West Virginia is on a clear path to recovery from the COVID-19 pandemic. One especially promising milestone is the news that more than 680,000 West Virginians have received at least one dose of the COVID-19 vaccines. And legislators in Charleston wisely considered tax reforms that will make it easier for businesses to grow and invest, translating into long-term job creation that helps everyone emerge stronger in the next, post-pandemic world.
But members of Congress seem poised to go in a different direction — a direction that would slow our recovery.
Some in Congress want to reverse course from the 2017 corporate tax cuts enacted under President Donald Trump, raise rates and phase out pro-growth policies that were like rocket fuel for manufacturers of all sizes. But new research suggests raising taxes on businesses will cost millions of jobs over the next decade, slow down investment and reduce overall economic activity. At a time when communities and our economy need to emerge stronger from the devastation of COVID-19, this is the last thing Congress should be doing.
A new study published by the National Association of Manufacturers, a lobbying group with more than 14,000 members, shows what would happen if Congress raises taxes on small businesses and increases the corporate tax rate from 21% to 28%, along with other reversals of 2017 tax reform policies. The result would be 1 million fewer jobs in just the first two years after the rate hike, with an average of 600,000 fewer jobs each year over the next decade, according to the study. After tax hikes, our country would experience reduced investment and a decrease in overall economic activity.
It makes no sense to bring on these self-inflicted economic handicaps, especially when we have real evidence of how beneficial tax reform was back in 2017. Our industry, which provides nearly 50,000 well-paying jobs across West Virginia, was strengthened by the 2017 reforms. The following year, in 2018, manufacturers created 263,000 new jobs nationwide, achieving a 20-year record for manufacturing job creation. And wages grew roughly 3% per year, even during the height of the pandemic.
This is exactly what manufacturers said they would do if tax reform happened. Small, medium-sized and large businesses see more competitive rates as an opportunity to grow their operations, expand valuable research enterprises, reinvest in their communities and lift up their employees. We kept these promises.
And we can say with certainty that the 2017 tax reforms made our economy better prepared for the disruption everyone experienced as COVID-19 swept the country. The women and men our associations represent have been instrumental in leading the recovery from COVID-19, whether they were working overtime to fill the need for personal protective equipment, putting household goods on shelves or even developing life-saving vaccines.
Raising taxes would seriously hamper our ability to lead the recovery, undoing so much progress. And given that many small and medium-sized businesses — the vast majority of manufacturers — struggled with fluctuations in demand and supply-chain disruptions, a higher tax burden could make it even harder for them to stay afloat.
Instead of raising rates and making it harder for West Virginia manufacturers to compete, Congress should consider the example of the West Virginia House of Delegates and Senate, where representatives were looking to simplify rates and minimize everyone’s tax burden. At the very least, Congress should look to preserve the positive elements of the 2017 tax reforms, rather than erase them.
Our industry and the women and men who power it have proven that they’re essential to this recovery. Instead of slowing manufacturers down, let’s put more rocket fuel into this recovery.