By Rep. Pete Olson, R-Texas
Each April 15 fills Americans with dread as they fill out complicated tax forms and many must write big checks to Uncle Sam.
Our corporate tax rate is among the highest among major world economies, causing American companies to move overseas, taking jobs and revenue with them.
This has left America with a complicated and messy code that leaves two big winners: tax lobbyists and accountants. It’s time for this to end; that’s why Congress worked hard to pass the Tax Cuts and Jobs Act. This critical tax reform ensures bigger paychecks for hardworking families, more money in your pocket and more flexibility in how you use it.
You have probably heard a lot about this bill. Let’s take a look at how it helps you. First, a typical family of four earning $73,000, will see their taxes cut by more than $2,000. It also doubles the Standard Deduction. Roughly 70 percent of Americans file their taxes under the Standard Deduction and our tax reform doubles the amount you can deduct from $6,500 and $13,000 under current law to $12,000 and $24,000 for individuals and married couples, respectively.
We are also cutting the tax brackets to make sure that the money you earn is taxed at a lower rate. The new brackets will be 0, 10, 12, 22, 24, 32, 35, and 37 percent so you can keep more of your hard-earned money.
We are also cutting tax rates for job creators. This isn’t just a gift for big companies, despite what you might have heard. First, we are working to create a better system to help small businesses. We are also working to make America more competitive on the global stage. Making sure our corporate tax rate can compete with other nations means we can keep job creation and revenue here at home and stop sending our talent overseas.
We must also address what this bill doesn’t do. For the 30 percent of Americans who do file itemized tax returns, for all homeowners with existing mortgages that were taken out to buy a home, there will be no change to the current mortgage interest deduction. For homeowners with new mortgages on a first or second home, the home mortgage interest deduction will be available up to $750,000. We also kept the adoption tax credit in place and folks here in Houston can still deduct any losses related to Hurricane Harvey.
We also expanded the medical expense deduction for 2017 and 2018 for medical expenses exceeding 7.5 percent of adjusted gross income with an increase to 10 percent in 2019. We also expanded the deduction for charitable contributions so people can continue to donate to their local church, charity, or community organization.
Yes, there are some tax deductions that change with this bill. Reforming our nation’s tax code is not an easy task. But we must keep the bigger goal in mind – a simpler, fairer tax system for everyone. Already, workers are reaping the benefits of reform as companies are acting to help their employees. Employees will begin to see bigger paychecks as lower withholding rates take effect.
Typical families of four can expect a tax cut of $2,059 next year as rates are lowered across the board. That is what this is all about: helping people earn more and keep more of what they earn.