In the closing weeks of 2017, the rhetoric on tax reform was something to behold. U.S. Sen. Bernie Sanders called the bill “one of the great robberies…in the modern history of this country.” Some political pundits went so far as to say it would “kill people” and called it “mass murder.” U.S. Rep. Nancy Pelosi invoked “Armageddon.”
Wisconsin is no stranger to doom and gloom predictions. In 2011, defenders of the status quo called proposed free market reforms, like Act 10, a “war on working families” and said lawmakers who passed the bill, “came in like the Grim Reaper.”
But the predictions gave way to a brighter reality in Wisconsin. The reforms worked, unleashing a string of economic benefits for our state. We eliminated a $3.6 billion budget shortfall and now we have an anticipated budget surplus $385.2 million. Our state pension system remains fully funded, as it has been for decades. All of which prompted U.S. News and World Report to rank Wisconsin one of the best states for government, giving us high scores for budget transparency and fiscal stability.
Getting our state finances on track paved the way for $8 billion in cuts to property, income, manufacturing, and agricultural taxes, among others. And our economy has responded. Chief Executive magazine lists Wisconsin among the top 10 states for business in the entire country and the American Legislative Exchange Council ranks our economic outlook 14th—we were 30th back in 2011.
The same type of growth is now on the horizon for the entire country. Contrary to the Chicken Little-hyperbole of December, the sky did not fall after the president signed the Tax Cuts and Jobs Act. Instead, the benefits of tax reform became immediately visible.
More than one hundred companies, from JetBlue Airlines to Boeing to Wells Fargo, announced bonuses and bigger paychecks for employees. Others revealed plans to grow their businesses. AT&T said it would increase U.S. capital spending by $1 billion. Fiat Chrysler announced it will invest $1 billion to modernize a U.S. manufacturing facility and return production from Mexico. And many pledged to boost philanthropic efforts.
Here in Wisconsin, Associated Bank, the largest financial institution headquartered in our state, announced a 50 percent minimum wage increase, bringing it to $15 per hour, and a $500 bonus for all hourly, noncommissioned workers.
The CEO and president of Americollect, in Manitowoc, told employees, “Since we will now be taxed less, I wanted to take this opportunity and utilize this financial benefit to give back to each of you, our teammates, by directly impacting your paycheck in the form of a bonus!”
Employees of Copperleaf Assisted Living, which owns and operates senior living communities throughout central Wisconsin, will also receive bonuses. The company is giving its entire estimated tax savings—$60,000—to its 175 employees.
And to top it off, the vast majority of hardworking taxpayers in every income category will see their taxes go down this year.
The simple truth is that tax cuts are a recipe for success.
In the five years following the 1964 Kennedy tax cuts, per-capita income was up an average $2,200 and the economy grew at an average 5.2 percent quarterly rate.
It happened again after the Reagan tax cuts. Americans on average had an extra $2,700 in their bank accounts. The economy grew at an average 5 percent quarterly rate and nearly 12 million new jobs were created.
Of course, there were naysayers back then, too, who called the Reagan plan “a terrible gamble.”
But the proof is in the pudding. Tax cuts bring about healthy economic growth with better pay and greater opportunity for workers. Hyperbole doesn’t have quite the same payoff.
Eric Bott is the Wisconsin state director of Americans for Prosperity.