Tax Day (April 15) is right around the corner. For the majority of Iowans, their taxes will be lower and the filing process will be simpler thanks to tax reform.
Last Congress, Republicans passed the Tax Cuts and Jobs Act. It was the first major tax reform legislation to become law since President Ronald Reagan was in office. Its goal was to lower taxes for Americans, simplify the tax code and reignite our national economy by lowering tax burdens on small businesses and making America’s corporate tax rate globally competitive.
After the legislation was passed, businesses of all sizes began reinvesting in their employees and operations. They raised salaries, increased employee benefits, distributed bonuses, expanded their operations and increased charitable giving in their communities. There have been many examples of this throughout Iowa.
Small businesses like Anfinson Farm Store in Cushing offered $1,000 bonuses and five percent pay raises to employees. Keg Creek Brewing in Glenwood grew its operations and invested in new equipment. Iowa utility companies like Iowa American Water Co., MidAmerican Energy, Des Moines Utility, Interstate Power and Light, Alliant Energy and Black Hills Energy lowered electric, gas and water bills for consumers.
National companies, such as Starbucks, AT&T, Wal-Mart and McDonalds – all with many locations throughout Iowa – raised base wages, made scholarship opportunities available to employees and increased sick time and parental leave benefits, among other employee reinvestments.
Two years later, the positive impacts of the Tax Cuts and Jobs Act are continuing to improve the American economy. According to the Congressional Budget Office, three out of every four dollars in tax cuts went directly to individuals and small businesses. The Tax Cuts and Jobs Act cut taxes for the average household in every state with a significant portion of the savings going to middle-class and lower-income Americans.
Monthly job gains have nearly doubled from what they were during the Obama administration, increasing from 110,000 per month to an average of 215,000 since the passage of tax reform.
There have been 5.2 million jobs created nationwide since January 2017. More than half of those jobs were created after the enactment of tax reform.
Beginning in April of last year, the number of job openings in the national economy has exceeded the number of unemployed Americans. The national unemployment rate has steadily dropped, averaging 7.4 percent during the Obama administration, 4.1 percent during the Trump administration and 3.9 percent since the Tax Cuts and Jobs Act became law.
Here in Iowa, the unemployment rate has dropped from 4.9 percent under the Obama administration to 2.9 percent under President Trump and 2.6 since tax reform. In fact, our unemployment rate has been at an all-time low rate of 2.4 percent for three consecutive months and was tied for the lowest in the country in February.
Meanwhile, the median household and family incomes both stood at all-time highs in Iowa and across the country. Annualized growth in disposable income averaged 3.9 percent since the enactment of tax reform. That’s compared to 3.4 percent during the Trump administration as a whole and only 2.5 percent under President Obama.
The Tax Cuts and Jobs Act is an example of what can be accomplished in Congress with a little elbow grease and a lot of common sense. Comprehensive tax reform continues to give a hand up to middle-class and lower-income Americans and deliver results for businesses of all sizes that were being crushed by regulation and anti-competitive tax rates.