Momentum on Tax Reform
Congressional efforts to reform our nation’s broken tax code are picking up momentum. After a week of debate and deliberation, the House Ways and Means Committee approved H.R. 1, The Tax Cuts and Jobs Act. It will now go to the full House for consideration.
When it comes to tax reform, my top priority is for the plan to benefit the people I represent in Central and Southeast Alabama. A study from the nonpartisan Tax Foundation found that House Republicans’ tax reform plan will offer the median household in Alabama an average of $2,078 in tax relief. Also, our bill expands the Child Tax Credit to $1,600 per child and lowers the income threshold so that more low-income families can take advantage of it. A few thousand extra dollars in the family budget can go a long way, and I believe individuals know how to spend their money better than the federal government does. And remember, these aren’t just one-time savings. This is annual tax relief that hardworking taxpayers can count on and budget for year after year.
Another important priority is to boost the economy and create jobs. That’s why the Tax Cuts and Jobs Act lowers business tax rates from 35 percent to a globally-competitive 20 percent while also closing the labyrinth of loopholes that have been written into the tax code for three decades. This will help businesses to grow and hire more workers here in the United States. That same Tax Foundation study estimates that our plan could help create as many as 13,323 new full time jobs in Alabama.
Tax reform is a complicated issue on its own, so it doesn’t help that some individuals and organizations are spreading misinformation and confusing the public. For example, Senate Democrats’ false claim that the bill somehow raises taxes on the middle class received“Four Pinocchios” from The Washington Post Fact Checker. Also, a Washington think tank was forced to retract its harsh analysis of the bill and admit they miscalculated how the expanded Child Tax Credit would help working families.
Some have characterized our tax reform plan as a tax cut for the wealthiest Americans. That’s not true. The bill delivers relief at every level while maintaining the top 39.6 percent tax rate on high-income earners. Our plan actually lowers tax rates for low and middle-income earners and increases the standard deduction, which means that a lot of people will be able to immediately keep more of what they earn. Some feared that our tax reform plan will raise taxes on retirement. That’s not true either. Our bill retains the popular retirement savings options, such as 401(k)s and Individual Retirement Accounts (IRAs) just as Americans know them today.
There is one important recent change to the bill I’m pleased to report: The adoption tax credit was successfully added back into the tax reform package. The tax code provides adoptive families a credit of up to $13,570 in qualified expenses for each child adopted, including through public foster care, domestic private adoption, and international adoption. For parents following the call to adopt children, this tax credit can make a big difference in removing financial barriers that often come with adoption. Restoring this tax credit was the right thing to do, and I appreciate Ways and Means Committee Chairman Kevin Brady for listening to the voices of adoptive families across the country.
Simply put, I want you and your family to keep more of what you earn in your pocket. I believe hardworking Americans should have relief from our burdensome and frustrating tax code, and that’s what our plan delivers.
The Tax Cuts and Jobs Act is just one step of the process. The Senate has released its own version of a tax reform plan, and we still have work to do. As we move forward, I encourage you to read the plan for yourself and stay informed on developments. You can find the text of the bill, frequently asked questions, and tools to help calculate how the plan would benefit you at FairandSimple.Gop.