The Republican tax cut plan unveiled this week, if approved, will help stimulate more economic growth and jobs and thereby offset some of the $1.5 trillion of cuts provided to business and individual taxpayers, the chairman of the House budget committee said Friday.
U.S. Rep. Diane Black, R-Tenn., the chairwoman of the House Budget Committee and a member of the tax- writing House Ways and Means Committee, said lowering corporate tax rates, allowing businesses to immediately expense investments and giving most individual taxpayers lower and simpler taxes should spur more business and job growth and put more money in the pockets of consumers to also stimulate the economy.
"Our economy desperately needs a jolt — we all know that," Black told hundreds of manufacturing leaders gathered for the 115th annual meeting of the Chattanooga Regional Manufacturers Association in Chattanooga on Friday. "We've been in the doldrums."
Black said the United States has the highest corporate tax rate among major industrialized nations "so we're seeing an exodus of our companies going to foreign countries because they could compete better there."
The broadest measure of economic growth, the Gross Domestic Product, has historically grown at 3 percent average annual rate over the past century. According to the Bureau of Economic Analysis, the average growth rate of the economy last year was 1.6 percent, down from 2015 when GDP grew by 2.6 percent, which marked the best year for average growth under President Obama.
The Chattanooga Regional Manufacturers Association recognized Friday Siskin Steel President Paul Loftin with its highest honor, the C.D. Mitchell award given in honor of the founder of the 115-year-old manufacturers group. Loftin, a 15-year Siskin employee who has been president of Siskin Steel for the past seven years, served as chairman of the Chattanooga Regional Manufacturers Association for the past year.
Black said with the tax reform plan outlined Thursday by GOP leaders in the House, the U.S. economy should grow at least a 2.6 percent a year "and maybe much faster" if the Trump administration and Congress continue to lift regulations that limit growth opportunities in many industries.
That extra economic growth should help pay for at least some of the costs of the tax reductions, although Black said she was disappointed that the GOP Senate this year didn't do go along with the House-approved budget that would have made more cuts in spending.
"We were able to pass the most conservative budget that was passed in 20 years and to begin to change the dialogue in Washington," Black said of the original House budget plan adopted earlier this year. "Unfortunately, we were not able to fully implement the budget that we had passed in the House."
But passing the revised congressional budget last month "was the golden key that unlocks tax reform."
Black said the tax reform plan introduced Thursday will be debated, along with proposed amendments, in the House Ways and Means committee on Monday and Tuesday and is likely to spur opposition.
"Anytime you talk about cleaning up the tax code and removing tax loopholes, you're going to gore someone's ox," she said.
Democrats question the economic gains from the tax reform plan, noting that it would remove deductions for student loans, medical expenses and property tax payments while repealing the estate tax that affects only just 0.2 percent of all estates.
Tennessee Democrat Party Chairman Mary Mancini said if the GOP tax plan is adopted "revenue will be depleted and the deficit will balloon and Republicans have already said that they'll deal with the increase in the deficit next year by cutting Medicare and Social Security.
"Diane Black is blatantly misleading us about this tax plan," Mancini said. "Tennesseans, who work hard on a path to a better life for themselves and for their families, will no longer be able deduct student loan payments or medical expenses while millionaires like Diane Black will get out paying the dues we all pay to keep this country's roads safe and drinking water clean."
But Black, who has represented Tennessee's 6th congressional district since 2011 and is a GOP candidate to succeed Gov. Bill Haslam next year, said 90 percent of Tennessee taxpayers would be able to fill out their taxes on a post card if the GOP reform plan is adopted.
Black was cheered by manufacturers Friday when she pledged to work to lower taxes and limit business regulations on industry. More than 342,000 Tennesseans are employed in manufacturing jobs and Black said "nobody works harder than the American worker" anywhere in the world.
"Let's just get off your backs, give you an opportunity to do your business and you can do it," she told the manufacturers group.
Black said chances the House passing the tax cut and reform plan before Thanksgiving "is very, very good," and she expects at least some Democrats will ultimately vote for the final version of the tax reform plan.
"This is a once-in-a-generation opportunity," she said.
Contact Dave Flessner at email@example.com or at 423-757-6340.