Op-Ed: More jobs, fairer taxes, bigger paychecks
When Washington politicians talk about the tax code, it’s easy to get bogged down in numbers. But tax reform isn’t about percentage points or pie charts — it’s about people.
It’s about farmers in Franconia who want their family farm to be successful and operational when their children are grown. It’s about moms in Middletown who are trying to make ends meet while saving for life’s special moments. And it’s about the small business owners in Sellersville who want to continue to serve their community and support their employees, but are restricted by red tape and compliance costs.
Tax reform has many faces — more than 700,000 of them right in our district — and every single one of them should inspire Washington’s work on pro-growth tax reform. It’s with these people in mind that I joined the House in passing tax reform legislation this week that cuts rates, improves simplicity and levels the playing field.
The Tax Cuts and Jobs Acts [H.R. 1] works to create a tax system that respects the American people by making the process both clearer and fairer, and by taking less of your paycheck. The simplicity starts by lowering the number of tax brackets from 7 to 5. These new brackets (0 percent, 12 percent, 25 percent and 35 percwent) lower individual tax rates for working and middle-income Americans, putting more money in Americans’ pockets each year, while maintaining the 39.6 percent rate for the highest earners. According to the independent Tax Foundation, the result of these cuts in Pennsylvania will be an over $2,300 increase in after-tax income for middle-class families.
Deductions will likewise be simplified to make paying taxes less burdensome for the American people. The Tax Cuts and Jobs Act eliminates most itemized deductions while raising the standard deduction from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples — simplifying the tax code extensively for the vast majority for Americans who take this option. Additionally, the Child Tax Credit will be significantly increased to help families with the cost of raising children — nearly 46,000 filers in our district.
While itemized deductions will be abridged to remove lobbyist loopholes and special interest carveouts, this measure will still allow families to deduct the cost of state and local property taxes up to $10,000 — a compromise I fought to include — and mortgage interest deductions up to a $500,000 for new homeowners. Also kept in place are the popular retirement saving options such as 410(k)s and Individual Retirement Accounts to protect a lifetime of savings.
While hardworking American families will be keeping more of what they earn to invest in their future, our economy will benefit from increased support of small businesses. As part of this reform, small business job creators — over 51,000 in our district — will see rates lowered to 25 percent, which coupled with new tax credits and write-off opportunities, will help them keep the revenue they need to grow independently in the 21st century economy. Globally, the Tax Cuts and Jobs Act increases American competitiveness by lowering the world’s highest corporate tax rate from 35 percent to 20 percent.
For years, wages stood stagnant and our gross domestic product hovered around an anemic 1.6%. We can’t afford to wait to act to grow our economy.
Over the first two quarters of this year, we’ve seen economic growth climb to over 3 percent at the speculation of tax and regulatory reform, and, according to the Tax Foundation, this rise will continue. Over the next decade, the estimated result of tax relief efforts includes a 3.9 percent higher GDP, 3.1 percent higher wages, and the creation of nearly a million new fulltime jobs — including over 36,000 here in Pennsylvania.
The Tax Cuts and Jobs Act is a once-in-a-generation piece of legislation that protects hardworking Americans and their paychecks. By acting now, we can create jobs, increase pay, grow our economy and improve lives of people across Bucks and Montgomery counties.