Time is running out for Republicans if they want to keep their governing majority in 2018.
After 238 days of having control of
the White House and both houses of Congress, the GOP has only one major
legislative achievement – the Senate confirmation of Supreme Court
Justice Neil Gorsuch.
This is, in part, because Republicans tried to run
before they could walk. Attempting to immediately repeal and replace
ObamaCare without an iron-clad strategy for success was a mistake driven
by post-election excitement and inexperience. Remember, many current
House Republicans have never served when there was a Republican in the
White House, and our Senate majority is still too slim to pass
transformative conservative legislation.
But while early mistakes are to be expected, it is not too late to change the Republican trajectory.
Before we can fully bring our country out of the
liberal, big government, dependency model, Republicans need to develop
an economic-growth-focused strategy, build legislative momentum on the
floor of Congress, and gain full support from the American people.
The key to achieving these goals – and growing our
majority in both the House and Senate next year – is to pass simple,
popular, tax cut legislation by this year’s end – preferably by
Thanksgiving.
The cornerstone of this legislation must be a serious
tax cut for small businesses so they can expand, create more jobs, and
revive the middle class.
Small businesses represent 99 percent of our
country’s employers, employing nearly half of our country’s private
sector workers and creating three out of every four new jobs. However,
instead of paying the corporate tax rate, more than 90 percent of these
businesses report their income through their owners’ individual income
tax filings.
Despite what some on the Left assert, these are not
“the rich” or “the top 1 percent” – far from it. Most small businesses
are truly small.
U.S. Treasury data and a
report by the National Federation of Independent Business
show only 2.4 percent of small businesses report incomes in excess of
$250,000 a year. In fact, 88 percent of income tax returns by small
business owners show adjusted gross income of less than $200,000.
Seventy-one percent of such returns show adjusted income that is less
than $100,000 a year.
On the high end, the
Tax Foundation reports
that the top earning small businesses pay marginal federal tax rates as
high as 44.6 percent (when you combine the individual rate, the
self-employment tax, and the net investment income tax). Adding state
income taxes to the mix means these small business owners face tax rates
that approach 50 percent.
This must change.
Republican lawmakers should create a graduated system
that caps the tax rate on the highest small business incomes at no more
than the corporate rate of 38.92 percent, drastically reduce the
individual income tax rates, or both.
Relieving small businesses of this enormous tax
burden will allow them to buy more equipment, expand their operations,
hire more people, raise workers’ wages, and generate massive economic
growth.
Despite a slow start for the Republican-led government,
Gallup reported
on Wednesday that 51 percent of Americans approve of the way President
Trump has handled the economy. This is higher than the economic ratings
Barack Obama, Ronald Reagan, and Bill Clinton each received during their
eighth month in office. Only George W. Bush in 2001 had a higher
economic approval rating, at 72 percent.
It is not surprising that Americans approve of how
President Trump has been handling the economy. Since taking office, the
stock market has been booming. The Dow Jones Industrial Average is up
12.25 percent; The Nasdaq Composite Index is up 22.92 percent; and the
S&P 500 is up 11.49 percent.
Tax cuts on small business and the middle class will
provide an enormous boost to the already improving economy. This will
result in even more jobs, higher take home pay, and stronger growth.
When voters head to the polls on November 6, 2018, if
they have been experiencing a robust American economy that is
dramatically stronger than the slow-growth economy during the previous
years of Democratic leadership, then they will elect more Republicans to
office.
But Republicans must pass serious tax cuts for the
middle class and small businesses by Thanksgiving to make that happen.
It’s that simple.
Newt Gingrich is a Fox News contributor. A Republican, he was
speaker of the United States House of Representatives from 1995 to 1999.
Follow him on Twitter @NewtGingrich. His latest book is "Understanding Trump."