During my mandate in the congress, I observed a fundamental truth about American democracy – when the Americans vote for change, they vote because of their wallets. It’s as simple as that.
The anti-turning scheme through three consecutive presidential cycles highlights this reality. The Americans have repeatedly rejected the sitting administrations not so much because of the ideology or partisan loyalty, but because of their lived economic experience. Forget the Dow; When the voters feel the pinch in the grocery store or the gas pump, they require a change.
The public has now given a second chance to a republican administration led by Trump, whose campaign messaging of the construction of a stronger and more flourishing economy resonated with the voters.
Trump will have to considerably stimulate the economy if he and the Republicans want to maintain power. The upcoming force test on the renewal of Trump 2017 tax reductions offers an opportunity for recovery provisions to overcome two key pillars of the economy: small businesses and housing.
Correction of retroactive R&D expenses – an increase in stimulus for jobs and GDP
Over the past three years, the tax on tax reductions and jobs, or TCJA, has increased taxes on many small businesses by substantial margins, in particular companies that make improvements to their products or experience means of being more effective.
Indeed, under article 174 of the law, companies are forced to amortize certain technical expenses over several years instead of deducting them all at the same time. For example, if you have designed a product update, you could normally take a 100% deduction of all costs associated with this update. Under TCJA, you would pay tax on 90% of these costs during the first year.
Although this may seem to be an esoteric fiscal question, the reality is that there are tens of thousands of companies across the country, an increase of 300% of tax with pure and simple bankruptcy. Small businesses are feel the painBecause they do not have the capital reserves to survive massive tax increases.
A small steel manufacturing business that I know went from $ 35,000 to taxes to $ 1.3 million, only because they employed engineers. It was not the planned policy. To add the insult to the injury, China offers a deduction 20 times that of the United States For the same expenses.
The retroactive fixation of article 174 would be a set of massive stimulus for small businesses. The corrective has a generalized bipartisan support (the previous solution, HR 7024, adopted the room 357 votes at 70), but the current legislation only corrects it on an advanced basis, which means that from January 2025. If companies can recover their former tax-taxed taxes, even just for 2024, it would immediately infuse the economy with tens of billions of dollars.
Most importantly for Trump, it is money that would be available to American companies in 2025 long before the middle of the outside and made it attack more to a crucial segment of voters who pray that this is repaired.
Fight inflation with low -income housing
I taught congress that a high -flying economy only corresponds to a housing market. From the pandemic, we have seen the most important increases in rents since we have taken registers. Mortgage rates have stabilized but still lock millions of people from the American home ownership. The inflation of inflation between insurance, labor and supply costs exerts intense pressure on owners, owners and American families who work in almost all states.
When we say that we have an inflation problem, what we really mean is that we have a problem of cost of housing. The relative importance of housing costs within the consumer price index (IPC), which measures the variation in the prices of consumer goods and services, represents a 35% share of all the elements. The cost of shelter, including rent and mortgage payments, increased for 57 consecutive months. To say another way, if The shelter was excluded From the IPC, overall inflation would have been targeted 2% of the Fed in 16 of the last 20 months.
Here, once again, changes in tax policy can feed a transformation of housing costs, reducing invoices for millions of families. Since 1986, the low -income housing tax credit (LIHTC) has been a confidence mechanism to stimulate economic growth while building and preserving accessible affordable houses. The LIHTC works by subsidizing the development costs of low -income housing by allowing those who invest in qualified projects to take a 9% tax credit compared to the cost of construction. It gives decision -making to the States, encourages private capital and management and does not compose on the large bureaucracy. The enormity of this incentive has led to 4 million affordable houses for 9,280,000 families in the past 30 years.
Republicans and Democrats proposed legislation to extend and strengthen the tax credit, which would strengthen the housing supply at a critical time. Again, this is massively supported by both parties. An increase of 12.5% of the allowance to the housing credit ceiling of each state, alongside a multitude of other improvements, has also been included in the abovementionion HR 7024. If Trump defends this change, it would lead to about 200,000 additional affordable houses During the next decade than what would have been possible otherwise.
Make Trump’s economic promise
For the future, the success of the administration will be measured by its ability to translate the policy into portfolio results for everyday Americans. The opportunity window is clear but finished; Although the job initiatives offered and the tax reforms provide a framework, their success depends entirely on the execution which has an impact on the economy of the kitchen table.
With a clear mandate for change and a complete economic gaming book, the Trump administration is now faced with its decisive challenge: creating an economy that offers tangible advantages in all segments of American society. The champion of these two arrangements would tell the American people that Congress and President Trump care about the real economy and the Americans who are buzzing.
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