Lawmakers Should Make the Tax Cuts and Jobs Act Permanent

Donald Trump has an ambitious policy agenda. Small businesses’ top priority should be making the Tax Cuts and Jobs Act (TCJA) permanent. The law is set to expire at the end of the year, so federal lawmakers must act swiftly or Main Street will be hit hard with what is effectively a tax hike.

It shouldn’t be difficult for policymakers to get behind the effort. The law has been an undeniable success. Initially passed in 2017, the TCJA has acted as rocket fuel for the small-business community.

Elements of the law include lower tax rates for pass-through small businesses, which represent most Main Street operations nationwide, and the creation of a 20 percent small-business deduction. Together, these provisions have helped entrepreneurs shield more of their money from Uncle Sam — paving the way for hiring employees, raising wages and growing operations.

Other parts of the TCJA help small businesses to clear the biggest hurdle for entrepreneurs: access to capital. Under the law, small businesses can immediately expense capital equipment on their taxes, which creates incentives to expand facilities and upgrade machinery, among other manufacturing tools.

The tax cuts-related boost for small businesses isn’t just a theory but an economic reality. It enabled my former company to flourish. My business experienced significant cost savings from the tax cuts. With the extra money, we could reward our employees with bonuses.

The same story played out nationwide — creating one of the strongest pre-pandemic economies in half a century. Real wages grew at a record two-decade pace after the law’s implementation in 2018 and 2019. Real median household incomes jumped by more than $5,000, and the unemployment rate reached a five-decade low.

Making the TCJA permanent is not just a recipe for extending economic prosperity. It’s also a tool that can help bolster national security.

As geopolitical feuds hit boiling points globally, the United States must secure its supply chain networks to prevent meltdowns in times of crisis — a lesson made clear during the pandemic. While measures like the CHIPS Act help incentivize domestic investment in computer chips, pharmaceutical manufacturing remains an area where we must make up ground.

Policymakers can address the vulnerability by encouraging the nearshoring of the medicine supply chain through the tax code. For example, building off the already robust pharmaceutical manufacturing capabilities in Puerto Rico can help to diminish reliance on medicine made in China. Lower tax rates that attract further investment can help shore up production even more.

The administration is poised to deliver innovative, pro-growth policies that will ring in a new era of economic prosperity in America and keep residents safe. Leaders in Washington can help make this agenda a reality by making the Tax Cuts and Jobs Act permanent.