Every Congressional District in California Gets a Tax Cut This Year

COMMENTARY Taxes

Every Congressional District in California Gets a Tax Cut This Year

Jul 30, 2018 2 min read
COMMENTARY BY

Former Senior Policy Analyst, Grover M. Hermann Center

Adam N. Michel focused on tax policy and the federal budget as a Senior Policy Analyst in the Grover M. Hermann Center.
In Southern California, the average tax cut can be as much as $2,000 in Rep. Mimi Walter’s, R-Laguna Beach, district — about a 9 percent tax cut. choness/Getty Images

Key Takeaways

The average Californian can expect a tax cut of $1,397 this year — and $24,376 over the next 10 years — thanks to the 2017 federal tax reform.

Americans will benefit twice from the tax cuts every year — once from paying less in taxes, and again from higher pre-tax incomes because of a larger economy.

To ensure a better future and protect our paychecks, Congress must make our tax cuts permanent.

The average Californian can expect a tax cut of $1,397 this year — and $24,376 over the next 10 years — thanks to the 2017 federal tax reform.

A new online tool from the Heritage Foundation shows that the typical taxpayer in every single congressional district in California — and every district across the country — will get a tax cut this year.

In Southern California, the average tax cut can be as much as $2,000 in Rep. Mimi Walter’s, R-Laguna Beach, district — about a 9 percent tax cut.

In less affluent districts, such as Rep. Lucille Roybal-Allard’s, D-Downey, the average tax cut is more than 20 percent of what they had previously paid, or about a $500 tax cut in 2018. This trend appears across the country: lower-income communities tend to have the largest reductions in their income taxes, relative to how much they were previously paying.

Americans have already begun receiving their tax cut. Perhaps you’ve noticed that your employer has been deducting less in taxes from your paycheck this year.

And the number of dependents you have will also affect the size of your tax cut. For example, the typical family of four in the 45th district can expect a $3,500 tax cut, thanks in part to a more generous child tax credit.

This year’s tax cut is already helping Americans pay for groceries, for their summer vacation, and will soon help support the looming task of back-to-school shopping.

The tax reform of 2017 was more than just a one-time savings. Americans will actually benefit twice from the tax cuts every year — once from paying less in taxes, and again from higher pre-tax incomes because of a larger and more dynamic economy.

Over the next 10 years, the typical household in Rep. Raul Ruiz’s, D-La Quinta, district can expect almost $16,000 in additional take-home pay. A family of four in the same area can expect over $25,000. These benefits capture increases in incomes, growth of investments and about 300,000 more jobs.

The biggest benefit from tax reform — greater economic growth — materializes over many years. It takes time for businesses to expand and hire more staff. It takes time for jobs to come back from China and Mexico, where they were relocated under our old, broken tax code.

There is still much more to come, but we have already seen businesses responding to the tax cuts. Since tax reform passed, Americans for Tax Reform have logged more than 600 instances where companies have announced more jobs, bigger bonuses, higher wages, charitable giving and new investments in the U.S. Each of them explicitly cited the tax cuts as the reason for the bonuses and investments.

Economy-wide, businesses are in the longest-running stretch of adding jobs in U.S. history. In the coming years, the tax cuts will continue to raise wages, increase investment, and expand economic opportunities.

But this future is not certain. Many of last year’s tax cuts are slated to expire after 2025 — and some in Congress are determined to repeal them well before then. The estimates of a family’s increased take-home pay assume the tax cuts expire in 2025, so if they are extended your benefit could be even larger. The reverse is also true. If the Tax Cuts and Jobs Act is repealed or rolled back, many of the projected benefits will be lost.

The Tax Cuts and Jobs Act is fundamentally important for Americans all across the country. Significant economic benefits have already materialized for most Americans and will continue for years to come. Protecting the reforms in the future is a crucial part of reaping the longer-term economic benefits.

To ensure a better future and protect our paychecks, Congress must make our tax cuts permanent.

This piece originally appeared in The Orange County Register

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