Busting myths about the Trump tax cuts

Congress must act now to prevent a massive tax hike.

The Tax Cuts and Jobs Act put more money in Americans’ pockets, made U.S. businesses more competitive, and drove economic growth. But unless Congress votes to renew it, key parts of the law will expire in 2025, putting working families at risk.

Opponents of tax reform failed to stop it in 2017. Now, they’re spreading myths to undermine it and roll back the benefits. Here’s the truth:

MYTH: The tax cuts only really benefit the top 1%.

FACT: The tax cuts benefit Americans at every income level.

Critics’ favorite way to attack the TCJA is to try to paint it as nothing but a windfall for the wealthiest Americans.

The law cut taxes for every income bracket. A married couple’s first $24,000 of income and a single filer’s first $12,000 became tax-free. This was inflation-adjusted, reaching $30,000 for couples and $15,000 for single filers in 2025. The U.S. Treasury estimated that 90% of wage earners saw more take-home pay. A typical family of four earning $73,000 saved $2,059.

The Congressional Budget Office even found that the 2017 tax law increased the share of total income taxes paid by the top 1% of households while reducing the burden on lower income earners.

MYTH: The tax cuts failed to spur economic growth.

FACT: The economy reached record highs thanks to the TCJA.

Between TCJA’s introduction and the start of the pandemic, the U.S. added 5 million new jobs, and the unemployment rate reached its lowest level since the ‘60s at just 3.5%.

Those jobs paid more than before, too. Real wages and salaries gained an estimated $3.6 trillion (compared to pre-TCJA projections), and over 870,000 Americans received a bonus of $1,000 or more as median income reached an all-time high of $78,250.

Overall, gross domestic product will be $12 trillion higher than the Congressional Budget Office’s pre-TCJA projections, and private investment is estimated to be $4 trillion higher.

Any way you look at it, the TCJA delivered incredible economic growth.

MYTH: Tax reform will explode the national debt.

FACT: The tax cuts fueled economic growth, and federal revenues exceeded projections.

Through 2025, total federal tax revenues are estimated to be nearly $620 billion higher than projected before the passage of the TCJA. Through the first 10 years of the TCJA, federal tax revenues are estimated to be $2.7 trillion higher than projected. That’s thanks to the previously mentioned economic growth driving up tax receipts.

Despite the rate cuts, tax revenues as a percentage of GDP have remained at their 30-year average of 17%. Spending, however, has increased from 20 to 24% of GDP. If you want to know why the federal government is going into debt, it’s the spending you need to look at.

It’s also worth noting that not long after the TCJA was enacted, the same politicians who claim to care about the debt supported a massive spending bill, costing $300 billion over the following two years and is estimated to result in $1.5 trillion in new spending over the decade . Their problem isn’t deficits, it’s letting Americans keep more of their own money.

What’s next?

AFP is calling on Congress to act: Put the American people first and extend these vital tax cuts. Click here to add your voice to the movement.