(The Center Square) – California leaders implored Congress to maintain the 2017 Tax Cuts and Jobs Act’s tax cuts and tax-deferred Opportunity Zones, citing the program’s success in transforming the California city of Stockton and noting the substantial tax savings created for the average Californian.
The TCJA is set to expire by the end of 2025, meaning if Congress does not renew the cuts, Americans would face major tax increases, and the loss of Opportunity Zones — governor-nominated economically distressed Census tracts where investors can defer or eliminate federal taxes on capital gains.
Americans for Prosperity, a libertarian advocacy group, and The LIBRE Initiative, which says it is the nation’s largest center-right Latino group, held an event Thursday evening in Stockton with the city’s former mayor, Kevin Lincoln, on the importance of maintaining the TJCA, and possible negative consequences for Californians if Congress fails to renew the cuts by the end of the year.
“Stockton’s 19 Opportunity Zones cover nearly 90,000 residents — about 28% of our city,” Lincoln told The Center Square. “During my time as mayor, we saw these zones drive new downtown investment, create jobs and support community-led efforts in South Stockton.”
According to the National Bureau of Economic Research, OZ investments totaled $82 billion between 2019 and 2022.
“If Congress fails to renew these tax cuts, California families could see their federal tax bill increase by over $3,000, and the state could lose more than 100,000 jobs,” said AFP Western Region Director Heather Andrews to The Center Square. “AFP-California is amplifying the voices of Californians, urging Congress — and especially Rep. Josh Harder — to make these tax cuts permanent.”
An earlier study from the National Taxpayers Union Foundation found the typical California tax filer’s taxes would rise $3,769 if the TCJA expires.
A bill to extend the TCJA at first advanced in Congress, but stalled earlier Friday as Republicans concerned about the bill’s impact on federal deficit blocked the bill, which would add between $3.3 trillion to $4.1 trillion to the $37 trillion national debt over the next decade alone.
Moody’s Ratings, an international credit ratings agency, also downgraded the United States’ debt Friday from its AAA rating — the highest possible — to Aa1, citing the growing federal debt load and sustained deficits.
“This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” said Moody’s in a statement. “Over the next decade, we expect larger deficits as entitlement spending rises while government revenue remains broadly flat. In turn, persistent, large fiscal deficits will drive the government’s debt and interest burden higher.”
While Moody’s did downgrade the nation’s federal debt, it did raise the nation’s credit outlook from negative to stable, suggesting further downgrades are not yet on the horizon. Moody’s also noted that the national debt rating ceiling is still AAA — meaning that sufficient action could result in a ratings improvement in the future.
