McCarthy: Tax bill is great for California

Guest Editorial

By KEVIN MCCARTHY, House Majority Leader

Co-authored by Ed Royce, Mimi Walters, Tom McClintock and Steve Knight

Reading the news and watching television, one gets the impression that our Tax Cuts and Jobs Act is stealing from the poor to feed the rich, all while pushing old, sick Grandma off a cliff. House Minority Leader Nancy Pelosi — fearing the new year is the beginning of the end times — even called the bill “Armageddon” and the “end of the world.”

If these attacks don’t strike you as at least slightly bizarre, then consider this a trigger warning: the truth below might not be the cup of Kool-Aid you’re used to.

Let’s get some things straight. A family of four in California earning $60,000 or less a year will pay no federal income taxes. That same family earning $90,000 will see their federal income taxes fall by 22 percent, a tax cut of more than $1,000. In our districts the median family of four will see a tax cut of up to $2,500 and the average single individual will see a tax cut of $1,400 to $1,900. But California is an expensive place, especially in our cities, which is why a family of four earning $200,000 will see a tax cut of more than $1,500.

If you notice a trend, you’re right. Just about everybody is getting a tax cut — single or married, kids or no kids, rich or poor. Not only that, but businesses across the country are giving bonuses and increasing retirement funding for their employees while utility companies throughout the U.S. are lowering rates for their customers.

The news gets better. Our legislation cuts the small business tax rate to the lowest it’s been since the 1930s while reducing the corporate tax rate to 21 percent, below the international average of 22 percent. That incentivizes people to start businesses in America, move businesses to America and hire Americans.

We need those businesses. California’s unemployment rate is 4.9 percent, above the national average of 4.1 percent. Meanwhile, our labor force participation rate is 62.5 percent, far below rates before the recession. According to a report by Measure of America accounting for everything from median earnings to standard of living, California is the single most unequal state in the country.

Facing an overwhelming tax burden, companies like Toyota and Carl’s Jr. have already fled California. Simultaneously, record numbers of Californians are moving to low-tax states like Texas. The people of California can’t afford high state taxes that shut out businesses, destroy jobs and deprive Californians of much-needed income.

Despite this, Gov. Jerry Brown and Sacramento Democrats just increased California’s gas tax again — a move that hits the poor the hardest — even while falsely accusing our tax plan of raising taxes.

Unfortunately, the disinformation campaign of hypocritical Democrat leaders and much of the media is sowing fear in the same people the Tax Cuts and Jobs Act is going to help.

The left-leaning Tax Policy Center conservatively estimates that 80.4 percent of Americans would get a tax cut in 2018, seeing an average of $2,140 more in their paychecks. Even so, only around a quarter of Americans think their taxes will go down while around 50 percent think they will go up.

The only explanation for this disconnect between perception and reality is the astounding degree of dishonesty from the bill’s detractors. So let’s refute some of the most common critiques.

Folks are worried that by limiting the state and local tax and home-mortgage deductions, Californians will pay more. Our legislation keeps the SALT deduction for up to $10,000 and the home-mortgage interest deduction up to $750,000 in loan value for new mortgages, and every time we limited or eliminated deductions or loopholes, we directed those savings to taxpayers. That’s why even with changes to these deductions, the average tax cut in California is more than $2,000.

Critics also portray the elimination of Obamacare’s individual mandate as taking health care away from the American people. However, if people don’t buy bad insurance when the government stops forcing them to buy it, they haven’t lost insurance, they’ve regained freedom.

Finally, this bill is attacked as a tax cut for the rich at the expense of the poor. We do cut taxes at every single income level — for high-earners as well as everyone else. But this attack preys on resentment the American people don’t have. We don’t begrudge others getting a tax cut that we get too because we know we can all rise together.

As this tax plan is implemented, working Americans should ignore the spin, check their paychecks, and see that they keep more of their money, businesses and jobs coming back, and American workers are getting a raise.

No matter what the prophets of apocalypse say, the world isn’t ending. Federal taxes are going down because of the Tax Cuts and Jobs Act, and especially if Sacramento follows suit and reduces state taxes, Californians can look forward to better days ahead.

Story First Published: 2018-01-26