Tax Reform Works: Majority of Americans Saw Tax Cut
April 15 is known as tax day, the day in which tax returns are due to be submitted to the federal government. This is the first tax day we’ve had since the Tax Cuts and Jobs Act was enacted, and this year we celebrated with higher wages, record economic growth and families across South Dakota keeping more of their paychecks each month.
The Tax Cuts and Jobs Act lessened the tax burden for South Dakota families and businesses, and our economy is stronger because of it. When families aren’t paying high tax rates, they can use their money how they want to. This helps to strengthen local economies.
In addition to lowering tax rates, tax reform also resulted in growing wages and a strong job market. More than 5.4 million jobs have been created since the beginning of 2017, according to the Bureau of Labor Statistics. Additionally, wages have grown by 3.4 percent over the past year. A number of businesses in South Dakota have offered bonuses, raises and other benefits to employees based on savings from the Tax Cuts and Jobs Act. Unemployment is also down across the country. Jobless claims are at the lowest levels in 50 years.
The tax reform law simplified the filing process to make it easier for more families to file using the 1040 postcard. It doubled the standard deduction and repealed Obamacare’s individual mandate which imposed an unfair tax on families making less than $50,000 per year. It saved families $5 billion in taxes by doubling the child tax credit to $2,000. It also cut the corporate tax rate to make U.S. businesses more competitive in the global marketplace. By doubling the exemption rate of the estate tax and stopping a massive hike for farmer co-ops, farmers and ranchers also saw a benefit from the Tax Cuts and Jobs Act.
Some people have been saying the Tax Cuts and Jobs Act didn’t work because they received smaller refunds this year. It’s important to remember that tax reform reduced tax rates and required the Internal Revenue Service (IRS) to change tax withholding tables. The size of your refund is based on the amount of your paycheck you withheld. Your tax refund represents how much you overpaid to the government last year in your paycheck. So if you did not update your W-4 form to make sure you were withholding the right amount from your paycheck, you may see a refund that is different from what you expected.
The Tax Cuts and Jobs Act marked the first time in a generation that comprehensive tax reform had been enacted. In the 16 months since it was signed into law, it is clear that it is working for South Dakota families. While we still have work to do – such as finalizing trade deals and strengthening our workforce – our economy continues to soar thanks to tax relief and other pro-growth policies.