From our nation’s beginning, taxes have played a critical role in people’s daily lives. Indeed, a series of disputes over unfair taxes contributed to our American Revolution. As we celebrate our nation’s independence this year, the public can also celebrate new, permanent tax relief, more opportunities, and greater economic prosperity thanks to the enactment of the Working Families Tax Cuts on July 4 last year.
When crafting this significant legislation, my Republican colleagues on the Senate Finance Committee and I had several goals in mind. Preventing a more-than $4 trillion tax hike on virtually everyone was nonnegotiable. However, we also wanted to provide new tax relief to families and seniors, and we needed to unleash the productivity and innovation of the private sector by providing certainty in our tax code.
One year in, the Working Families Tax Cuts are working. By the end of the tax filing season, over 62 million Americans — more than 40% of all filers — took advantage of targeted new tax relief for tips, overtime, American-made cars, and an increased deduction for seniors. Over 7.5 million workers claimed the tips deduction, more than 29 million workers benefited from no tax on overtime, and more than 35 million seniors’ tax burdens were reduced with an average additional deduction of over $7,500.
Additionally, about 6 million children and counting are registered for Trump Accounts, with 1.4 million qualifying for an initial government-funded $1,000 contribution. With 86% of all accounts linked to families making less than $200,000, the program is providing a generation of children with an opportunity to build financial security and learn about personal finance.
Altogether, hardworking Americans kept more of their money this tax filing season, and millions of people got more money back compared to previous years. Over $320 billion was refunded to taxpayers — an 18% increase from the last filing season — with an average refund of nearly $3,300, more than an 11% increase.
And even the average refund amount does not tell the whole story; many working-class people who owed money when filing in prior years instead received a refund this year thanks to the Working Families Tax Cuts.
In addition to helping people keep more of what they earn, the law is helping them earn more in the first place by encouraging economic growth. Nearly 26 million small businesses now have increased confidence thanks to a permanent, pro-growth 20% tax deduction. Estimates find permanence will create 1.2 million jobs annually and boost small-business gross domestic product by $750 billion over the next decade.
The permanent restoration of full expensing for U.S. research and development is supporting domestic innovation and growth by large and small businesses alike. The Small Business and Entrepreneurship Council recently reported that 92% of small businesses are either stable or growing, and over three-quarters of them are already directly benefiting from the law. Investment in new equipment and facilities has accelerated and businesses all over the country are hiring.
In addition to cutting taxes, the Working Families Tax Cuts also achieved a historic $1.5 trillion in savings by eliminating waste, fraud, and abuse from mandatory spending programs. Past-due improvements to programs such as Medicaid — which had ballooned in recent years — will preserve and strengthen them. Commonsense reforms like work requirements for able-bodied adults, tightened eligibility verification, and ensuring noncitizens do not receive taxpayer-subsidized coverage will ensure funds are available for those who truly need them.
WORKING FAMILIES TAX CUTS ARE A BEACON FOR MAIN STREET AMERICA
Of course, health coverage is only helpful when you can access care providers, which can be difficult in rural communities that face long-standing challenges such as low patient volumes, staff shortages, and outdated technologies. So, Republicans created a $50 billion Rural Health Transformation Program to address those needs. The program is shoring up rural healthcare delivery systems and helping state and local leaders make targeted investments in new equipment, training programs, and other initiatives that will enable rural hospitals and providers to continue serving their communities for years to come.
The law is helping Idahoans and all Americans build a stronger future, as the initial results — more money in the public’s pockets, a booming economy, and increased access to healthcare — are making clear. As we remember our past this Independence Day, we can also look to the future with increased optimism thanks to the Working Families Tax Cuts.
Mike Crapo is a senator for Idaho and Chairman of the U.S. Senate Finance Committee.