This week, Environmental Protection Agency administrator Scott Pruitt proposed repealing the Obama administration's Clean Power Plan, a 2015 rule to regulate carbon nationwide. The plan would have dealt a death blow to Colorado's 12 coal power plants and their counterparts across the country as well as hurt the consumers and small businesses who rely on them for power.
This deregulation is just the latest such effort under the Trump administration. This summer, the White House announced that it had withdrawn or removed from active consideration more than 800 proposed regulations. With less red tape, the national economy and financial markets have responded positively. But to truly turbo-charge broad economic growth under a lasting foundation, Congress must pass tax cuts as recently proposed by Republican leadership.
The details in the tax reform proposal contain many promising signs for the state's hardworking taxpayers, who see a significant portion of each paycheck diverted to Washington, D.C., to fund often vague and misguided federal priorities. If passed, the most immediate impact for my constituents and taxpayers across the country would be a raise in their take-home pay. The framework would double the income threshold under which families pay zero tax and make a number of other changes to help the four-in-five American employees still living paycheck to paycheck.
The framework also proposes a small-business tax cut, which would help small businesses and their communities, both of which have largely been passed over by the so-called economic recovery. Small businesses, which create two-thirds of new jobs and are the backbone of the economy, pay a top federal marginal rate of 40 percent, not including additional state and local taxes and fees. Cutting this rate to 25 percent, in-line with their international competitors and as the tax framework suggests, would allow small businesses to keep more of their earnings in their business and communities.
Specifically, such a small-business tax cut would allow entrepreneurs to expand their businesses, hire employees, and raise wages. Most business owners say they would direct their tax cut savings to at least one of these, according to a recent nationwide poll conducted by the Job Creators Network. As a result, tax cuts would give some employees two raises: first, by taking less money from their paychecks; and second, by giving business owners the funds to raise them.
Such an economic stimulus stemming from more money remaining on Main Street would provide a dramatic stimulus to the economy and help the nation get out of the economic doldrums and back to its historic 3 percent growth rate.
The economic growth component of tax cuts can also help stem concerns about their fiscal implications. And concerns about the country's fiscal condition are important. The U.S. has over $20 trillion of debt with over $100 trillion more in unfunded liabilities. Significant economic growth through tax cuts, is one of the few things we can do to help reverse this debt crisis.
History has shown that tax cuts can pay for themselves through economic growth. President Ronald Reagan dramatically cut taxes (the last time Americans enjoyed a broad tax cut), and income tax revenues boomed by 28 percent, adjusted for inflation, between 1983 and 1989. Before that, President John F. Kennedy significantly cut taxes, recognizing "a rising tide lifts all boats," and raised tax revenue by 33 percent, adjusted for inflation, between 1961 and 1968.
To generate the support necessary to pass tax reform, Republicans and their advocates must "lean in" to tax cuts, unapologetically explaining how they would provide relief to the backbone of the American economy while strengthening it at the same time. They should highlight how the regulatory and tax policies of the last several years have contributed to rural America becoming the new inner city, awash in drugs with a dearth of opportunity. But more money on Main Street and less on K Street can cure much of what ails this country.
For the economic victims of the nation's slowest economic recovery ever, deregulation is merely the appetizer; tax reform is the main course.
Dave Williams is The Colorado General Assembly representative from House District 15.