Author: Jack Haxton
When President Trump signed the Tax Cuts and Jobs Act (TCJA) into law in 2017, it fundamentally reshaped the U.S. tax system, delivering lower rates for individuals and businesses, spurring economic growth, and making American companies more competitive globally. With key provisions of the TCJA set to expire, Congress faces a critical decision: extend these tax cuts and continue fueling economic prosperity, or allow them to lapse, raising taxes on millions of families and businesses. Continue reading as we explore why the TCJA was so impactful, what’s at stake in the current tax debate, and how extending these policies can shape the future of America’s economy.
Part 1: What Was the TCJA and Why Was It Important?
The 2017 Tax Cuts and Jobs Act (TCJA) reshaped the U.S. tax system, lowering rates for individuals and businesses while fueling economic growth. It reduced income tax rates, nearly doubled the standard deduction, and slashed the corporate tax rate from 35% to 21%. These changes led to wage increases, record-low unemployment, and small business growth. As lawmakers debate its future, understanding the TCJA’s impact is crucial.
Lower Taxes for Individuals and Businesses
- Individual Tax Cuts: The TCJA lowered tax rates across multiple income brackets and nearly doubled the standard deduction, reducing tax burdens for middle-class families.
- Corporate Tax Rate Reduction: The corporate tax rate was slashed from 35% to 21%, making the U.S. more competitive globally and encouraging business investment.
- Pass-Through Business Deduction: Small businesses, which make up 99.9% of all U.S. businesses, benefited from a 20% deduction on qualified business income.
Economic Growth and Job Creation
- GDP Expansion: Following the TCJA, GDP growth accelerated, and the economy experienced its lowest unemployment rate since 1969.
- Wage Increases: Real median household income rose, with many businesses passing tax savings onto workers through higher wages and bonuses.
- Business Investment Boom: Lower corporate taxes encouraged businesses to invest in expansion, hiring, and technological advancements.
Part 2: The New Tax Bill – What’s Being Proposed?
With key provisions set to expire, Congress decides whether to extend them or allow tax hikes on millions of Americans. On February 25, 2025, the House passed a budget resolution to advance a tax relief bill that would extend key features of the TCJA. This bill is crucial to preventing a tax increase on millions of Americans and ensuring continued economic growth.
Key Provisions of the Bill:
- Extending Individual Tax Rate Reductions
- Maintaining the Child Tax Credit Expansion
- Continuing the 20% Pass-Through Deduction for Small Businesses
- Preserving the 21% Corporate Tax Rate
Benefits of the New Tax Bill/Permanent Extension of TCJA
- Debt Perspective: Critics argue that tax cuts increase the deficit, but economic growth can help offset revenue losses. The TCJA proved that lower taxes led to higher tax
- revenues due to increased economic activity.
- 1 million new jobs created by small businesses of the 20% small business deduction is made permanent
- $284 Billion of new economic growth from American manufacturers
- $50 Billion in new investment in Opportunity Zones
Part 3: Addressing the “Tax Cuts for the Rich” Narrative
Despite criticism, the TCJA provided broad tax relief, with middle-class families saving an average of $2,000 per year and lower-income workers seeing strong wage growth. Small businesses flourished, job creation surged, and after-tax incomes rose across all brackets. While opponents claim the cuts favored the wealthy, the data proves they benefited hardworking Americans and strengthened the economy.
- Tax Reductions for All Income Groups: Under the TCJA, the average middle-class family of four received a tax cut of about $2,000 per year.
- Increase in After-Tax Income: Households earning between $50,000-$100,000 saw an average after-tax income increase of 1.7%, while higher-income groups saw only fractionally higher benefits.
- Job Market Gains: Lower-income workers experienced the fastest wage growth in decades, proving that tax relief spurred economic mobility.
The Future of American Tax Policy
The Tax Cuts and Jobs Act was more than just a tax reform—it catalyzed economic expansion, job creation, and increased prosperity for millions of Americans. As Congress debates whether to extend these critical provisions, the stakes couldn’t be higher. Allowing key elements of the TCJA to expire would mean higher taxes on working families, small businesses, and job creators, threatening the economic gains made over the past several years. By making these tax cuts permanent, lawmakers can secure long-term growth, keep America competitive, and ensure that businesses and individuals continue to thrive. The question is whether Washington will choose policies that empower taxpayers and strengthen the economy—or revert to higher taxes that stifle innovation and prosperity.
