Ed Fryar, an Arizona chicken farmer, will add nearly 50 percent to his workforce next year — but only if the House tax plan becomes law. The bill will help millions of Americans and small business owners pay less in taxes, and its corporate cuts will help bring jobs and taxes to the United States.
Business tax cuts aren’t just good for millionaire business owners these days. Most U.S. businesses, particularly small businesses, are set up as “pass-through corporations,” meaning their owners pay personal income tax on the profits instead of corporate tax. The House bill will drop that top rate from 39.6 percent to 25 percent — a massive break for successful small businesses.
Ed Fryar owns a chicken company and was recently interviewed for National Public Radio’s Marketplace. With the pass-through tax cut, one of the bill’s business tax cuts, he will be able to pay down his business loan in one year instead of three. And when that’s paid off, he will add 500 to 800 employees to his current 1700-man workforce. That kind of growth will raise wages, employment, and tax revenues at the same time.
The bill’s corporate tax cut is also a great boon for business. The tax cut from 35 percent to 20 percent will help bring corporations and their tax revenues back to U.S. shores. The drop will make America competitive with other countries, almost all of which has a far lower corporate tax rate on paper (though its effective tax rate is only slightly higher than that of other countries).
Between the corporate and pass-through tax cuts, the House bill provides serious incentives for large businesses to continue to operate and for small businesses to start up in the United States. If President Donald Trump signs the tax bill into law, U.S. businesses and wages could grow faster than they have in decades.
The bill also improves personal income taxes. Sophomore Joshua Waechter’s column from the Nov. 16 issue of The Collegian, “GOP tax plan harms most Americans,” misses the mark on this point. He says that the removal of certain itemized deductions will hurt most Americans, but that’s not true. Those removals only affect the upper classes and the other reforms in the bill balance it out for everyone else. The bill simplifies the tax code and promotes American business and wage growth for all.
Waechter argues against several reforms that eliminate deductions in order to simplify the tax code. But the vast majority of Americans don’t use any of the affected deductions.
He says that capping the property tax deduction at $10,000 would hurt many Americans. But the average American only pays about $2,100 in property taxes. This proposed change would only affect Americans living in high-tax states with homes worth over half a million dollars. It’s not exactly a big hit for Joe Six-Pack.
In fact, 70 percent of Americans use the standard deduction, which means they don’t take any itemized deductions like property tax deduction. Waechter claims the bill “eliminates necessary deductions for millions of middle-income and lower-income Americans.” That’s simply not true, when 70 percent of Americans don’t take any of the deductions mentioned in the column, and the ones that do are mostly upper-class.
The tax bill doubles the standard deduction while eliminating the smaller “personal exemption.” It’s a complicated tradeoff, but it basically evens out for most Americans while simplifying the tax code in the process. And with the expanded child tax credit, many lower-income singles and families will save on taxes.
The facts back this up: the Joint Committee on Taxation shows that the tax plan would be either beneficial or neutral for the 92 percent of Americans for five years. And after five years, it would still help most Americans.
This sweeping reform benefits all income levels and cuts through the nightmarish red tape of the IRS tax code. Come April, most Americans’ taxes will be easier than ever — and they’ll probably even save a little. It’s what the GOP has promised for decades. If the bill passes the Senate and White House, they could finally deliver.
Noah Weinrich is a senior studying politics.