Tax Cuts & Jobs Act Will Create Jobs
There are a number of significant problems with the GOP’s Tax Cuts and Jobs Act. For example, it doesn’t do nearly enough to reduce the Code’s complexity—which ultimately costs America over $400 billion annually. Likewise, it will probably add to the national debt, which is one of America’s biggest economic problems right now, and will be into the future.
But there’s also two significant silver linings. First, the bill will remove loopholes that allow illegal aliens to collect some $23 billion in tax credits annually. Second, the bill will likely stimulate economic growth and create jobs.
Regarding economic growth, the Tax Foundation, a nonpartisan public interest group, estimates that the Republican plan will create up to 1 million new jobs and increase GDP by 3.9 percent “over the long term.” They also estimate that the average after-tax income for a middle-income family will grow by $2,598 over the next 10 years as a direct result of the legislation. This is good news, and it is consonant with other research.
For example, a recent study from the Council of Economic Advisers found that reducing the corporate tax rate from 35 to 20 percent will increase America’s GDP by 3 to 5 percent over the coming decade. Likewise, Congress estimates that the Act will give an ordinary middle class family of four (earning $59,000 annually) a tax break of $1,182 per year (not including the projected economic growth), as reported by the Washington Free Beacon. Of course, these aren’t massive numbers given the time horizon, but it’s better than nothing (which is what we usually get).
As far as job creation goes, a new survey conducted by Yahoo Finance, finds that a (slim) majority of US businesses think the tax plan will be good for job growth:
Yahoo Finance surveyed more than 1,200 business owners November 20–22 and found that many plan to use the savings from tax cuts to spend more and hire more workers. Fifty percent of respondents told us tax cuts would make it more likely that their firms would hire new workers, and 51% said they’d be more likely to increase investment in the United States. Fifty-two percent expected worker pay to rise if their taxes go down, with 11% expecting pay raises of 10% or more. Full survey results are at the end of this story.
Business owners also felt optimistic about their employees’ futures. Fifty-three percent said tax cuts would make their employees better off in 5 years, and just 40% said the tax cuts would not make employees better off. Some 16% weren’t sure.
Of course, the results of this survey are certainly not determinative, but there’s no doubt that many business leaders are enthusiastic about America’s prospects for economic growth.
Recall how numerous CEOs and business leaders have expressed their intention to invest in America over the course of the year, including Mario Longhi, CEO of US Steel. Hopefully the tax bill will feed into the optimism that we’ve seen thus far.