatures have passed tax cuts to give their hardworking constituents a break, grow their states’ economies, create jobs, and raise wages.
In Arizona, Gov. Doug Ducey has repeatedly cut taxes and passed pro-growth policies. As a result, state economic growth has led the region, and more people and businesses are rapidly moving to Arizona to take advantage. In fact, Arizona’s population was the seventh-fastest growing in the nation between 2010 and 2016.
But there is only so much that can be done at the state level. My colleagues and I must now ease the far bigger federal tax burden along the lines of our recently released tax reform framework. This document proposes across-the-board rate cuts for the middle-class and small businesses, the backbone of the American economy.
Although workers have seen small wage increases in recent years, this uptick has not kept pace with inflation. According to a recent Federal Reserve survey, two-thirds of Americans earning $40,000 a year or less would not be able to cover an unexpected $400 dollar expense, like a car or home repair. According to a recent CareerBuilder survey, four in five American workers live paycheck-to-paycheck.
The immediate raise in take-home pay provided by Republicans’ tax cut framework, which among other reforms doubles the standard deduction, would help these hardworking Americans breathe a little easier.
The economic boost provided by the proposed small business tax cut could do even more good. Small businesses, which are crucial to the American economy and account for half of all jobs and two-thirds of new jobs, would see their top tax rates fall from 40 percent to 25 percent under the proposed plan.
This tax cut would help reinvigorate small businesses and the communities where they are located, which is important because such businesses have not felt the full effects of the economic recovery. Nationwide, small business creation and employment continue their downward trend. A recent JPMorgan Chase Institute survey finds the median small business has average daily cash outflows of $374 and average daily cash inflows of just $381.
A tax cut would allow businesses to keep more of their earnings in their communities, helping both to thrive. According to a poll conducted by the Job Creators Network, most small business owners would use their tax cut savings to raise wages, create new jobs, or expand. Evidence also suggests tax cuts generate worker raises.
While critics of tax cuts point to the potential effect on the federal deficit, experience shows that the fiscal cost of tax cuts are offset by increased revenue. Ronald Reagan cut taxes across the board in the 1980s, and the economy enjoyed several years of significant growth.
Pro-business state legislators have passed the tax cut baton to their federal counterparts. Now Congress must run with it.