Last week, the odds of achieving pro-growth tax cuts in 2017 took an important step forward when Treasury Secretary Steve Mnuchin expressed his desire for tax reform to be retroactive.
As I previously wrote, “retroactivity” is the question of whether tax cuts should be back-dated to January of this year in order to include income already earned this tax season. Retroactivity is a critical, yet overlooked, facet of tax reform that was in urgent need of a champion inside the “Big 6” architects of tax reform.
Secretary Mnuchin came out in support of retroactivity on CNBC, stating that backdating tax cuts “is still something we are considering and it would be a big boon for the economy.”
Committee to Unleash Prosperity co-founder Steve Forbes echoed the economic benefits of retroactive tax cuts, as well as the political ones. Forbes explained it is in Republicans logical self-preservation instincts to pursue retroactivity, stating:
They know if they don’t get this economy really moving, really where people feel it, they’re going to be in trouble next year, and members of Congress do not want to become Uber drivers. So I think they will push something, and I think there’s even a good chance they may make it retroactive. And get a real kick and get big refunds going out in April of next year.
Forbes also reiterated his call for retroactive tax cuts in a column that appeared on Forbes.com on Sunday.
The 2016 Republican landslide is owed in large part to the fact that Americans want economic growth now, not later. Republicans in Congress must deliver on this mandate by back-dating tax cuts to the first of this year, giving families a clear, immediate financial benefit following the results of the election.
If Republicans wish to reap the greatest political benefits from overhauling our outdated tax code, the most visible opportunity is a larger-than-normal tax refund check in April.
Retroactivity would also send a powerful signal to American businesses by informing them that their forthcoming tax bill will no longer be as high as they expected. Once America’s job creators have the certainty of knowing a lower tax bill is on the horizon, the economic benefits will be immediate.
While it is highly encouraging to see this important pillar of tax reform has finally made its way into serious consideration, more work is needed to keep it a focus point in the tax discussion. Let’s hope that Secretary Mnuchin will continue to hold his ground on the economic benefits of retroactivity.
Photo credit: International Monetary Fund via Flickr, CC BY-NC-ND 2.0