US sees 6 million job losses, $1.1 trillion GDP shortfall if Trump tax cuts expire: study

FIRST ON FOX: A study released by the National Association of Manufacturers (NAM) shows that nearly 6 million American jobs are at risk if President-elect Trump’s 2017 tax cuts expire.

Fox News Digital first obtained a copy of the study conducted by Ernst & Young on behalf of the largest production association in the US It has been found that if Congress does not take action to preserve the Tax Cuts and Jobs Act by the end of 2025, an estimated 5.9 million American jobs will be lost.

NAM argued that key pro-manufacturing provisions related to research and development, capital investment, and business loans from the Tax Cuts and Jobs Act of 2017 have already been phased out in 2022 and 2023, and several other provisions, specifically the 20% pass-through deduction, individual tax rates and the estate tax exemption threshold are expected to expire at the end of 2025.

The study estimates that the American economy will face $540 billion in lost wages and a $1.089 trillion GDP shortfall if the remaining provisions of the Tax Cuts and Jobs Act expire. In addition, if Congress does not preserve the reforms, 1.137 million manufacturing jobs, $126 billion in manufacturing worker compensation and $284 billion in manufacturing GDP are on the line, the study says.

“The time to act is now. Millions of American workers depend on a manufacturing sector that will continue to move America forward,” said NAM President and CEO Jay Timmons. “The growth-oriented tax policies of President Trump’s 2017 tax reforms have been rocket fuel for manufacturers and made the U.S. economy more globally competitive. Manufacturers have kept our promises to create jobs, increase wages and benefits, and invest in our community. By acting now, policymakers can choose economic growth over economic disaster and protect Americans’ livelihoods.”

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Timmons argued that preserving tax reform should be one of the first priorities of the new Congress and the incoming Trump administration.

“If Congress delays, manufacturers will be forced to delay investment and job creation decisions due to an uncertain outlook. In 2017, Congress passed the landmark Tax Cuts and Jobs Act late in the year, meaning manufacturers’ investment decisions based on the law could it won’t bear fruit until 2018 at the earliest,” Timmons said.

In 2018 and 2019, capital spending in manufacturing grew by 4.5% and 5.7%, respectively, compared to growth of just 1.4% in 2017.

Timmons noted that manufacturers also added 267,000 new jobs in 2018, marking the best year for manufacturing jobs in 21 years.

“This time we can’t afford to wait: With key provisions of the TCJA expiring in recent years, the economy is already in decline,” he said. “After direct R&D spending expires in 2022, EU R&D growth has surpassed the US for the first time in nearly a decade, and China’s R&D growth has tripled our own. Congress and President Trump should work expeditiously on stimulating activity this year by acting urgently to give manufacturers the tax certainty they need to plan long-term job creation projects.”

NAM argues that congressional inaction risks higher taxes on pass-through and family-owned businesses; increased costs for research and development, capital equipment purchases and business loans; and “an uncompetitive international tax regime that discourages investment in the US and inhibits manufacturers’ ability to compete on the world stage.”

House Republican leadership has made it clear they agree to preserve the 2017 tax reforms.

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“Failure to extend Trump’s tax cuts could lead to an estimated 6 million job losses and the destruction of America’s manufacturing sector,” House Speaker Mike Johnson, R-La., said in a statement. “It is the responsibility of Congress to act quickly so that we can protect Americans’ livelihoods, prevent wage cuts and avoid the largest tax increase in history. We all know the importance of creating things here in Americathat’s why House Republicans are working hard to preserve and build on President Trump’s historic tax reform and support American manufacturers.”

House Majority Leader Steve Scalise, R-La., said Trump’s Tax Cuts and Jobs Act of 2017 “has not only strengthened American manufacturing, it has promoted job growth, spurred innovation, increased the take-home pay of hard-working Americans, and increased U.S. competitiveness.”

“With President Trump returning to the White House and Republican majority in the House and Senate, we must act quickly to ensure global competitiveness is maintained, support investment and innovation, and protect small businesses and workers,” Scalise added. “Hardworking Americans deserve a strong economy that works for them, not against them. House Republicans are poised to prevent the largest tax hike in history and make our economy great again.”

“This study confirms the need to immediately extend Trump’s tax cuts this year by showing the real devastation to America’s small businesses and manufacturers if we don’t take action,” said Ways and Means Committee Chairman Jason Smith, R-Mo. “With nearly 6 million jobs on the line, Congress must act quickly to give America’s small businesses, families and communities across the country the green light to hire more workers and expand their businesses to rebuild the largest economy of our lifetime as soon as possible.”

“The last thing they need is the biggest tax increase in American history,” Smith added. “Ways and Means Republicans have been preparing for this moment for nearly two years and are ready to deliver an economic package that makes American manufacturing great again.”

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The study also drew a reaction from the upper house of Congress. Senate Finance Committee Chairman Mike Crapo, R-Idaho, said Trump’s tax reform “allowed Americans to keep more of their hard-earned money and allowed companies to invest in their ideas, products and people.” He added that permanent tax cuts “are the best way to ensure the greatest economic growth, ensure safety and stability for American businesses, and avoid the economic losses described in this study.”

A press conference to discuss the study further is scheduled for Tuesday afternoon at the Capitol.