Don't just stuff your latest pay stub in a drawer. It should contain a welcome surprise.
New IRS tax withholding tables reflecting recently passed federal tax cuts have taken effect. The upshot: bigger paychecks for ordinary workers in Colorado and across the country.
According to Yahoo Finance, a person earning $60,000 a year can expect to earn $112 more per month. If they have kids, that number will be higher. State Republican legislators like myself are backing a parallel tax cut at the state level to make these pay increases even bigger.
These welcome pay bumps will help ordinary workers pay their bills, buy groceries and maybe even take a vacation. They will cover the cost of a monthly smartphone plan. Who wouldn't want that taken care of?
For many employees across the state and country, this will be their second tax cut-induced pay increase. Hundreds of the country's biggest employers, including major Colorado employers such as the Bank of Colorado, Southwest Airlines, and Comcast, have announced major pay raises for employees because of their tax cut savings. For example, Walmart, Colorado's largest private employer (28,000 employees), is raising its base wage to $11 and providing bonuses of up to $1,000.
It seems like every day another major company is announcing a similar move. Just last week, Hostess Brands announced $1,250 employee payouts and free Hostess snacks for a year because of the tax cuts. Talk about a sweet bonus.
The benefits of these pay raises go beyond the family budget. Millions of employees in the state receiving billions of extra dollars a year in their paychecks will provide a significant economic stimulus for local communities and small businesses. This money, which would otherwise have been shipped to Washington, D.C., to be spent on federal priorities with often vague benefits to Coloradans, will instead stay here at home.
The best may still be to come. The federal tax cuts deliver the biggest small-business tax cuts in American history. They create a new 20 percent tax deduction for small businesses, the backbone of the state's economy, allowing them to keep more of their earnings necessary to raise wages to attract and retain the best employees. As small businesses learn about this tax cut at their upcoming quarterly filing, expect additional pay raises to occur.
No wonder a new nationwide poll of 500 small-business owners conducted by the Job Creators Network finds that over two-thirds of respondents view these tax cuts favorably, compared with just 6 percent who view them unfavorably.
Democratic House Leader Nancy Pelosi, who characterized the tax bill as "Armageddon" and "the worst bill in the history of the United States Congress" has called tax cut-induced pay increases "pathetic" and "crumbs." (I don't think she's referring to the Twinkies and Ding Dongs.)
For Pelosi, a San Francisco resident whose husband has made a fortune off what some call crony real-estate deals, these may indeed be crumbs. But I'd imagine most Coloradans feel differently. From their ivory towers, wealthy, coastal, tax cut opponents seem to forget that - according to a Federal Reserve report - two-thirds of working-class Americans cannot cover an unexpected $400 expense.
The tax cuts are now bringing long overdue relief to these hardworking families. I've co-sponsored a state bill (SB-61) that calls for lowering the state income tax rate to return the added revenues the state inadvertently takes in due to federal tax cuts back to Colorado families to help them more.
In other words, the tax cut-induced pay raise you see on your current paycheck may be just one of many more to come.
Lois Landgraf is the Colorado state representative for House District 21.