Simplifying our broken tax system is no easy task, but we know Americans need relief.
This is why we introduced a bill at the start of November to streamline the tax code and help people keep more of what they earn. We then spent the week of Nov. 6 debating the details in a Ways and Means Committee markup, where the bill is prepared for a vote by the full House. The legislation passed out of committee with my support, and we anticipate a House vote to quickly follow.
Americans at all income levels will see tax cuts under this bill, which the head of the nonpartisan Joint Committee on Taxation confirmed on the first day of our markup. Many provisions are designed to help working families, namely the doubling of the standard deduction, increasing the child tax credit, and lowering tax rates across the board.
Doubling the standard deduction will significantly increase the zero-tax bracket. Under our bill, a couple’s first $24,000 of income is tax-free, compared to $12,000 today. Filers can also keep the money they would normally spend on tax experts or software, as nine out of 10 Americans will be able to file their taxes on a form the size of a postcard. With this financial boost, families can meet more household needs while saving for the future.
In addition to helping Americans keep more of their money, this bill also sets the stage for Americans to earn more money. By cutting the tax rate on small businesses to a historic low and reducing the corporate tax rate to 20 percent to allow American companies to compete in the global economy, job creators will be able to add more positions, raise wages and invest here at home.
Our bill also firmly rejects the idea of death being a taxable event. The death tax runs counter to the American dream, so it is not surprising an April 2017 NPR report found a majority of Americans support repealing it permanently. Our bill phases out the death tax over six years and, in the meantime, doubles the exclusion amount to provide immediate relief.
Eliminating the death tax will have a positive ripple effect throughout the economy. Right now, the death tax only represents one half of one percent of all federal revenue. However, the flow of these dollars to the Internal Revenue Service has been a significant drain on economic growth. Our economy has lost out on more than $1.1 trillion in capital since the introduction of the death tax, according to the Joint Economic Committee.
Another study by the Tax Foundation found normal taxation on the amount of capital infused back into the economy by repealing the death tax would more than pay for itself, actually yielding an additional $8 billion in revenue than we have seen with the death tax in place. As Americans for Tax Reform said in response, “You heard that right – we’d actually collect more tax revenue if we stopped collecting the death tax.”
We cannot let this opportunity to boldly reform the tax code pass us by, and people across the country agree. In fact, more than 40 conservative and tax policy organizations signed onto a letter on Nov. 9 declaring the bill “a victory for the middle class.”
There is more work to do, but we are moving in the right direction. It’s time for real relief.