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Why Americans must defeat Biden's tax increase pledge

Why Americans must defeat Biden's tax increase pledge
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July’s extraordinary job numbers — 1.8 million jobs added to the U.S. economy and 9.3 million total new jobs in three months — is attributable to the economic power of the GOP’s and Trump administration’s Tax Cuts and Jobs Act of 2017, one of the largest tax cuts in U.S. history. Former vice president Joe BidenJoe BidenBiden says Beau's assessment of first 100 days would be 'Be who you are' Biden: McCarthy's support of Cheney ouster is 'above my pay grade' Conservative group sues over prioritization of women, minorities for restaurant aid MORE, who as the presumptive Democratic nominee has embraced the socialist agenda put forth by Sen. Bernie SandersBernie SandersOvernight Health Care: CDC approves Pfizer vaccine for adolescents aged 12-15 | House moderates signal concerns with Pelosi drug pricing bill | Panel blasts COVID-19 response Briahna Joy Gray: Warren not endorsing Sanders in 2020 was 'really frustrating' House moderates signal concerns with Pelosi drug pricing bill MORE (I-Vt.), has pledged to repeal this vital tax reform, promising the largest tax increase in American history.

To determine what this would mean for America and each taxpayer, we must make sure American voters have a clear understanding of the elements and benefits of the tax reform law and how those created tax reductions and increased wages for all. That includes the lowest unemployment rate in 50 years, until we were hit by COVID-19. The benefits of this law will return when America is broadly reopened.

That tax reform law was the foundation of the Trump/Republican blue-collar boom. The law cut marginal tax rates for all working people: a 20 percent tax cut for middle class singles earning up to $38,700, and for married middle-class workers earning up to $77,400, with a 12 percent rate cut for upper-middle-income married couples earning up to $156,150. Tax reform also cut taxes for the middle class by virtually doubling the standard tax deduction and the child tax credit.

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Federal income taxes on small business and professional income also were cut 20 percent, with a 20 percent deduction for such income applying to unincorporated businesses. Corporate tax rates were reduced from 40 percent (counting federal and state rates), highest in the industrialized world, to about 26 percent on average, roughly equal to the rates of our nation’s top trade competitors. The federal corporate income tax rate was reduced to 21 percent (corporations don’t really pay taxes, they collect them — from customers in the form of higher prices, from employees in the form of fewer jobs and lower wages, and from investors in the form of lower returns). 

The business tax cuts generated millions of jobs and record low unemployment in this blue-collar boom, with the lowest unemployment in American history for Blacks, Hispanics, Asian Americans, single women and teens. Such job creation was further encouraged by tax reform’s adoption of territoriality, meaning overseas business income is taxed only by the nation in which it was earned.

This end of double taxation of overseas business income for American multinationals encouraged repatriation and reinvestment in the U.S. of trillions of dollars in accumulated overseas profits. That encouraged companies to bring jobs home and reestablish domestic supply chains. In the first quarter of 2020, U.S. companies brought home $124 billion to invest here.

Perhaps the most powerful job-creating element of tax reform has been immediate expensing of capital investment, meaning an immediate deduction of the expenses of such investment, instead of up to 30 years of depreciation deductions. Companies consequently have been able to write off such investments immediately, creating job growth and increased wages.

A key component of tax reform was the creation of opportunity zones, advanced by Sen. Tim Scott (R-S.C.), to provide low taxation of business investment in underserved areas across the nation. This has had a positive impact on minority communities and other communities across America.

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With Tax Reform 2.0 in 2021, we could make all tax rate reductions permanent and finally terminate the hated 100-year-old estate tax, providing further incentives for personal savings and investment.

The ultimate benefit of the Trump administrations and Republicans’ tax reform legislation will be the dramatic increase in the rate of economic growth our nation enjoys. As former Sen. Phil Gramm (R-Texas) and tax expert Mike Solon reported recently in the Wall Street Journal, the Congressional Budget Office projected that the 2017 tax reform would add $7.4 trillion to economic growth over the first 10 years. 

That means tax reform will more than pay for itself in economic growth, just as the tax cuts under President Reagan did. Federal revenue doubled during Reagan’s presidency, when the top personal income tax rate was cut from 70 percent to 28 percent. Because of Reagan’s tax cuts, his expansion continued for 25 years.

Restoring economic growth and everyone’s potential wealth is the private enterprise, free-market American answer to the socialist/progressive “zero sum game” philosophy put forth by Biden and House Speaker Nancy PelosiNancy PelosiOn The Money: Inflation jumps at fastest pace since 2008 | Biden 'encouraged' on bipartisan infrastructure deal Overnight Health Care: CDC approves Pfizer vaccine for adolescents aged 12-15 | House moderates signal concerns with Pelosi drug pricing bill | Panel blasts COVID-19 response Biden 'encouraged' by meeting with congressional leaders on infrastructure MORE (D-Calif.), which holds that for one person to have more money, it must be taken from someone else. When that is the dominant philosophy, it is no wonder there is unrest in America’s streets.  

We need peacemakers in charge, not protesters. It is time to rebuild — not break — the symbols, buildings and businesses of American society. If we simply love our neighbors as ourselves, there is no need for the twisted logic of antifa and socialists.

Just remember that under President Obama, when Biden was vice president, America suffered the worst recovery from a recession since the Great Depression. That is why America’s working people chose Donald TrumpDonald TrumpWarren says Republican party 'eating itself and it is discovering that the meal is poisonous' More than 75 Asian, LGBTQ groups oppose anti-Asian crime bill McConnell says he's 'great admirer' of Liz Cheney but mum on her removal MORE for president in 2016, and why Democrats and democratic socialists should never again run tax policy in America. 

Lew Uhler is founder and chairman of the National Tax Limitation Committee and National Tax Limitation Foundation (NTLF). He collaborated with Ronald Reagan and economist Milton Friedman in California and across the country.

Peter Ferrara is the Dunn Liberty Fellow in Economics at King’s College in New York, and senior policy adviser to NTLF. He served in the White House Office of Policy Development under President Reagan, and as associate deputy U.S. attorney general under President George H.W. Bush.