Tonight we will have the opportunity to pass the most sweeping changes to our tax code in more than 30 years. This historic moment is long overdue.
Since the last tax reform effort in 1986, the tax code has grown out of control in length and complexity. All told, taxpayers spend over 6 billion hours annually complying with its dictates. Moreover, our outdated corporate tax system puts American companies at a competitive disadvantage as they try to compete in a 21st century global economy.
The Tax Cuts and Jobs Act will make good on our commitment to provide significant tax relief to middle-income taxpayers, while making the tax code simpler, fairer, and more pro-growth.
The bill provides significant tax simplification for the vast majority of tax filers. Most taxpayers will find they are better off simply by taking the standard deduction. No longer will they have to spend hours sifting through receipts and forms to determine what they can and cannot deduct.
Middle-income taxpayers can also expect to see significant tax cuts. A median income family of four could see their tax bill reduced by over $2,000. This is relief that families will see almost immediately as less tax is taken out of their paychecks.
This tax relief stems from many pro-family and pro-middle income tax provisions in the bill.
First, there is the nearly doubling of the standard deduction. For families this means the first $24,000 of their income will be exempt from tax all together. As a result, a significant number of lower-income Americans will be removed from the tax rolls entirely.
Second, the middle-class tax brackets are significantly lowered and expanded to include more taxpayers. This includes reducing the current 15% bracket to 12% and the 25% bracket to 22%.
Third, the tax bill specifically recognizes the cost associated with raising a child by doubling the child tax credit from $1,000 to $2,000. Furthermore, to ensure lower-income families are able to benefit from this expansion the refundable portion of the tax credit is increased from $1000 to $1,400.
While my colleagues on the other side of the aisle have attempted to claim this tax bill is all out about the wealthy, this is just simply false. This is evident from the features of the tax bill I just discussed.
But, if you need more evidence look no further than the distributional analysis of the bill by the non-partisan Joint Committee on Taxation.
According to their analysis, on average, every income group will experience a tax cut with the largest percentage tax cuts going to middle income groups. Moreover, the tax bill would make the tax code more progressive with taxpayers earning more than $1 million shouldering a larger share of the tax burden than they do under current law.
The bill also enacts much needed tax relief for job creators. It provides a significant deduction on business income for small businesses, effectively lowering their top tax rate to under 30%.
All small businesses, down to the smallest family-owned corner store and family farmer stand to benefit.
As small businesses are responsible for creating the majority of new jobs, this is a key provision for promoting economic growth and job creation.
Additionally, the bill lowers the statutory corporate rate down from the highest in the developed world to 21%. At 35%, our current corporate tax rate puts American companies at a competitive disadvantage globally, costing American jobs.
Moreover, economists generally agree that a significant portion of the corporate tax falls on workers in the form of reduced wages. Estimates of the burden of the corporate tax on workers range from 25% to more than 70%. While the exact amount may be debated, one thing is clear; a corporate rate reduction results in bigger paychecks for hard working Americans.
These business tax reforms are crucial to getting our economy growing. We can’t continue to settle for the anemic growth of less than 2% we have experienced since 2010.
Lower tax rates coupled with greater expensing under the bill will encourage new capital investments that are necessary to increase productivity, generating both higher wages and higher growth.
Our bill signals the faith we have in the ingenuity and entrepreneurial spirt of the American people, rather than government, to get our economy on the right track.
In all, tax reform will put more money in the pockets of middle class Americans, make U.S. industry and workers more competitive, and get the economy growing again after years of stagnation.
This is a historic opportunity to help Americans from every walk of life. I look forwarding to joining my colleagues to pass this once-in-a generation tax bill and have it enacted into law before the New Year.
I yield the floor.
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