These Targeted Tax Credits Would Help Fuel Growth
As former Vice President Joe Biden and Democrats in Congress advocate for tax hikes on the wealthy and intrusive regulation on small businesses and workers, Americans know you can’t “Build Back Better” by dragging down the economy.
We know this based on recent experience. Following the 2008 financial crisis, the Obama-Biden Administration regularly lowered expectations for recovery, claiming that slow growth would be the new norm. Democrats wanted to pick and choose which jobs grew and how, while calling for cumbersome taxes that made recovery even slower.
But those claims were shattered by common-sense, pro-growth policies, which cut corporate tax rates and reduced the regulatory burden on small businesses and workers.
In just three years, these Republican reforms accomplished more than the Obama-Biden administration did in eight. The economy surged after the Trump tax cuts, unemployment for American workers dropped to record lows, and poverty declined by historic rates in 2019. Minorities, females, and those without a college degree saw some of the biggest wage gains.
And while take-home pay increased, business closures became rarer. Some companies stopped fleeing overseas. This approach created new jobs for all Americans, strengthened consumer confidence and optimism, and fostered breakthrough innovations here in America.
Successful Republican policies put American workers in the driver’s seat before the coronavirus hit. Today, we can help these same workers rebuild the greatest economy in a generation. But they deserve more than regaining their lost prosperity -- they deserve growth. And as we pursue that growth, we can, and should, end our dependence on China and address significant vulnerabilities in our medical supply chain.
That starts with helping Americans return to work safely in healthy workplaces -- many of which are moving in the right direction. Our Healthy Workplace Tax Credit makes the health of American workers a major priority. This is a refundable tax credit against payroll taxes for 50 percent of the costs incurred by businesses for Covid-19 testing, disinfecting, extra cleaning, and office reconfiguration.
As workers and families safely resume work, we will still find ourselves relying on critical goods from China, despite the instability that causes. That is why we must also take steps to rebuild American leadership in innovation and manufacturing.
The good news is Congress has already prioritized innovation’s ability to drive economic growth. In 2017, Congress allowed businesses to deduct research and development (R&D) costs immediately in the Tax Cuts and Jobs Act. Today, we can foster greater innovation by making this provision permanent, doubling the R&D tax credit, and making it easier for American companies to hold and return to the U.S. intellectual property developed abroad.
We can go even further than innovation to achieve greater manufacturing resilience. We can rebuild a stable supply of medicine and other necessities, with an Advanced Medical Manufacturing Equipment tax credit. We can encourage the domestic manufacture of ingredients for medicines, vaccines, and other countermeasures with a Domestic Medical Drug Manufacturing tax credit, which would cut the corporate tax rate in half on eligible profits.
These smart, targeted policies are part of Republicans’ Commitment to America to rebuild the greatest economy in history. We’ve done it before, and we will do it again, by enhancing Americans’ medical security, growing manufacturing jobs, and putting us back in front on a global scale.
Sadly, former Vice President Joe Biden and congressional Democrats have rejected this approach. Their job-killing tax increases and a raft of heavy regulations would send manufacturing fleeing abroad while keeping workers at home indefinitely, preventing them from safely providing for their families.
Both parties should agree that nothing is more important than keeping Americans healthy and making our country more resilient for the future. The best path to rebuilding the economy is pro-growth policies, not tax hikes and intrusive regulations. Democrats should adopt House Republicans’ ideas to rebuild and ensure that a pandemic like this will never have such a terrible impact on our economy ever again.
Rep. Kevin McCarthy, R-Calif., is the House minority leader; Rep. Kevin Brady of Texas is the ranking Republican on the House Ways and Means Committee.