‘A rising tide lifts all boats’
As Iowans in the First District received their paychecks in February, most received a welcome tax cut. From the Cedar Valley to Dubuque, and from Decorah to Grinnell, hardworking Iowans are keeping more of the money they earn. The Tax Cuts and Jobs Act cuts rates in every tax bracket, and the largest percentage reductions are in the lower income brackets. In fact, according to the House Ways & Means Committee, the average family of four in northeast Iowa will save $2,564 on their taxes.
While this bill worked its way through Congress, our office heard from many Iowans on tax provisions they wanted to see preserved in the tax code. We fought for those and delivered. Provisions like Federal Historic Tax Credits, the Medical Expense deduction, the Orphan Drug Tax Credit, the Renewable Wind Energy Production Credits, the Section 199 deduction for farmers & cooperatives, tax-deferment for 401(k)s and IRAs, the property tax deduction and the mortgage interest deduction. Keeping these provisions in our tax code is a big win for Iowa.
Despite the tens of millions of dollars in negative attack ads trying to convince Americans that these tax cuts are “Armageddon,” we’ve already seen great economic growth across America. Since this bill was signed into law, thousands of companies have announced wage increases, benefit increases, and company-wide bonuses specifically because of this tax cut legislation.
Apple, for example, announced it will invest $350 billion in the United States in the next five years and will pay $38 billion more in taxes by bringing that money back to America. And right here close to home, MidAmerican and Alliant have outlined their plans for nearly $150 million in utility bill rate reductions in rates and credits to their consumers’ monthly bills, as a direct result of Tax Reform. Unemployment has dropped to a 17 year low, with African-American unemployment at an all-time low. We’ve seen billions of profits repatriated, and billions more for economic expansion announced due to tax reform.
It is my belief, rooted in historical fact, that tax reform will not increase the deficit, as the economic growth that we see from these tax cuts will increase revenues to our treasury. According to the Federal Reserve, in the decade following the Kennedy tax cuts we witnessed higher economic growth and a 118 percent increase in federal revenues. And the decade following the Reagan tax cuts we also witnessed higher economic growth and a 90 percent increase in federal tax revenues.
Also, it is important to understand that our deficit is not caused by too little tax revenues. In fact revenues in recent years have reached all-time highs. Rather, our deficits exist because of the bipartisan consensus in Washington that refuses to reform wasteful spending seriously, and we will continue to have deficits regardless of our tax policy until this is addressed.
Iowans will see economic gains in the coming months and years through increased wages and benefits, lower rates on their taxes, and more job opportunities as companies compete for workers as a direct result of the Tax Cut and Jobs Act.
As President John F. Kennedy once said, “A rising tide lifts all boats.”
U.S. Rep. Rod Blum of Dubuque represents Iowa’s First Congressional District.