Wednesday, July 11, 2018

Justin Haskins: Six months in, tax cuts are already providing historic gains for minorities, women, and small businesses

Unemployment rates for minority groups are reaching historic lows.

When Republicans passed the Tax Cuts and Jobs Act in December, congressional Democrats denounced the legislation as a reckless attempt to help wealthy corporations at the expense of everyone else. House Minority Leader Nancy Pelosi, D-Calif., famously dismissed the law’s benefits to most taxpayers as “crumbs.”

Six months later, many of the groups Pelosi and other Democrats warned would be worse off as a result of the tax reform legislation — including minorities, women, and small businesses — are not only thriving, they are experiencing some of the most notable economic growth in the country's history.

In January, the black unemployment rate was 7.7 percent, but by May, it had dropped to 5.9 percent, the lowest unemployment rate recorded for African-Americans since the Bureau of Labor Statistics began to report such figures in 1972. This rate is made even more impressive considering that prior to President Trump's time in office, African-Americans had never experienced an unemployment rate below seven percent.

Hispanic and Asian unemployment rates are also at historic lows. Hispanic unemployment in 2018 is on pace to be the lowest annual average ever, and the unemployment rate for Asians has dropped by nearly a full percentage point, from 3 to 2.1 percent, since January. That rate is now sitting at its lowest point in BLS records, which date back to 2003.

Women are also enjoying groundbreaking economic gains. May’s 3.3 percent unemployment rate for women is lower than any rate recorded since 2000 and is on pace to be the lowest annual rate since 1953.

Tax reform has improved other aspects of the economy as well. BLS reports wage growth for the first quarter of 2018 was greater than at any time since the recession of 2008, and numerous welfare programs are experiencing dramatic enrollment decreases. For example, the Centers for Medicare and Medicaid Services reports total Medicaid and Children's Health Insurance Program enrollment dropped by 728,000 from December 2017 to March 2018, the most recent month for which data are available. By contrast, in the four-month period prior to the tax cuts (September 2017 through December 2017), enrollment increased by 163,000.

Similarly, enrollment in the Supplemental Nutrition Assistance Program, commonly referred to as food stamps, decreased by more than 1.1 million from December 2017 to the end of March 2018.

Pelosi and other opponents of the tax reform legislation continue to insist the cuts primarily benefit corporations, whose tax rate under the bill fell from 35 percent to 21 percent. Cutting the corporate tax rate was necessary to make America more competitive with the rest of the industrialized world, which has for many years offered much lower corporate tax rates. But corporations weren’t the only businesses to benefit from the law.

Various changes affecting small business owners — including the creation of a 20 percent deduction for qualified business income for pass-through businesses — have helped spur confidence among small businesses, who employ about half of all private sector workers.  The National Federation of Independent Business reports that its Small Business Optimism Index in May reached the “second highest level in the NFIB survey’s 45-year history.” And NFIB President and CEO Juanita Duggan said optimism among small businesses “is on a stratospheric trajectory thanks to recent tax cuts and regulatory changes.”

As difficult as it may be for Pelosi and other advocates of higher taxes and more government control to admit, the successes of the Republican tax reform legislation clearly illustrate that when people are empowered to keep more of their own money, everyone in society benefits.

Justin Haskins is a contributor to the Washington Examiner's Beltway Confidential blog. He is an executive editor at The Heartland Institute.

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