Some people would have you believe cutting taxes reduces government revenue. However, as evidenced by the Tax Cuts and Jobs Act of 2017, individual and corporate tax rates were reduced, but federal revenues increased from $3.32 trillion collected in FY 2017 to a new record $4.05 trillion by FY 2021.
In fact, federal revenues increased to $3.34 trillion in FY 2018, rose again to $3.6 trillion in FY 2019, and plateaued during the FY 2020 pandemic at roughly $3.7 trillion.
After the 2017 tax cuts, and prior to the great cessation recession of 2020, the Census Bureau announced that the U.S. median household income increased 6.8% in 2019 to $68,709. In dollar amounts, the increase of $4,375 in just one year was approximately 50% of the entire eight years of Barack Obama’s presidency.
The greatest beneficiaries of rising incomes were blacks (7.9% increase), women (7.8% increase), and Hispanics (7.1% increase). Poverty fell 1.3 percentage points to 10.5%, the lowest level since 1959. (Source: The U.S. Census)
It’s always easy to point out a need for a new government program, but it’s difficult to find private dollars that are better spent by the government than by the private sector.
Inefficiency in providing grants, favoritism in providing grants to political supporters, and the inability of the government to reward the most productive uses of capital results in lower economic activity, waste, and, of all things, lower taxes than expected.
New tax revenues are soaring to the federal government under the tax cuts enacted in 2017. And increased economic activity is creating jobs and supporting wage increases and wealth creation for the lowest income households. Now is not the time to burden the economy with new tax increases.
Jon is president of Gauthier Wealth Management in Charlotte