Republicans say evidence is mounting that tax cuts passed in December are already benefiting the economy and proving their Democratic critics wrong about the legislation’s impact.
The Tax Cuts and Jobs Act slashed corporate taxes from 35 to 20 percent and doubled the standard deduction for individuals and couples while eliminating most other deductions. Democrats say the wealthy and big businesses will see the vast majority of the savings, but Republicans predict it will boost the economy overall.
“The tax reform is helping jobs, its helping increase wages, it’s going to help with benefits, and its going to make our state and country more competitive,” said Rep. John Moolenaar, R-Mich.
On Wednesday, Apple announced it plans to invest $350 billion in the U.S. economy over the next five years, create 20,000 new jobs, and pay $38 billion in taxes to repatriate overseas funds, in part because of the tax cuts.
The Apple news followed dozens of other companies saying they will pay bonuses or raise wages due to the changes in the tax code. Skeptics have questioned how much those decisions really were driven by the tax cuts, but it is undoubtedly money the workers did not have before the bill passed.
“I think the biggest challenge is trying to overcome so much of the fiction that you’re hearing about it in the news,” said Rep. Claudia Tenney, R-N.Y.
New tax withholding tables are expected to take effect in February, and Republicans hope that will make the case for the bill for them.
“The explanation’s going to come in your paycheck,” she said. “Ninety-five percent in the district will get a tax cut.”
There are fresh signs the public is starting to see things Republicans’ way.
A New York Times/SurveyMonkey poll found that support for the tax law has jumped from 37 percent to 46 percent since it was passed, and disapproval has slipped from 58 percent to 49 percent.
The poll also showed a significant increase in the percentage of Americans who believe they will receive a tax cut, from 33 percent to 41 percent. Experts say most taxpayers will see at least a temporary cut, but many of the bill’s provisions that affect individual taxes are currently set to expire in eight years.
Other recent polls have indicated rising confidence in the strength of the economy, but opinions are mixed on how much credit the current president deserves for that.
Trump’s own approval rating has crept upward since the beginning of the year, as well. According to FiveThirtyEight, his average rating is above 40 percent for the first time since May.
According to Tenney, constituents have been calling her office upon learning they will see bigger paychecks this year.
“This year is going to tell a different story than we’ve seen in the past,” she said.
Those who will face tax increases, she said, are wealthy landowners who are now only allowed to deduct $10,000 of their state and local taxes.
“Just the opposite of what Sen. Schumer and my opponent are saying,” Tenney added.
However, Rep. Paul Tonko, D-N.Y., said making New Yorkers and others in high-tax states pay federal taxes on the money they pay to state and local governments amounts to double taxation.
“That is grossly unfair to the people of states like New York and California and Illinois, Connecticut, New Jersey, Massachusetts and the list goes on,” he said.
Tonko also faulted Republicans for piling on additional federal debt to pay for the cuts. Non-partisan estimates put the total cost of the package after accounting for reasonable economic growth around $1 trillion over ten years.
Rep. Bruce Westerman, R-Ark., disputed those figures, arguing the strong economic growth seen in the last three quarters of 2017 is now likely to continue, creating more tax revenue than those analysts calculated.
“If we can see the growth that the bean-counters here in DC don’t account for, we’re going to see more revenue coming into the government that will by far exceed any kind of tax break we’re going to the American people,” he said.