On this Tax Day, Sen. Pat Toomey (R-Pa.) joined business owners at the U.S. Chamber of Commerce to promote the benefits of the overhaul enacted by Republicans in December, while protesters gathered nationwide to protest the cuts.
“I have always believed we are entirely capable of really strong economic growth indefinitely if we have good policies,” Toomey said at the event, adding that the recent tax cuts will boost the U.S. economy, which in turn will help narrow the government’s budget deficit. “It is likely that when we look back at the end of the 10-year period, we would generate more revenues as a result of having done this thankful tax reform.”
The Tax Cuts and Jobs Act, which President Donald Trump signed into law in December, reduced the corporate tax rate from a maximum of 35 percent to 21 percent. That change “lowers the cost of capital,” and “really drives the growth,” Toomey said.
U.S. gross domestic product expanded 2.3 percent last year after growing 1.5 percent in 2016, according to the Bureau of Economic Analysis.
Business owners at the event said the recent tax law has allowed them to increase capital investment, hire more people and give bonuses.
“This year, we are hiring 12 electricians and have added two project managers to our senior team,” John Biagas, president and chief executive of Bay Electric Co., told the audience. “Plus, the new tax law accelerated our plan to invest over $500,000 in new trucks and equipment.”
Bay Electric is based in Newport News, Va., and has a staff of about 40 employees, according to its website.
But while business owners gathered at the Chamber of Commerce to promote the tax overhaul, protesters gathered near the Capitol to march in opposition to the new law.
“Our objection to the tax cut is that it delivers an enormous amount of its benefits to the already-rich,” said Josh Bivens, research director at the left-leaning Economic Policy Institute, a sponsor of the Tax March, in an email Monday.
Activists argue that the tax code revisions are not consistent with Trump’s promise to bring jobs back to the United States.
Get the latest global financial news and analysis delivered to your inbox every morning.
“In the corporate tax cut, there’s a lower tax rate for earnings on routine operations abroad,” said Indivar Dutta-Gupta, co-executive director of the Georgetown Center on Poverty and Inequality and a member of the march’s executive committee, in a Monday phone interview. “The tax law is likely going to encourage companies, who otherwise wouldn’t have, to shift operations and jobs abroad so that they can pay lower taxes on those earnings.”
Marches took place in more than 40 cities, Dutta-Gupta said on Tuesday.
A White House official told Morning Consult in an email Tuesday that the new tax law has encouraged companies to bring cash and other assets from overseas back to the United States to invest in the domestic economy, and that as of last month at least 65 companies have announced investments in their business totaling at least $167.5 billion.
Sen. Cory Booker (D-N.J.), speaking Monday at a Digital Town Hall on Facebook Live, called for middle-class families to re-examine the trade-off for their bonuses and potential tax breaks.
“For a company, it’s not a consistent tax increase.” he said, noting that corporate tax cuts were made permanent while middle-class cuts “sunset after a time.”
Booker added that the monetary increase on people’s paychecks comes at the expense of social services. “We already are having a hard time doing things that we should be doing,” he said. “But we don’t have resources to do it.”