The Media Should Report the Facts About the Tax Cuts

The President has signed into law the Republican tax bill permanently extending the 2017 tax cuts and preventing a substantial tax increase from going into effect. The bill’s primary benefit is that it locks in pro-growth lower individual and corporate tax rates benefiting working people, small businesses, and American job creators.

Unfortunately, Congressional Democrats continue to spread a number of myths about the bill that are simply not true. These stories about the bill are inaccurate and not supported by the facts, and the media should stop reporting them.

Myth number one is that the tax bill only benefits the wealthy, a tax cut for billionaires. In fact, the number show that the vast majority of the tax cuts go to middle-class working people. According to the official estimate of the bill by the nonpartisan Joint Committee on Taxation, 70% of the tax cuts go to households earning less than $500,000 a year. Nearly 85% of the tax benefits go to taxpayers with income under $1 million.

Even the Washington Post, which has never written a positive article about Republican tax cuts, had to admit that “most of the tax cuts primarily benefit middle-class taxpayers.”

A second myth is that the tax cuts will explode the deficits and the debt. In fact, the bill primarily just keeps today’s tax law in place, and prevents a $4.5 trillion tax increase from going into effect. Keeping the government from getting its hands on $4.5 trillion in new revenue to spend is not an increase in the deficit.

A third myth is that the bill is a handout to big corporations. In fact, the overwhelming majority of the tax cuts go to individual taxpayers and small businesses. A Joint Committee on Taxation analysis of the bill shows that the tax cuts for individuals and small firms represent 89% of the total tax cuts. A substantial portion of the business tax cuts in the bill are offset by other business tax increases.

One important feature of the tax bill is that it maintains the 21% corporate tax rate enacted n 2017 when the U.S. had one of the highest tax rates in the world. The lower rate has been enormously successful in increasing investment, wages, and jobs, and keeping the economy going.

The lower corporate rate directly benefits working families. Numerous studies show that raising the rate is the most economically harmful tax increase, and that a higher rate would be “uniformly harmful” to working people, lowering their wages, increasing the prices they pay, and reducing their retirement savings.

Further, the 21% rate has stopped tax inversions, which shipped American jobs overseas and devastated many American communities. In the years prior to the corporate rate cut, nearly one hundred U.S. firms moved to foreign countries to avoid the high uncompetitive U.S. tax rate. These tax inversions resulted in the loss of jobs, tax revenue, and growth in the U.S.  Since the rate was reduced, tax inversions have disappeared and not one single American company has moved overseas, keeping jobs and investments in the U.S. 

The facts are clear. The myths are false. The lower individual and corporate tax rates primarily benefit working people, prevent higher damaging tax increases, and keep jobs and investments in America.