To hear Republicans leaders talk about tax cuts, you’d think there was a deadline to get it done. There is — Election Day.
House Speaker Paul Ryan said he wants the full House to vote on a second round of tax cuts before the end of this month. The markets may get a look at the legislation in the week ahead. House Ways and Means Committee Chairman Kevin Brady (R-Texas) said it was “full steam ahead” and aims to hold a hearing on the effort.
President Donald Trump signed the Tax Cuts and Job Act into law in December. This tax reform 2.0, as some supporters refer to it, aims to make permanent the temporary tax reductions in the earlier bill. Almost two-dozen tax reductions included in the original bill expire in 2025. These include lower individual tax rates, the higher standard deduction and the increase in estate and the $10,000 limit on deducting state and local taxes.
Democrats voted against the first tax cut package. A few Republicans did as well, citing the cap on subtracting local taxes like property taxes from one’s tax bill.
In the massive American economy, it is difficult to attribute changes in data to a single legislative action. Here’s what we know: Since the tax bill became law, the U.S. economy has created 1.5 million new jobs. While strong, the economy added more jobs over the first seven months of 2014 and 2015 without significant tax reform. Since the tax legislation, the job gains have come for many reasons. They also have come while wages over the past year haven’t budged when considering inflation.
In the second quarter, the U.S. economy expanded at its fastest annual pace in almost four years. The S&P 500 stock index is up almost 7 percent this year. And after tax corporate profits have jumped 18 percent during the first six months of the year compared to a year earlier before the tax changes.
The first tax cut package helped turbocharge company profits and stock market gains. With Republicans fighting to retain control of the House this election cycle, expect Election Day to turbocharge GOP efforts toward another tax cut.
Tom Hudson hosts “The Sunshine Economy” on WLRN-FM; @HudsonsView.