If Congress doesn’t extend or codify the 2017 tax cuts, the U.S. ag industry could shed close to 50,000 jobs amid reduced economic output, a new report says.
The Tax Cuts and Jobs Act will sunset at the end of the year if Congress doesn’t extend the legislation or make the measures permanent. Provisions scheduled to end – or revert back to pre-TCJA law – include a pass-through deduction for business owners, lower individual income tax rates, expanded tax brackets and a higher estate tax exemption threshold.
Other provisions, like full expensing of certain capital expenditures and amortizing research and development expenses over multiple years have already lapsed or begun phasing out ahead of the TCJA’s expiration.
“[T]he expiration of these policies could put 5.9 million US jobs, $540 billion of US employee compensation, and $1.1 trillion of U.S. GDP at risk,” a new analysis from consultancy firm EY finds. The report was prepared on behalf of the National Association of Manufacturers – an advocacy group representing the U.S. manufacturing sector.
While that sector is slated to lose the most jobs from the TCJA’s expiration, the report also notes that the agriculture, forestry, fishing and hunting industries could lose a combined 49,000 jobs, leading to lost wages and benefits worth $3 billion and reduced economic activity of around $10 billion.
The job losses could be swift, the report says, as businesses can quickly trim workers to shed costs, while other impacts will unfold gradually.
Over a longer time period, the U.S. economy would forgo investment that would otherwise have been available. Foreign countries would become more attractive investment destinations relative to the U.S., dragging on U.S. economic growth. Reduced investment “makes workers less productive and, in turn, reduces overall economic activity,” the authors note.
“Failing to extend the pro-manufacturing tax policy Congress and President Trump provided in 2017 will destroy America's competitiveness,” Ways and Means Committee Chair Jason Smith, R-Mo., said during a joint press conference unveiling the report. “This study underscores the need to extend the Trump tax cuts this year as quickly as possible.”
Smith has been among the most vocal House lawmakers calling for a single reconciliation package to enact Trump’s policy goals, putting him at odds with some in the Senate that would prefer tax legislation to follow border and energy legislation in a subsequent reconciliation bill later in 2025.
“Any inaction only leads to complications, slowdowns and uncertainty,” Smith added during the press conference.
The report’s findings, House Majority Leader Steve Scalise, R-La., added, challenge the argument frequently made by Democratic lawmakers that the tax cuts only benefitted the wealthy.
“What we saw from business owners all across the country is they gave pay raises to their workers. They actually hired more people. They invested more money in research and development so they could not only bring the jobs back to America, but make our companies here in America more competitive,” Scalise maintained.
NAM President Jay Timmons struck a similar tone, asserting that “manufacturers kept our promises.”
“It really wasn't just a victory for manufacturers,” Timmons added. “It was a victory for the entire country.”
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