We can’t let the Tax Cuts and Jobs Act expire

Feenstra

In 2017, Congress passed, and President Trump signed into law, the Tax Cuts and Jobs Act (TCJA) – the single largest and most comprehensive reform of the tax code in decades. As promised, this legislation boosted our economy, strengthened our global competitiveness, and let American families, farmers, and small businesses keep more of their hard-earned money. Real median household income increased by $5,000, real wages rose at the fastest rate in 20 years, the child tax credit was doubled from $1,000 to $2,000 per child, the corporate tax rate was lowered to spur investment and economic growth, and the standard deduction was nearly doubled – exempting a larger share of families’ income from federal taxes. By every measure, the TCJA was an economic success story that proved that when Americans can keep more of their hard-earned income, we can supercharge the economy and create a rising tide that lifts all boats with lower taxes, fewer regulations, and less red tape.

However, without congressional action, these pro-growth policies are set to expire at the end of 2025. Beginning, in 2026, a family of four making $75,000 can expect to see their taxes increase by $1,500, small businesses will face a top tax rate of 43.4%, the child tax credit will be cut in half, family farms and small businesses will have to consider the impact of a more costly death tax on their finances, and economic growth will subside as key provisions to promote investment expire. All in all, American families, farmers, and businesses would face a combined $7 trillion in tax hikes.

In anticipation of this tax cliff, the House Ways and Means Committee – on which I serve – is working to prevent massive tax increases and build on the economic success we saw following the Tax Cuts and Jobs Act, particularly after years of inflation we’ve seen under President Biden. I’ve helped introduce legislation to make permanent the enhanced standard deduction for our families, the 20% tax cut on qualified business income for small businesses, 100% R&D expensing for innovators, and 100% bonus depreciation for our farmers and businesses.

These provisions have given families more wiggle room in their monthly budgets, helped our small businesses grow and prosper, strengthened research and innovation here at home, and allowed our farmers and producers to purchase new equipment and invest in their operations. The 21% corporate tax rate has also kept the United States at the forefront of economic growth and global investment – putting an end to the exodus of businesses we saw under our uncompetitive tax code before the Tax Cuts and Jobs Act. From 1983 to 2015, 60 American companies inverted, or, in other words, moved their headquarters to a foreign country for more favorable tax treatment. But, since TCJA was signed into law, not a single American company has inverted – keeping jobs, investment, and money in the United States.

There’s no question that we have to reauthorize many provisions of the Tax Cuts and Jobs Act that uplifted middle-class families, protected American agriculture, and allowed our businesses to finance expansions, hire new employees, and spur investment in our communities. But we also know there is room to improve this pivotal legislation for the benefit of our economy, workers, and families.

Among many priorities, I believe that tax reform must work towards the full and permanent repeal of the death tax on family farms and small businesses. This egregious double tax on the transfer of property, land, and other assets following the death of a family member only drains taxpayers and entrepreneurs of needed cash to keep the family tradition alive and could allow our foreign adversaries – particularly China – to buy up our farmland if a family is forced to sell due to a massive tax bill from the federal government. Alongside over 160 of my colleagues, I introduced legislation to permanently repeal the death tax so that we can keep China away from our farmland, help our family farms and small businesses keep their operations running, and support the next generation of farmers and business owners.

If done right, tax reform has the potential to unlock new economic opportunities and financial benefits for our families, farmers, and businesses. We must reject proposals that seek to hinder our economic growth, raise taxes during a time of high inflation, and punish hard work and financial prudence. By not only reauthorizing the strongest provisions of the TCJA, but also building upon those successes, we can unleash another period of American prosperity and economic dominance that was threatened by the Biden administration’s tax-and-spend policies. Republicans will keep our commitment to low taxes, less red tape, and economic security for every American.

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Randy Feenstra, a Republican from Hull, represents Iowa’s Fourth District in the U.S. House.