If you were to guess which state earned the highest Gross Domestic Product (GDP) per resident, would you guess that the winner – by a long shot – wasn’t a state at all?
Washington, D.C. rakes in more than $160,000 per person, more than doubling runner up Massachusetts and far eclipsing North Dakota’s own $62,837 earnings per resident. D.C.’s special interests have created their own economy influencing where American tax dollars are spent, and the rest of the country is losing out. As a result, the top four wealthiest counties in the country are all part of Greater Washington D.C. If that makes your blood boil as much as it does mine, you, too, should support the Republican tax plan.
Under the proposed Tax Cuts and Jobs Act, Washington will return an estimated $1.5 trillion to America’s hardworking families and businesses. In North Dakota, that means a roughly $2,287 pay raise for every middle-income family in the state. It’s enough for 8 months of groceries in the average household, or for a local restaurant owner to invest in wage increases or a much-needed new employee. Most importantly, it means money in the hands of local individuals and job creators, rather than in the pockets of overextended Washington bureaucracies.
It doesn’t take a degree in economics to know that a dollar spent on federal taxes is a dollar unavailable to the local economy. With some of the highest national business tax rates in the world, the United States ensures that not only do we lose the capital to finance our most successful local entrepreneurs, but we incentivize successful businesses to relocate overseas. Congress’ tax plan hopes to court the best and brightest business owners by being especially friendly to small businesses.
The vast majority of small businesses in America are taxed at individual rates, not corporate rates. The Republican bill calls for lowering the top marginal rate on many of these businesses to 25 percent, down from the 39.6 percent rate they’re currently saddled with. The reduced rate is also subject to anti-abuse rules to make sure the tax cut benefits the small businesses it was designed to help.
But the benefits of tax reform extend far beyond income and revenue.
The tax plan allows businesses to immediately write-off loan interest and capital investment expenses. It’s a simple rule which is far more practical than the current system, which forces small business owners to perform complex mathematics to determine their tax savings from depreciating purchases across multiple years. Small business owners who aren’t lucky enough to moonlight as certified public accountants can look forward to wading through a 114-page IRS document explaining how in the world to calculate what you don’t owe them.
When it comes time for small businesses to expand, it’s these cost and time saving measures which make daunting new expenses – like a new van for a local catering company, or another excavator for a landscaping business – far more manageable.
In President Trump’s words, tax cuts are going to “create a new age of American prosperity.” With the Republican tax plan bringing American dollars out of the swamp and back to Main Street, I have no doubt that American prosperity will quickly follow.