Left-wing activists and journalists are distorting the pending federal tax-cut legislation in a last ditch effort to scuttle it. A Google search shows hundreds of anti-tax cut articles in the last week alone. But few provide objective and sober analyses of the bill; many suggest the bill is little more than a gift to the rich.
In reality, proposed tax cuts would allow small businesses and entrepreneurs to achieve the American Dream just like Ronald Reagan’s tax cuts allowed me to do in the 1980s.
President Reagan’s across-the-board tax cuts significantly increased the incentives to go into business and generated several years of 4 percent economic growth that helped my young company grow. This bill will do the same.
My company started on a dirt floor with a coal stove outside Morgantown, West Virginia, and grew into the world leader in large diameter shaft drilling. Over the years we have generated thousands of jobs and millions of dollars of economic activity. In today’s tax environment it would have been difficult to impossible to have enjoyed the same success.
The benefits my company have produced have been more than just economic. The drilling know-how developed at my business helped us rescue 33 miners in Chile. Despite the naysayers, this pending tax-cut bill will help entrepreneurs follow in my footsteps, achieving the American Dream and improving the world around us along the way.
How? The bill creates a new 20 percent small-business tax deduction allowing entrepreneurs to keep more of their earnings needed to innovate, expand and thrive. This provision would help level the playing field between small businesses and their big businesses and international competitors, which currently pay far lower tax rates, giving them an upper hand in the marketplace. To make sure this deduction goes to those who need it most, it would be off limits to wealthy investment, law, accounting and other “white collar” firms.
In addition to using them to be more competitive, small businesses would deploy their tax-cut savings to create new jobs, raise wages and expand, as both survey and empirical evidence demonstrate. This would keep more money in local communities where it is needed and send less to Washington, D.C., where it is not.
Journalists may not see it, but regular American communities have been largely passed over by the economic recovery. Meanwhile, a new Census Bureau analysis shows that the five wealthiest cities in the country are all in the Washington D.C. region. This wealth is largely built of the backs of ordinary, hardworking Americans through tax dollars. The tax bill would also help right this imbalance.
Small businesses and local communities would also be helped by the tax bill’s provisions for immediate expensing and interest deductibility, which would further spur expansion and capital investment. And small businesses, along with all ordinary Americans, would benefit from its provisions to double the standard deduction to $24,000, eliminate the 15 percent tax bracket in favor of a vastly expanded 12 percent rate and double the child tax credit.
Taken together, the pending tax bill would bring long overdue relief to hardworking Americans and help spur the next generation of business success stories.