Making the 2017 Tax Cuts Permanent

Republicans in the House of Representatives have recently proposed making the 2017 tax cuts permanent amid sky-high inflation rates (data shows that inflation has remained above 8 percent for the past seven months). The proposal would also renew the 20% small business deduction and make immediate expensing provisions permanent. Those provisions are expected to provide an incentive for businesses to increase production amidst supply chain problems.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about proposals to make the 2017 tax cuts permanent.

Below is a summary of the debate that ensued between the two professors.

Their Votes:

Byrnes

Bloink

Their Reasons:

Byrnes: Americans are struggling across the board with rising prices and inflation rates that are higher than we’ve seen in decades. The last thing we need is a major tax increase that will take place automatically in just a couple of short years absent Congressional action to extend our current reduced tax rates. We need to take action now to protect Americans from an unnecessary tax increase that would only further exacerbate the problem of strained wallets.

Bloink: The 2017 tax reform package overwhelmingly favored the wealthiest Americans. These are the very same people who are the least likely to be impacted by inflation. We need to overhaul the system and provide assistance in response to inflation, yes. But making the 2017 tax cuts permanent would not provide the benefits that lower- and middle-income taxpayers need to combat sky high prices for food, energy, and other basic essentials.

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Byrnes: The 2017 tax reform legislation was a powerful tool designed to help Americans at all income levels and making the existing tax cuts permanent would continue to provide the assistance that our taxpayers need. The last thing Americans need right now is a tax increase that even further reduces their spending power in the face of soaring inflation.

Bloink: Instead of tax cuts for the wealthy, Congress should be looking at alternative solutions—perhaps in the form of tax credits and other benefits specifically designed to offset the impact of inflation for the lower income taxpayers who are feeling the effects of inflation the most. The overall solution might even include tax hikes for the wealthiest Americans so that the increased revenue can be put to use in developing strategies that might actually combat inflation.

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Byrnes: We have to remember that economic conditions improved across the board in the wake of the 2017 tax overhaul. The cuts did work to stimulate the economy. Now isn’t the time to revamp a system that has helped Americans climb out of poverty over the years. Instead, it’s time to cement the tax cuts into place and continue supporting our small businesses and taxpayers who invest and keep the economy strong.

Bloink: Making the 2017 tax cuts permanent would only serve to put even more money in the hands of the richest Americans. That could work to drive inflation rates even higher in this already strained environment. On the supply chain side, making immediate expensing permanent would provide a long-term incentive for companies to invest and increase production over the future. However, in the short run, the move could be counterproductive when it comes to our supply and demand problems—especially if the benefit is deficit financed.