Last year's tax reform is benefiting Americans twice. First, from paying less in taxes, and second from a bigger economy that results in higher incomes.
That's not just wishful thinking. We've run the numbers. The average American household can expect an additional $26,000 in take-home pay over the next 10 years. For a family of four? Just shy of $45,000.
That's more than enough for a new car, a year of college tuition, or part of a down payment on a house.
New research I recently completed with Kevin Dayaratna and Parker Sheppard from The Heritage Foundation measures the benefits of the Tax Cuts and Jobs Act in every congressional district across America. Using IRS data, we look beyond the national average and find that typical taxpayers in every congressional district and in every state get a tax cut this year. Every district also sees higher take-home pay over the next 10 years due to the bigger economy.
In short, this doesn't just benefit the rich, or those in "red" states. It benefits everyone.
You may have noticed part of your tax cut already, as your employer has started deducting less from your paycheck this year. The average American household can expect to pay about $1,400 less in taxes in 2018. But depending on where you live and how many kids you have, the numbers can look different.
In communities that had high tax bills last year, such as Palo Alto, Calif.'s 18th Congressional District, represented by Anna Eschoo, or New York City's 12th district, represented by Carolyn Maloney, the average tax cut could be as much as $3,000.
Lower-income communities, such as Arizona's 7th district near Phoenix, represented by Ruben Gallego; and New York's 15th district in the South Bronx, represented by Jose Serrano, will see much larger percentage decreases in their tax bills.
Tax reform befitted these communities by cutting their income taxes by as much as a third. By this measure, lower-income communities tend to see the largest reductions in their tax bills.
Americans with children will also benefit tremendously from the Tax Cuts and Jobs Act. A married couple filing jointly with two children will see their tax bills fall by $2,917, on average.
The tax cuts, however, will have much larger effects than just letting Americans keep more of their money. Since tax reform passed, Americans for Tax Reform has counted more than 650 companies that have announced more jobs, larger bonuses, higher wages, charitable giving and new investments in the U.S. All of them have explicitly cited the tax cuts as the reason for the bonuses and investments.
Nationally, businesses are in the midst of the longest-running trend of adding jobs to the U.S. economy in our history. For the first time since we started counting these this type of things, there are more jobs available than people looking for them.
Because it is easier to find, more people are looking for work, relying less on unemployment, and supporting themselves. In the coming years, the tax cuts will continue support more jobs, raise wages and expand economic opportunities. Economists across the board agree that the economy is fundamentally strong, and a strong economy means higher wages.
But the future of tax cuts is not so certain. Many of them expire after 2025, and some in Congress are determined to repeal them well before then. If the tax cuts are made permanent, the benefits over the next 10 years will be even bigger and will continue to compound for years to come. The reverse is also true. If tax cuts are rolled back, the benefits will shrink or go away entirely.
The Tax Cuts and Jobs Act was a landmark achievement to lower America's taxes and update our broken system that pushed jobs overseas. Making the tax cuts permanent is crucially important for our well-being. To protect our paychecks, Congress must make our tax cuts permanent.
This piece originally appeared in The Sacramento Bee