Congress' lack of success in passing a bill to address skyrocketing health care costs has left their approval rating floundering in the teens. Polls suggest that unless the Republican majority can deliver a victory by the end of the year, voters will throw them out.
This prospect should concentrate policymakers' minds to quickly pass popular and much-needed legislation: tax cuts for all Americans.
Tax cuts enjoy broad backing from the American public, with nearly two-thirds of the population in favor. And it's no wonder why - 85 million Americans depend on small-business jobs. A significant cut in the individual tax rate would unleash prosperity for small businesses, their employees and their communities.
According to the Bureau of Labor Statistics, the median hourly wage in Colorado is just $19. This leaves many working families in our state living paycheck to paycheck.
And while Colorado's economy has delivered solid wage growth in recent years, for many it hasn't been fast enough. According to the Federal Reserve, nearly half of the American population can't cover an unexpected $400 expense.
The fastest and easiest way to tackle the stubborn problem of stagnating wages and provide real relief for those on fixed incomes is by cutting their tax rates. This would immediately boost take-home pay that could be used to cover ever-increasing health care, housing, and child care costs, among others.
Because the vast majority of small businesses are taxed at the individual rate, such a tax cut would also help them by allowing more of their earnings to be used for business expansion, new employees, and wage hikes. And since small businesses are the lifeblood of small communities, such tax cuts would reinvigorate the many pockets of the state and country that are still struggling economically.
Under the current tax code, small businesses pay 40 percent of their marginal earnings in federal taxes. Including state tax, workers' compensation, and unemployment insurance, that number can increase to half of their earnings! This means that roughly one out of every two dollars in earnings are extracted from communities and sent to Denver or Washington, D.C. to be spent on often vague priorities of no real benefit to businesses or their employees.
Small business and individual tax cuts would provide a major economic stimulus to Colorado communities and others across the country. More jobs, wage hikes, and money on Main Street would help the economy get back to its historical 3 percent growth rate. Why is 3 percent growth so good? Under such growth, living standards triple over a standard lifetime. Under 2 percent growth, they merely double.
The economic growth associated with tax cuts would help offset their fiscal cost and overcome concerns that they would add to the federal deficit. Consider the last major federal tax cut - the Reagan tax cuts of the 1980s - for proof. President Reagan dramatically slashed individual tax rates on all Americans and not only did the economy boom, but so did tax revenues. In fact, federal tax revenues were 25 percent higher (adjusted for inflation) at the end of his term than the beginning.
With less than three months left in this year's legislative term, Congress does not have much time left to win one for hardworking Americans.
By passing tax cuts now, they can unleash prosperity, growth and optimism, and make a real improvement in Americans' lives while saving their own political ones.
Jennifer Schubert-Akin is the chairman and CEO of the Steamboat Institute.