The April jobs numbers are more proof that tax cuts — along with other pro-business policies at the federal and state level — are adding fuel to the fire of the American economy.
The unemployment rate fell to 3.9 percent. This is a huge achievement. Only a few times in the past half-century has the unemployment rate fallen below 4 percent. Black and Latino unemployment rates are at their lowest levels ever recorded. Unemployment for women is at an 18 year low.
The tax cuts are helping extend the positive labor market and economic growth advances that officially have been underway for the last nine years, but were turbocharged with the election of President Trump in November 2016.
How? They are allowing small businesses, individuals, and corporations to keep more of their earnings. These are used to spend, invest, expand, create jobs, and raise wages. They provide a significant economic stimulus that drives growth and wage rates higher.
Wage growth is at its fastest rate in a decade, knocking on the door of 3 percent per year. The nonpartisan Congressional Budget Office recently revised its growth rate for 2018 to 3.3 percent — a level that prominent left-wing economists like Larry Summers said could we could never achieve. In the words of Summers, one could only believe in the possibility of such growth if one also believed in “tooth fairies.”
Some tooth fairy!
Consider the new 20 percent tax deduction for small businesses. This deduction reduces small businesses’ top marginal tax rate by 25 percent and allows them to protect one-fifth of their earnings from taxation. This money can go to creating jobs, expanding businesses, and raising wages. A running tally of such tax cut success stories maintained by Americans for Tax Reform suggests countless small businesses around the country are doing just this.
No wonder small business confidence is now near record highs. And small business owners support tax cuts by a margin of ten-to-one.
The tax cuts are affecting nearly every industry. Manufacturing wages are rising at their fastest pace in 20 years. In the tech sector, Apple announced a $350 billion infusion into the economy over the next 5 years, with plans to create 20,000 jobs, largely because of their tax cut savings.
Meanwhile more than 90 percent of middle class taxpayers are getting a tax cut this year. A family of four with $75,000 in income will see over $2,000 in cuts. Families already in the lowest tax bracket will enjoy a larger child tax credit. Here in Ohio, tax cuts are even on track to reduce our utilities bills.
Before the tax overhaul, Democrats edged out Republicans in polling on taxes and the economy. Now, more favor the GOP to advance their interests regarding taxes. And on the economy, where tax cuts have powered our growing prosperity, Republicans now boast a seven-point lead — 35 to 28 percent.
Opponents of tax cuts and pro-business reforms are trying to paint our continued economic prosperity as a natural phenomenon — like a rainstorm on the Ohio Turnpike. But in reality, our economic success is the result of good public policies that allow people to keep more of their earnings and spend them in their communities. The recent tax cuts are Exhibit A.
Bob Kessler is president of the Kessler Sign Company, Dayton.