Calling the nation’s economy “historically strong,” Sen. Steve Daines this week credited the 2017 tax cuts for creating jobs and elevating wages, and he rebooted his call to make tax cuts for small businesses permanent.
Daines, a member of the Senate Finance Committee, used a Wednesday hearing with Treasury Secretary Robert Mnuchin to say both programs are benefiting American workers.
“Watching what’s happening under President Trump with Republican leadership’s commitment to tax reform and cutting burdensome regulations, this economy is booming,” Daines said. “It’s benefiting Montanans, and it’s benefiting the American people.”
Daines suggested 6.7 million jobs have been created during Trump’s presidency and that 70% of those jobs came after the Republican Party passed its tax reform legislation in 2017.
The Congressional Budget Office last year said income for middle-class Americans was growing at less than half the rate as for the richest 1%. It also found that GOP tax cuts were expected to provide the biggest overall reduction in taxes to top earners.
But Daines said low-income workers are seeing the greatest gains.
“Wages are growing for workers across the board but importantly, we’re seeing this blue collar boom,” he said. “Low income Americans are experiencing the largest wage gains. The average wage growth for workers now outpaces the average wage growth of managers.”
Daines said the outcome was predictable and should be explored on a wider scale. He asked Mnuchin which tax policies he saw as having the greatest impact moving forward.
“There’s no question, the change on the corporate side to a territorial system and encouraging companies to bring their cash back here and build jobs here has been very important,” Mnuchin said.
“There’s no question the pass-through deduction for small businesses has been critical. There’s no question the tax cuts for the middle class has put more money back in people’s pockets they can save or spend.”
Daines said 90% of Montana’s businesses are considered small business, and he cited a recent Gallup Poll suggesting that 67% of small business owners benefited from recent tax cuts. Roughly 7 in 10 small business owners reinvested their savings back into the business, he added.
He and GOP Sens. Pat Roberts and John Thune, among others, are pushing to make the 20% tax deduction for small businesses permanent. The legislation was introduced last April.
Mnuchin said it could further boost American businesses.
“Those small businesses are the backbone of a large part of the economy, just not in your state but in other states,” Mnuchin told Daines. “Providing that tax relief gives those businesses more money to put back into their business, hire more people and go out and make capital investments.”
The Congressional Budget Office predicted in January that U.S. deficits would average $1.3 trillion a year over the next decade – more than anticipated in the Trump administration’s new budget. That’s viewed by some economists and policy makers as unsustainable.
Senate Democrats on the committee described the push for new tax breaks as a fleecing of American workers.
“The Trump administration’s budget is built on policies that pillage working families to pay for new windfalls for multi-national corporations and the wealthy,” said Sen. Ron Wyden, D-Oregon.
Wyden said he recently became aware of the Trump administrations push to “milk” the 2017 tax law to create more than $100 billion in new corporate tax loopholes.
“These are brand new loopholes that are the product of tricky, Treasury Department regulatory maneuvering,” he said. “It sure looks like corporate special interests are going to make off with brand new loopholes worth $100 billion in addition to the outlandish share they got from the original $2 trillion Trump tax law.”
Sen. Chuck Grassley, R-Iowa, said critics continue to distort the statics around the 2017 tax law.
“Critics continuously use preliminary and incomplete data to distort the efforts of tax reform to support a political narrative,” said Grassley. “Nothing the critics can say will refute the fact that every income group in every state saw tax cuts under tax reform. This is particularly true for low and middle income families.”