Buchanan Pens Op-Ed in Washington Examiner 40 Years After Reagan Tax Cuts
By Rep. Vern Buchanan (R-Fla.)
Forty years ago – on August 13, 1981 – Ronald Reagan signed the Economic Recovery Tax Act, ushering in the longest era of economic prosperity in American history. On a foggy day outside his beloved Rancho del Cielo, Reagan’s tax cuts delivered on his promises of prosperity, limited government and a much-needed economic turnaround.
To borrow from his own well-known phrase, “are we better off today than we were FORTY years ago?”
Inflation is skyrocketing, spending is out of control, wages are stagnant and our economy’s post-pandemic recovery has slowed so dramatically that the small business community is crying out in desperate need for workers they cannot afford.
Despite mounting evidence that his economic policies are not working – and his own top economists forecasting a dim future – President Biden and Congressional Democrats are hell-bent on dismantling Republican tax reform and imposing crippling new tax hikes on working families and small businesses across the country.
In fact, despite Biden’s promises to the contrary, even the left-leaning Tax Policy Center found that Biden’s tax proposals would raise taxes on 75 percent of middle-class families next year, with that number jumping up to 95 percent by 2031.
In 2017, we passed the most comprehensive overhaul of our tax code since the Reagan administration. The Tax Cuts and Jobs Act (TCJA) reduced taxes on middle-class families and small businesses across the country and created nearly 5 million jobs in the two years following its passage. It also delivered the lowest unemployment rate in 50 years (3.5 percent), all-time low unemployment for African American and Hispanic workers and the fastest wage growth in a decade.
And despite misleading claims by many on the left, new data from the nonpartisan Congressional Budget Office proves that TCJA reduced federal tax rates for families across every income level while actually increasing the share of taxes paid by the top 1 percent of American households.
In fact, lower-wage workers won big under Republican tax cuts, whose wages increased 50 percent more than high-income workers. Tax reform also achieved the lowest poverty rate in almost a generation.
The results were stunning, but not surprising to anyone who has run their own business.
President Biden has proposed to raise the corporate tax rate to 28 percent – one of the highest in the industrialized world We’ve learned the hard way that higher taxes ship American companies to foreign countries with lower rates – like China. And despite claims that Democrats are attempting to “tax the rich” and dismantle mega-corporations, their policies will devastate small businesses and job creators who won’t be able to afford to do business here.
Small businesses are the backbone of our economy, employing nearly half of our work force. The President has also suggested sweeping new tax increases on millions of small businesses that operate as so-called “pass through businesses” because they pass through their income to the owners, who are then taxed at individual rates.
This will force entrepreneurs to send more money to Washington, limiting the funds they have available to create new jobs or raise wages for their loyal employees who show up day after day.
The Democrats’ radical tax-and-spend agenda is a direct attack on Main Street businesses and will torpedo family budgets. As an entrepreneur who spent the last four decades building businesses, and a senior member of the tax-writing Ways and Means Committee, I know from experience that tax increases hit hardworking people directly through lost jobs, lower wages, fewer benefits and higher costs of living. We’re seeing it now and, if nothing changes, it will only get worse.
The benefits of a competitive tax regime are well documented. Reagan-era tax cuts shined a bright light on what pro-growth tax policies can do for an economy. In 2017, Republicans built upon the Gipper’s legacy and ushered in a new era of American prosperity.
It’s time for President Biden to do the same.
In the words of President Reagan, “whenever we lower the tax rates, our entire nation is better off.” With Reagan’s words and policies in mind, we can recover our once vibrant economy.
Rep. Vern Buchanan represents Florida’s 16th District and is the co-chairman of the bipartisan Florida delegation. He is a senior Republican on the tax-writing House Ways and Means Committee and former chairman of the Tax Subcommittee.