For the past several months, the House of Representatives has been working on a pro-growth tax relief plan to bring more jobs, bigger paychecks, and fairer taxes to American families, individuals, and employers. This will be the biggest overhaul our tax code has had since 1986!
This week, the first draft of the tax relief legislation was released. We’ll be reviewing and debating the bill over the coming weeks, but I wanted to provide you with a quick breakdown of the bill right away and answer some of the initial questions I’ve gotten, so you can do your own analysis:
What does the bill do?
- Read the text of the legislation, here.
- Read policy highlights, here.
- Read examples of how this bill will help Americans from all walks of life, here.
- Read my opinion piece on why tax reform is important to Ohio, here.
How will this impact my family?
This tax legislation was crafted with American families in mind. We’re committed to letting families keep more of their hard-earned paycheck and make it easier to support a family. The bill does this by:
- Simplifying the process – the bill eliminates special-interest deductions that increase rates and complicate Americans’ taxes. The goal is for an individual or family to be able to file their taxes on a form as simple as a postcard.
- Increasing the standard deduction -- the standard deduction will be roughly doubled, protecting up to $24,000 of your family’s take-home pay each year from taxes.
- Establishing the new Family Credit -- which includes expanding the Child Tax Credit from $1,000 to $1,600 to help parents with the cost of raising children, and providing a credit of $300 for each parent and non-child dependent to help all families with their everyday expenses.
- Streamlining higher education benefits -- to help families save for and better afford college tuition and other education expenses.
How is this helping low- and middle-income Americans?
One of the big things this plan does is lower individual tax rates for low-and middle-income Americans to 12 percent, 25 percent, and 35 percent so people can keep more of the money they earn throughout their lives, and continues to maintain 39.6 for higher-income Americans. With this bill, a typical middle-income family of four, earning $59,000 (the median household income), will receive a $1,182 tax cut.
But I’ve heard opponents say it will raise taxes for the middle class…
That’s actually incorrect. The Washington Post Fact Checker recently did some independent research and rated that claim as “false.” Here’s what they say: “In their haste to condemn the GOP tax plan, Democrats have spread far and wide the false claim that families making less than $86,100 on average will face a hefty tax hike. Actually, it’s the opposite. Most families in that income range would get a tax cut. Any Democrat who spread this claim should delete their tweets and make clear they were in error.” Learn more here.
I’m an employer. How will this impact my business?
One of the main goals of overhauling our outdated tax code is to stop getting in the way of American employers, entrepreneurs, and small businesses to invest, grow, create jobs, and increase take home pay for their employees. This bill will provide relief for job creators of all sizes by:
- Lowering the tax rate on small businesses on Main Street to no more than 25 percent – the lowest tax rate on small business income since WWII.
- Allowing businesses to immediately write off the full cost of new equipment -- in order to improve operations and enhance the skills of their workers. It’s about unleashing growth.
- Preserves the Research and Development Tax Credit -- to encourage our employers and workers to develop cutting-edge “Made in America” products and services.
- Prevents American jobs, headquarters, and research from moving overseas -- by eliminating incentives that now reward companies for shifting jobs, profits, and manufacturing plants abroad.
What about the deficit?
The Tax Cuts and Jobs Act eliminates billions of dollars in unfair special-interest tax breaks that have long stifled economic growth, and meets all of the requirements set by the budget that recently passed both the House and Senate. In the long term, by rewarding work and investment, this tax relief plan will stimulate the economy – creating jobs, increasing paychecks, and promoting new investments – that will ultimately help pay for much-needed tax relief over the long term.
What happens next?
- The House Ways and Means Committee (the committee in charge of any bills on tax reform) will review and mark up the bill on November 6. This open legislation process gives members on both sides of the aisle the chance to weigh in with concerns, thoughts, and ideas and ensure that this bill will bring the best possible tax reform that Americans need.
- Click here to stay updated on the process. Click here to sign up for my email updates.
While there may be issues within the current draft of the legislation that may need to be addressed, it’s important to remember that this is only the first phase in achieving comprehensive tax reform and there will be opportunities for tweaks and public input going forward. I look forward to hearing from you
as we work through the process.
The last time our country overhauled the tax code, President Ronald Reagan’s approach was to go boldly out of the gate and value the input of all Americans when making adjustments. We need to follow in those footsteps and not be content with timid tweaks. Let’s continue to work together to reimagine a tax structure that puts taxpayers first and provides relief to American families and employers.