WASHINGTON, D.C. — The tax reform legislation that became law before the first of the year was created with two goals in mind: cut taxes for middle-class families and reopen the American economy as the best place in the world to do business.
Just a few months since becoming law, the results are there, and they are real.
In January, the IRS updated how much is taken out of paychecks for taxes to reflect the tax cuts, and by February, 90% of American workers got a higher paycheck and more take-home pay. For workers in Mahoning County, and across the state, the proof is in the paycheck.
With lower tax rates and a doubling of the standard deduction and the child tax credit, middle-class families are keeping more of their money rather than it going to Washington. A median-income family of four will save about $2,000 a year on their taxes. For families in the Mahoning Valley, that extra money makes a real difference. Based on what people around the state have told me, it’s being used to help pay for regular expenses like gas, groceries, or health care; to save for retirement or to use for a much needed vacation.
The benefits of this tax reform start with families, but they extend to businesses, their employees and our economy. Good news continues to spread throughout the Buckeye State as more and more businesses respond positively to the pro-growth changes in our new tax law.
In just the past few weeks, I’ve visited eight businesses across Ohio that have announced new investments in plants and equipment, raised wages, delivered bonuses, increased retirement contributions, or expanded health care benefits as a result of tax reform.
The most recent federal jobs report shows the fastest wage growth since the 2009 recession and the most Americans entering the workforce since 1983 — and according to a recent National Federation of Independent Business survey, small business optimism is at the highest level the organization has ever recorded. Business optimism is increasing from tax reform, and businesses are paying forward benefits of this new law to workers.
I saw this firsthand in Lake County two weeks ago and in Cincinnati, Columbus, Zanesville, Tipp City and Cleveland. At Tremco, a small manufacturing business in Cuyahoga County, I toured the facility and met with employees as the business announced plans to upgrade its equipment, hire new workers, and reinvest in their employees through increased contributions to employee retirement plans, all as a direct result of tax reform.
A more competitive business tax code, an international tax code that encourages jobs and investments in this country rather than overseas, and incentives like immediate expensing of equipment are helping American businesses like Tremco and others reinvest — and are increasing opportunity for Ohio workers.
One estimate suggests that, across the country, more than 400 businesses have announced bonuses, higher wages, increased benefits, or a combination of these things as a result of this tax reform law. I’ve met with dozens more small businesses since the first of the year across Ohio that aren’t included on that list and are doing the same thing, so I know the number is far higher than that.
The tax reform legislation also preserved important tax credits used for community redevelopment projects. The New Markets Tax Credit and Historic Tax Credit were removed in the House-passed tax reform bill, but I successfully fought to include them in the final law. These tax credits are important to Ohio, and they have helped leverage private funds for nine projects in Mahoning County.
The New Markets Tax Credit is a tax incentive to spur economic growth and community redevelopment projects. It was critical for the recent construction of the new University Hospitals Rainbow Center for Women & Children in Cleveland and the renovation of the downtown Youngstown YMCA. The Historic Tax Credit, which is used to preserve and renovate historic buildings, helped leverage funds for the new DoubleTree hotel in downtown Youngstown and will encourage more economic development in the area.
There are countless other examples of these tax credits benefiting Ohio communities, and I’m pleased I was able to work with my colleagues to ensure they stayed in our tax reform law.
Before this new law, it had been 31 years since we last updated our tax code in a comprehensive way. I’m proud that the tax reform law is putting money back in the pockets of Ohio families, creating more opportunity for Ohio workers, and helping Ohio’s companies and the American economy.
Editor’s Note: This commentary was submitted to The Business Journal by the office of U.S. Sen. Rob Portman.