When recently questioned by reporters outside the U.S. Capitol about the ongoing debt ceiling fight, Rep. Alexandria Ocasio-Cortez (D-NY) remarked, “the largest contributor to our deficit has been the Trump tax cuts.”
It’s an intellectually bankrupt argument that has been parroted by left-wing politicians and talking heads since the Tax Cuts and Jobs Act was debated and passed in 2017.
Fortunately, the facts have finally caught up with the tax cuts’ detractors while supporters have been vindicated. A new report from the Congressional Budget Office (CBO) proves that, on top of the tax cuts contributing to one of the strongest economies in half a century pre-pandemic, the package didn’t compromise the federal budget.
The CBO data reveals the government collected a record $4.9 trillion in revenue last year, nearly $500 billion more than what had been projected. The uptick in government collection was experienced across the board. Receipts from corporate and individual income taxes surpassed expectations by about 25 and 11 percent respectively.
And 2022 wasn’t a fluke. Federal revenue is up a total of roughly $1.5 trillion since 2018, or about 40 percent since the tax cuts went into effect that same year.
Translation: instead of the tax cuts “costing” $1 trillion as the Joint Committee on Taxation originally predicted, tax receipts have soared.
The increased government revenue isn’t in spite of the Tax Cuts and Jobs Act, but because of it. As my organization the Job Creators Network (JCN) has been arguing all along, the legislation created a small business boom by helping entrepreneurs compete on an even playing field with their big business competitors.
Provisions like the 20 percent tax deduction and immediate expensing helped small businesses keep more of their own money and encouraged investment. That meant hiring more employees, raising wages, providing more generous staff benefits, and upgrading facilities. Multiply these actions across the nation’s 30 million small businesses, and the U.S. economic pie grew by so much that the tax cuts more than paid for themselves.
Beyond broad economic progress, the package helped bridge racial economic divides because the legislation had an outsized positive impact on minority communities. In 2019, real median income increased by 7.9 percent for black households, 7.1 percent for Hispanics, and 10.6 percent for Asians—representing record increases in each case. It just goes to show how pro-growth economic policy is the key to providing opportunity.
Armed with the undeniable economic benefits triggered by the Tax Cuts and Jobs Act in addition to findings from the latest CBO report, there is no intellectually honest reason not to make elements of the law permanent.
But if it’s going to happen, policymakers need to act fast. Provisions of the legislation are set to expire in 2025, which leaves lawmakers with little time to act before entrepreneurs begin to slow investments to prepare for the 2025 cliff that will effectively be a tax hike on Main Street.
Extending the Tax Cuts and Jobs Act is a political uniter that lawmakers of all political persuasions should be able to rally behind. Maybe Rep. Alexandria Ocasio-Cortez can even be persuaded.
After all, it could help businesses in her district claw back at least some of the 25,000 good-paying Amazon jobs she chased away in 2019.
Alfredo Ortiz is the President and CEO of the Job Creators Network and author of The Real Race Revolutionaries: How Minority Entrepreneurship Can Overcome America’s Racial and Economic Divides.