Bring on the sunset: Let the Trump tax cuts expire

Sunsets can be beautiful — not just at the shore, or on the mountains, or in the heartland, but also in tax policy.

The sun is about to set on individual income and estate tax provisions of the so-called “Trump tax cuts.” Eight years of damage, deficit, debt and deep inequity: They haven’t been pretty. Their expiration in 2025 is a welcome sight.

House Ways and Means Chair Jason Smith, R-MO, has scheduled a hearing Friday at the Iowa State Fair to promote this policy failure. Speakers the chairman has invited are to address “the positive impact and importance of the Trump Tax Cuts.”[1]

“In view of the limited time available to hear the witnesses, oral testimony will be from the invited witnesses only,” Smith’s news release states. [2] Yes, who needs the full story?

What Smith and those attending likely won’t hear, but should, are stories about the damage to American families, farmers, workers and small businesses — those who benefit little if any from these tax cuts but are left on the hook for generations of fresh debt.

Chairman Smith could invite creative and sensible alternative approaches, like permanently expanding the Earned Income Tax Credit and Child Tax Credit to boost families out of poverty and toward opportunity.

Competent analysis has shown the 2017 tax cuts were skewed to the rich, with the top 1% getting an average tax cut of more than $60,000 in 2025, while the bottom 60% average less than $500.[3] Anyone making over $400,000 a year does not need continuing tax cuts, and we as nation cannot afford it.

In Iowa, we should be on to this strategy, with comparable results coming from the phase-in of a single-rate state income tax that treats the wealthiest most generously — nearly one-fifth of the benefit going to the top 1% and a little more than one-third to the bottom 85%.[4]

Competent analysis also has shown the 2017 tax cuts are costly — with official estimates of $1.9 trillion over 10 years and another $400 billion a year if the temporary income-tax and estate-tax cuts are made permanent. The Center on Budget and Policy Priorities noted, revenues as a share of the economy (GDP) dropped sharply from 19.5% before the Bush cuts in 2001 and 2003 to 16.3% following the Trump cuts, expected to average out at 16.9%.[5] “This is simply not enough revenue given the nation’s investment needs and our commitments to Social Security and health coverage,” the authors wrote.

Likewise, in Iowa the coming state tax cuts will reduce ongoing General Fund revenues by over 20%, a recipe for disaster in sustaining critical public services when budgets by law must be balanced.

Members of the congressional panel meeting Friday don’t have to worry about that. They can build deficits that compound debt, complain about it but do nothing to fix it — as happened in the past.

They should be interested in better options — not merely political affirmation — when they show up Friday for a corn dog.

Let the sun set on these tax cuts for the rich, and put the nation on a path to shared prosperity. Learn from the mistakes of 2017. Iowa has not. Maybe Congress can.

Mike Owen is deputy director of Common Good Iowa. Contact: mowen@commongoodiowa.org