Women are hurting after 4 years of Biden — Congress must not let Trump’s 2017 tax cuts expire
Women benefited greatly from the Tax Cuts and Jobs Act of 2017 — and they stand to lose a lot if key provisions of this bill are not restored and reformed by policymakers this year.
For one thing, the unemployment rate for women dropped to a near 65-year low in 2018 following the tax bill’s passage, as the first Trump administration noted. This didn’t happen by accident.
In 2016, the U.S. had the highest corporate income tax rate (combined federal, state and local taxes) among developed nations, according to an America First Policy Institute report by Michael Faulkender, President Trump’s nominee this year for deputy Treasury secretary. With the Trump tax bill, this rate fell to a much more competitive one, giving employers more resources to create new jobs and give workers — including many women — hiring and performance bonuses.
Federal Reserve data show that at the beginning of the first Trump White House, the labor force participation rate among prime-age workers (ages 25 to 54) was 81.5 percent. By the time COVID struck, that rate had grown to 83.1 percent. It still hasn’t recovered to pre-pandemic levels, however; it will undoubtedly worsen if the tax provisions are not renewed.
As workers were allowed to take home more of their pay in the wake of the 2017 tax bill, U.S. Census Bureau data released in 2020 showed that women also experienced record-high incomes. The poverty rate fell to a record low in 2019, with 4.2 million Americans lifted out of poverty that year — the largest decrease in poverty since 1966. This was in part thanks to improved business earnings that companies passed on to workers, which strengthened their financial position.
Under the 2017 tax reform, single women (and men) saw their guaranteed personal tax deduction rise $15,300, but the House Ways and Means Committee, which writes tax law, reports that is scheduled to drop to just $8,300 if the tax bill is not renewed. Married women saw their family’s guaranteed personal tax deduction rise to $30,600; this would crater to just $16,600 without the bill’s renewal.
The committee also notes that a family of four making $80,610 — the median income in the U.S. — would see a $1,695 tax increase if Trump's 2017 tax bill expires. This is the equivalent of about nine weeks of groceries for a typical American family. After the bill’s passage, mothers were eligible for a $2,000 per child tax credit. Without reforms, this would drop to $1,000 per child.
Women are highly entrepreneurial, with women owning more than 12 million businesses and employing over 10.7 million workers, contributing $2.1 trillion in sales, according to the U.S. Small Business Administration. Unfortunately, small businesses will be hit with a 43.4 percent tax rate if the tax law's 199A Small Business Deduction expires.
The National Federation of Independent Business reports that more than 90 percent of all businesses in the U.S. are structured as “pass-throughs.” This means they are taxed at the individual tax rate, not at the 21 percent rate for corporations. Likely a significant proportion of the nation’s 12 million women-owned businesses are structured this way. The Tax Cuts and Jobs Act provided for up to a 20 percent deduction on the entrepreneur’s business income to offset the income tax rate differential between corporations and individuals.
“The new deduction was generally designed to allow these business owners to keep pace with the significant corporate income tax rate cut provided by the" Trump tax law, Ernst & Young tax experts reported in November.
“Innovation and economic dynamism best materialize when start-ups can challenge incumbent firms with new products, services, and locations,” says Faulkender. “A higher tax rate on small business income would have further advantaged larger businesses.”
In other words, women running their small businesses will face greater headwinds (compared to big businesses, which have more resources) to absorb higher tax rates that are scheduled to take place with the spike in individual tax rates.
A National Federation of Independent Business member ballot showed that 91 percent of its small business owners “support permanently extending the expiring provisions, such as the Small Business Deduction, in the 2017 tax law.” An survey by the organization also reported “more than 81 percent believe the Small Business Deduction is important to their businesses.”
Without tax reforms, businesses will pass higher costs on to customers to absorb tax hikes. Women are already dealing with the 20 percent cost of inflation after four years of Bidenomics; we don’t need new economic sabotage shrinking incomes and spiking costs further.
The good news is that congressional leaders say they are committed to renewing the powerful provisions of the 2017 tax bill. It’s our role as voters to hold them accountable. Women, and all Americans, deserve to keep more of their hard-earned money and increase our economic security for retirement and building families.
Carrie Sheffield is a senior policy analyst at Independent Women’s Voice.
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