US sees 6 million job losses, $1.1T GDP deficit 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 a study conducted by Ernst & Young on behalf of the largest manufacturing organization in the US. It found that if Congress does not act by the end of 2025 to preserve the Tax Cuts and Jobs Act, an estimated 5.9 million American jobs will be lost.

NAM argued that key productivity provisions on R&D, capital investment and business loans of the Tax Cuts and Jobs Act of 2017 have been phased out in 2022 and 2023, along with several other provisions, namely the 20% pass-through deduction, per person . tax rates and the limitation of the estate tax exemption, are expected to expire at the end of 2025.

The study estimates that the US economy will face $540 billion in lost wages and a $1.089 trillion GDP deficit if the remaining provisions of the Tax Cuts and Jobs Act expire. Additionally, if Congress doesn’t save the changes, 1.137 million manufacturing jobs, $126 billion in manufacturing worker compensation and $284 billion in manufacturing GDP are on the way, the study said.

“The time to act is now. Millions of American workers depend on the manufacturing sector to continue to move America forward,” said NAM President and CEO Jay Timmons. “President Trump’s pro-tax policies in 2017 were rocket fuel for manufacturers and made the US economy more competitive globally. Manufacturers kept our promises to create jobs, increase wages and benefits and invest in our community. By acting now, policymakers they can choose economic growth over economic crisis and protect the American way of life.”

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Timmons argued that preserving tax reform should be one of the top 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 may not bear fruit until -2018 at the beginning,” said Timmons.

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

Timmons noted how manufacturers added 267,000 new jobs in 2018, representing the best year for manufacturing job creation in 21 years.

“In this case, we can’t afford to wait: As key provisions of the TCJA have expired in recent years, the economy is already in reverse,” he said. “Following the expiration of accelerated R&D spending in 2022, R&D growth in the EU surpassed the US for the first time in nearly a decade, and China’s R&D growth tripled ours. Congress and President Trump must act quickly to stimulate employment this year by acting urgently to give manufacturers the tax certainty they need to plan long-term job creation projects.”

NAM says congressional inaction risks higher taxes on pass-through businesses and family-owned firms; increased R&D expenses, capital purchases and corporate borrowings; and “an uncompetitive international tariff regime that drives away investment from the US and hampers manufacturers’ ability to compete on the world stage.”

House Republican leaders have signaled that they are on board to save the 2017 tax reform.

Mike Johnson, R-La., delivers his remarks after being re-elected Speaker of the House on the first day of the 119th Congress on Jan. 3, 2025. (Chip Somodevilla/Getty Images)

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“Failure to extend Trump’s tax cuts could result in the loss of an estimated 6 million jobs and damage to 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 the American way of life, avoid falling wages, and avoid the largest tax hike in history. We all know the importance of action here in America, so House Republicans are working hard to preserve and build on the President’s historic tax reforms Trump 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, but has spurred job growth, driven innovation, raised the wages of hard-working Americans, and increased US competitiveness.”

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

NAM President and CEO Jay Timmons (Andrew Harrer/Bloomberg via Getty Images/File)

“This study validates the need to quickly extend Trump’s tax cuts this year by showing the real-world damage to small businesses and American manufacturers if we fail to act,” said House 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 restore the largest economy in our lifetime as quickly as possible.” .”

“The last thing they need is the biggest tax increase in American history,” Smith added. “Ways and Ways Republicans have prepared this time 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 sparked a response from the upper house of Congress. Senate Finance Committee Chairman Mike Crapo, R-Idaho, said Trump’s tax reform “allowed Americans to keep their hard-earned money, and enabled businesses to invest in their ideas, products and people.” He added that making those tax cuts permanent “is the best way to ensure greater economic growth, provide confidence and stability for American businesses, and avoid the economic losses described in this study.”

A press conference to discuss the study in detail is scheduled to be held at the Capitol on Tuesday afternoon.