Op-EdAppeared in The Hill on February 12, 2018By Alfredo Ortiz

Success of tax cuts expose hypocrisy of the Democrats

Tax cuts are “Armageddon” and “the worst bill in the history of the United States Congress,” said House Minority Leader Nancy Pelosi (D-Calif.) in December. They’re “irresponsible, reckless, unjust, and just plain cruel,” said Sen. Cory Booker (D-N.J.). “Republicans will rue the day they passed” tax cuts, said Senate Minority Leader Chuck Schumer (D-N.Y.). They’re “highway robbery,” said Sen. Bernie Sanders (I-Vt.) and “a heist” addedSen. Elizabeth Warren (D-Mass.).

Whoops. What a difference a couple of months make. The early returns are in and tax cuts are an unqualified success. Hundreds of major American companies, which collectively employ millions of Americans, have directed part of their tax savings to significantly raising worker pay.

Walmart, the nation’s biggest employer with 1.4 million U.S. employees, raised its minimum wage to $11 and gave up to $1,000 bonuses to its employees. It turns out tax cuts have done more for entry-level employees than the “Fight for $15” ever has. Paychecks this month are also bigger due to new IRS tax withholding tables taking effect.

According to the Tax Policy Center, the average earner will receive about $135 more a month, and more if they have kids. At the household budget level, this means cable, smartphone, or utility bills can be taken care of. For the broader economy, this means more than 100 million American workers keeping more of their money at home where it’s needed and sending less off to Washington, D.C., where it doesn’t stimulate local communities and Main Streets.

The latest jobs report suggests tax cuts have contributed to the current tight labor market that is generating the fastest average wage growth in nearly a decade. Some economists, like those at the Atlanta Federal Reserve, are predicting 4 percent economic growth, levels mainstream economists, like Austan Goolsbee and Larry Summers, scoffed at mere months ago.

The best may be yet to come. Small businesses, which create two-thirds of all new jobs, are arguably the biggest winners of tax cuts, receiving a new 20 percent tax deduction. But they have not yet felt the full effects. Yes, many small businesses have made tax cut-induced pay increases and investments like their big business brethren. Joseph’s Lite Cookies in Florida is giving $3,000 raises to half its workforce. West Virginia Eye Consultants is hiring and expanding.

I hear from small businesses nearly every day making similar commitments. But since small businesses generally don’t have the accounting departments necessary to forecast their tax savings, many won’t notice them until they file their first quarter taxes in a couple of months. Expect another big spate of pay raises and investment at this time.

Don’t take my word for it. A new nationwide poll of small business owners conducted by the Job Creators Network finds that small businesses favor the tax cuts by a 10 to one margin. Yet a sizeable one in four respondents still don’t know how tax cuts will affect them, a testament to Democratic and media misinformation. As the muddied tax waters clear, expect small business support to grow even further.

Have Democrats apologized for their misguided tax cuts fear-mongering? No. In fact, they’ve doubled down on it, promising to repeal them, which would raise taxes on millions of ordinary Americans, if they retake Congress this fall. Are Democrats in moderate states, including Sens. Claire McCaskill (D-Mo.), Joe Manchin (D-W.Va.), and Joe Donnelly (D-Ind.), on board with this strategy?

Led by Pelosi, they are characterizing the tax cut-induced wage increases as “pathetic” and “crumbs.” They may be crumbs to Pelosi, a San Francisco millionaire, and her coastal compatriots, but for ordinary Americans — two-thirds of whom cannot cover an unexpected $400 expense, according to the Federal Reserve — they amount to long-overdue relief. “I’ve heard time and again that the middle class is getting crumbs, but I’ll take it!” said Wayne Love from Florida about his $200 paycheck boost.

Rather, coastal Democrats are desperately trying to game the system to lower taxes for their rich investment banker and trial lawyer constituents and donors who must now finally pay their fair share of federal taxes because the tax bill limited the state and local tax deduction loophole. Even the left-wing Institute on Taxation and Economic Policy finds that working around the state and local tax deduction limit would overwhelmingly benefit the richest one percent of households.

For years, the media narrative has been that Democrats are the party of ordinary Americans while Republicans are the party of the rich. Tax cuts are the wedge that illuminates the reality is just the opposite.

Alfredo Ortiz is the president and CEO of the Job Creators Network.