We must prevent a tax hike on Idaho families

At the end of this year, many key provisions of President Trump’s 2017 Tax Cuts and Jobs Act are set to expire, triggering an over-$4 trillion tax hike on American families and businesses.  There has been a lot of talk recently about how extending these expiring tax cuts are all for billionaires and corporations, but the facts show otherwise. 

The 2017 tax law increased take-home pay and powered a growing economy.  Individuals across all income brackets received a tax cut, not just--as opponents suggest--for the uber wealthy.  In fact, the Trump tax cuts made the tax code more progressive, meaning the highest income earners now pay a greater share of all income taxes than they did before 2017.

The majority of benefits accrued to working middle-class families.  Between the bill’s passage in 2017 and 2021, the bottom 50 percent of earners received the largest reduction in average tax rates at 17.3 percent.  In addition to lowering tax rates across the board, the Trump tax cuts doubled the standard deduction and the child tax credit and provided tax relief to America’s entrepreneurs and small businesses.

The effects of pro-growth tax reform were almost immediate.  Not only did taxpayers get to keep more of their hard-earned money, but a growing economy helped median household income reach an all-time high.  The labor market improved, workers saw wage growth and the unemployment rate fell dramatically to 3.5 percent--the lowest in 50 years.  And the lowest-income workers experienced the largest wage growth.  Corporate inversions became a thing of the past, and America became the place to do business.  All Americans reaped the benefits of a booming economy.

Extending this current, proven tax policy--and building on it--is the best way to restore economic prosperity and opportunity for working families, many of whom are still struggling to recover from the historic inflation of the last four years.  As American families contend with increased costs of everyday living, the last thing they need is another massive tax hike on top of that inflation.  Failure is simply not an option.

So, what happens if the Trump tax cuts expire?  If we do not extend these tax policies, Americans will be hit with an over-$4 trillion tax increase:

• More than $2.6 trillion will fall on households earning less than $400,000 per year.
• Families in Idaho will see an average tax increase of over $2,500 in 2026, according to Tax Foundation data.  Already struggling with persistent inflation, this tax hike would be the equivalent of eight weeks of groceries for an Idaho household.
• Tens of millions of families will see their child tax credit cut in half to $1,000, and 90 percent of taxpayers would see their standard deduction cut in half. 
• Idaho’s 200,000 small businesses--which employ over 55 percent of the state’s workforce--could face tax rates up to 43 percent.
• Seven million taxpayers will be impacted by the Alternative Minimum Tax, up from just 200,000 taxpayers currently.
• Many more small businesses and farms will have their death tax exemption cut in half.
• A report from the National Association of Manufacturers (NAM) shows in Idaho alone TCJA expiration could cost 33,000 jobs, $3 billion in wages and $6 billion in gross domestic product.

Senate and House Republicans are working together to act as quickly as possible to make the Trump tax cuts permanent.  We must prevent a massive tax hike and provide relief and certainty to families and businesses across America.

Mike Crapo represents the state of Idaho in the U.S. Senate. He can be reached at crapo.senate.gov.