The men and women of Trump’s America, on the other hand, believe that they should decide how to spend their own money, and the idea of a tax cut appeals to them. They’re not ideologically anti-government, but they do believe that government is full of waste and should be forced to run on a budget the same way families have to live within a budget. Furthermore, many of the “forgotten men and women” of Trump’s America who have been left behind by the globalist economic vision of the orderly institutionalist wing of the anti-Trump coalition have gone years without real pay raises, if they were lucky enough to keep their jobs at all. Despite months of concerted effort by the Democrats and other left-wing members of the anti-Trump coalition to stop the tax cuts, Republicans were able to deliver this monumental achievement by Christmas 2017—a tight, meaningful deadline brilliantly imposed by President Trump. Meeting the end-of-year goal was important politically, and the Left knew it.
The Tax Cuts and Jobs Act was the largest reform to the nation’s tax code in 31 years. The last time Congress and a president were able to give the American people tax relief of this magnitude was passage of the 1986 tax cuts under President Ronald Reagan. The left-wing members of the anti-Trump coalition feared that Americans would be pleased with Republicans due to the results of the tax cuts, and even some of the institutionalists who oppose him just wanted to keep Trump from any sort of victory in his first year. Instead, the anti-Trump coalition wanted to keep the focus on the first half of 2017, when Republicans were completely consumed in the endless Obamacare repeal and replace effort.
Wisely, Speaker Paul Ryan decided in July to move to tax cuts. This was critical because Ryan recognized that the health care problem was too big and would take too long to solve in 2017. He also saw that, for six months, the media and the Left were happily watching Republicans fight one another over the best ways to replace the Democrats’ deeply flawed health care law without producing an enormous disruption to the insurance markets that would ultimately inflict pain on Americans.
Ryan needed to unify the party, and he did. Working with President Trump and Senate Majority Leader Mitch McConnell, Ryan and House Republicans were able to immediately change the narrative by banding together to announce the new Republican tax reform framework.1 This served as the foundation of common principles which ultimately guided the Tax Cuts and Jobs Act.
Some in the party—and especially those in the media—wanted to keep hashing out the Obamacare fight, but Republican leadership stood strong and insisted on moving forward to a new focus. This proved vital to the GOP’s success. The newly minted GOP unity drove the Democrats and the elite media nuts. They desperately wanted to keep Republicans divided because they knew it helped the Left’s chances to make gains in the House and Senate in the 2018 elections.
But the elites were out of luck. Republicans across Congress quickly realized that working together earned them much more praise from the people they serve at home. This goodwill empowered them to ignore media and political attacks in Washington and keep grinding forward toward their goal.
Only five months after President Trump, Speaker Ryan, and Leader McConnell unveiled the tax framework, the House of Representatives and the Senate passed the bill, and the president signed it into law. This pace was incredible for writing, negotiating, and passing legislation of this complexity. Similarly, it took President Reagan and Republicans six months to propose, write, and pass tax cuts in 1981.
So, the short takeaway is: After the tumultuous 2016 elections, it took Republicans a little time to come together, but they did. The Tax Cuts and Jobs Act was the result of this effort. Going forward, Republicans must keep this successful, unified model in mind and apply it to everything they do.
HISTORIC TAX RELIEF
As mentioned, the Tax Cuts and Jobs Act of 2017 was the most thorough overhaul of the tax code in three decades. This was not a collection of small tweaks. The tax cuts represent significant tax relief for American families and businesses of all sizes—and a vast improvement in America’s ability to compete on the world stage.
The results of the tax cuts and reforms will mean more jobs, higher wages, more investment in American companies, and more companies bringing foreign earnings back to the United States.
American families receive tremendous tax relief under the new law. According to the House Ways and Means Committee,2 most four-member families who earn the median household income of $73,000 a year get a $2,059 tax cut in 2018. Instead of paying $3,557 in taxes, these families pay $1,499. This is a 58 percent tax cut, according to the committee.
Most single parents who have one child and who earn $41,000 a year receive a $1,300 tax cut. For most, this is a roughly 73 percent reduction in their federal taxes, with their final bills dropping from $1,792 to $488.
Married small business owners who make $100,000 a year ($85,000 in personal income from the business, and $15,000 of small business income) get a 24 percent tax reduction, according to the committee. A typical final tax bill for this type of family will drop from $10,982 in 2017 to $8,379 under the new law. Importantly, people began to see the benefits of this as soon as they started receiving paychecks for 2018 work in February. This significant tax savings for families is due to several provisions in the new law.
First, the overall tax rates were reduced across the board. The lowest individual tax rate is 0 percent for individuals who report less than $9,525 taxable income, and the highest individual rate is 37 percent for those who make more than $500,000. For joint filers, the 0 percent rate applies to those who make less than $19,050, while the top rate is for couples who make more than $600,000. The intermediate tax rates are 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, and 35 percent.
For perspective, households that make the median national income of $73,000 fall squarely into the 12 percent bracket.
However, the most significant benefit for individuals and families comes from the law almost doubling the standard deduction. The Tax Cuts and Jobs Act raised the standard deduction for single taxpayers from $6,500 to $12,000. Similarly, the deduction for joint filers raised from $13,000 to $24,000.
This change drives tax reduction for our nation’s low-and middle-income earners more than any other provision in the law by greatly expanding the 0 percent tax bracket—and dropping everyone’s taxable income. It means individuals will pay no taxes on the first $12,000 they earn, and families pay no taxes on the first $24,000 they earn.
This huge jump in take-home pay will have a profound effect on Americans across the country. The House Ways and Means Committee studied the impact the increased standard deduction will have by looking at the median income levels in every congressional district in the nation for both families of four and single taxpayers with no children. After crunching the numbers, they found tax cuts in every congressional district for both groups. This fact will be difficult to reconcile for Democrats, who universally voted against the tax cut in both the House and Senate. It will be especially difficult for Democrats in states Trump carried in the 2016 election.3
These reductions take into account another tremendous tax benefit for Americans with children. The Trump tax reform law doubles the Child Tax Credit from $1,000 to up to $2,000. This means most Americans with children will see a $2,000 reduction of their final tax bill for each of their dependent children. Even if the reduction exceeds their final tax bill, they can get up to $1,400 as a refund. This credit is available to all lower-and middle-income American families with children; however, it begins to phase out for families who make $400,000 a year or more.
The added benefit of having a larger standard deduction is that more families will be able to file their taxes on a simple form. Currently, 68.5 percent of tax filers use the standard deduction. Speaker Ryan estimated that with the larger standard deduction, 90 percent of taxpayers will choose this option and be able to file their taxes on a form that is slightly larger than a postcard.
Here’s my prediction: If only 85 percent of A
merican taxpayers choose to take the standard deduction in 2018, the media will fall over itself to say that Speaker Ryan was wrong—and they will completely miss the point that 85 percent of Americans saved money on tax preparation by doing their taxes at their kitchen tables.
However, for families and individuals that do not take the doubled standard deduction, the Trump-Republican tax law retains many important tax deductions, such as those for mortgage interest, extraordinary medical costs, charitable giving, educational costs, and state and local taxes up to $10,000.
The tax law also stripped away the Obama-era mandate that every American is obligated to purchase health insurance. This was an important first step to solving many of the problems created by Obamacare. It also spared more Americans from the individual Alternative Minimum Tax (AMT). The income threshold that determines who has to pay the AMT increased from $54,300 to $70,300 for individuals and from $84,500 to $109,400 for joint filers.
The Republican tax law was also an enormous win for small businesses in America.
Small business owners, who report their business income on their individual income tax as pass-through income, get to apply a 20 percent deduction on the first $315,000 their businesses make. This applies to S corporations, limited liability corporations, partnerships, and sole proprietorships. Such businesses that make higher incomes will have their effective tax rate capped at 29.6 percent.
Tax relief for America’s small business owners is essential to spurring our economy because small businesses make up 99.7 percent of our nation’s employers, according to the U.S. Small Business Administration.4 These firms employ nearly half of the U.S. private-sector workforce and are responsible for creating three-fourths of all new jobs in this country.
The Left and the elite media have desperately tried to convince Americans that these small business owners are ultrarich one percenters in disguise. However, data5 from the U.S. Treasury and a National Federation of Independent Business report6 tell a different story. In fact, only 2.4 percent of small businesses make more than $250,000 a year. The vast majority (88 percent) of small business owners report less than $200,000 of adjusted gross income on their tax returns. Additionally, 71 percent of these business owners reported less than $100,000 in adjusted income.
The relief provided by the Tax Cuts and Jobs Act will be a huge boon for these small businesses. In addition to having a lower overall tax burden, small business owners will be able to write off the costs of capital investments in the year they are made. So, if the owner of a small manufacturing business, like a tool and die shop with 25 employees, buys equipment to help increase production, that owner will be able to deduct that entire expenditure in his or her 2018 taxes rather than having to spread the deduction across multiple years. This will allow business owners to make calculated decisions about growing business and relieve some of their risk.
These tax cuts for small businesses will lead to very quick growth, hiring, and wage increases in communities across America.
Finally, the Trump-Republican tax cuts will help America successfully compete for the world’s business.
The tax law cuts the corporate tax rate from 35 to 21 percent. This is the deepest cut to the corporate income tax rate in our nation’s history, and it could not have come at a better time. Prior to passage of the Tax Cuts and Jobs Act of 2017, the United States had the third highest business tax in the developed world.
Aside from the tax cuts, the Republican law also updated and reformed the way we collect taxes on profits American companies earn overseas. Under the old tax scheme, U.S. businesses that operated in foreign countries paid U.S. taxes on money they made there—unless they invested their earnings in foreign countries. This provided a perverse incentive for companies to build facilities and create jobs and products outside of America.
As Kyle Pomerleu wrote for the Tax Foundation7 on August 1, 2017:
The U.S. worldwide tax system discourages companies from repatriating foreign earnings, causing what some call the “lock-out effect.” Companies make inefficient financial arrangements and investments to avoid repatriating this income and facing additional U.S. tax. In some cases, the system incentivizes companies to avoid the domestic tax on their foreign profits by moving their corporate headquarters out of the United States. As a result, the U.S. worldwide system has been one of the major drivers of corporate inversions in the last few decades.
Under the worldwide system, CNBC reported in April 20178 that U.S. multinational companies had more than $2.6 trillion tied up overseas to avoid paying the exorbitant corporate tax rate. Meanwhile, many of the countries with whom we compete maintain territorial tax systems that do not domestically tax profits made in other countries when those profits are brought home.
The new tax law finally brought the United States in line with the modern global marketplace, joining the ranks of 35 other Organization of Economic Cooperation and Development countries, which have designed territorial systems. Under the new law, companies will be able to bring the more than $2.6 trillion in foreign earnings back to the United States for a one-time, low rate of 15.5 percent for liquid assets and 8 percent for real estate and other investments. After that, foreign profits will not be subject to corporate income taxes—however, there are provisions that will prevent companies from hiding U.S.-earned profits in foreign subsidiaries.
These changes to the corporate tax rate—and the international tax system—will attract more foreign businesses to the United States and make it easier for American multinational companies to bring money they make in other countries back to the United States.
LEFT-WING LIES
As soon as it became clear that Republicans were galvanizing and making progress on the tax bill, Senate Minority Leader Chuck Schumer and House Minority Leader Nancy Pelosi started an aggressive campaign of lies and propaganda to poison Americans against the Republican bill.
Despite the doubled standard deduction, the greatly increased Child Tax Credit, and all the other provisions that lowered the tax burden on the vast majority of hardworking Americans, Democrats tried to convince people that the law was only going to benefit corporations and incredibly wealthy individuals. They also pitched an entirely false narrative that most Americans’ tax bills would actually increase.
Note the following tweets from Senate Democrats:
• Senator Kamala Harris (D-CA), October 27, 2017, “On average, middle class families earning less than $86,000 would see a tax increase under the Republican ‘tax reform’ plan.”
• Senator Robert P. Casey Jr. (D-PA), October 24, 2017, “The average tax increase on families nationwide earning up to $86,100 would be $794.00.”
• Senator Jeff Merkley (D-OR), October 24, 2017, “Under GOP plan, U.S. families making ~$86k see avg tax increase of $794.”
This lie was so egregious even the Washington Post9 had to call the Democrats out on it. The claim received four Pinocchios from the Post’s fact-checkers. According to the newspaper, the senators had misrepresented a finding by Democrats on the Joint Economic Committee, which claimed 8 million households making less than $86,100 would see an average tax increase of $794. The Dems happily decided to say this applied to all middle-class households.
In a stunning moment of honesty, the Post acknowledged that while 8 million families might see an increase, “more than 97 million (80 percent) will receive a tax cut. Doing the math the same way the [Joint Economic Committee] staff did, we come up with an average tax cut of about $450 for those 97 million households.”
So, 8 million could pay an extra $794 on average, while 97 million could save an extra $450 on average. This is the level of dishonesty to which Democrats are committed.
This honesty from the Washington Post was a small drop in a bucket of media lies about the tax cuts.
In October, before the bill had even been introduced by Republicans, the New York Times dutifully parroted its Democrat allies’ charge that the Tax Cuts and Jobs Act was a “middle-class con job�
��—even acknowledging in the article that “crucial details” of the plan had not yet been finalized. In a later Times op-ed, Paul Krugman referred to policies within the plan as “leprechaun economics.”
In Newsweek, Doug Wirth wrote, “Trump’s tax reform will make America poorer and sicker.” In the piece, Wirth dutifully carried on the Left’s lie that middle- and lower-income Americans would receive a tax hike under the plan. He further harped on the claim that eliminating the individual mandate, which the tax bill effectively did, will cause 13 million people to lose health insurance—ignoring the fact that many of those people will choose not to buy it.
On the other end, Business Insider wrote wildly out-of-touch articles bemoaning the claim that elite colleges with billion-dollar endowments were going to be taxed under the plan and that the Tax Cuts and Jobs Act would make it “a lot harder to buy a $1 million home.” I have to wonder what the editors were thinking. According to the Federal Reserve Bank of St. Louis, the median sales price of homes in the United States in the third quarter of 2017 was $315,200.10 Why on earth should regular, hardworking Americans feel sympathy for those who have trouble paying $1 million for a house?
Finally, the Atlantic wrote that the provisions in the bill, which opened up part of Alaska for oil exploration, could “forever alter” the lives of Alaskan natives. Dramatically, the piece focused on only two possible outcomes for these Alaskan natives: The bill would either destroy their lives or make them rich. And, of course, the Alaskans themselves overwhelmingly favor more oil leading to more jobs and creating more income.
After erroneously persuading many Americans their taxes would increase, the media then polled support of the bill—based on the Democratic lies the media had cheerfully repeated. Then, for weeks, the media inundated Americans with the reports of those skewed surveys to show how unpopular the bill supposedly was and how it was going to sink Republican chances to make gains in the 2018 elections. However, despite the staunch Democrat-media opposition, the bill passed, and the Left has been completely proven wrong. One of the best examples of the media realizing and acknowledging the depths of its own dishonesty was a report made by CBS News, which I have mentioned before on Fox News.11
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