America is a global leader in business and innovation, yet for many years, our tax code was outdated. Prior to 2017, the last major update of our tax code was in 1986. The tax system – a compilation of $1.6 trillion in annual deductions, credits, exclusions, exemptions and special rates – was enormously complex and created confusion, distortions in economic incentives and hindered America’s economic competitiveness to the detriment of Americans’ opportunities. For this reason, I have long believed comprehensive tax reform is necessary and essential for future economic growth.
Tax Cuts and Jobs Act
I was proud to join my colleagues in passing the Tax Cuts and Jobs Act in 2017. This comprehensive tax reform legislation modernized our tax system and still carries benefits for individuals, businesses and the American economy.
Regarding individuals, the Tax Cuts and Jobs Act:
- Lowered individual income tax rates across the board
- Doubled the standard deduction, which is claimed by nearly 90 percent of taxpayers
- Doubled the child tax credit, saving families over $570 billion
- Expanded 529 education savings accounts to K-12 educational expenses
- Zeroed out the ACA’s individual mandate penalty, which disproportionately impacted low- and middle-income Americans
- Preserved the student loan interest and medical expense deductions
Regarding businesses, the Tax Cuts and Jobs Act:
- Lowered the corporate tax rate to 21 percent, bringing the U.S. rate in line with the average rate among industrialized nations
- Permitted small and family businesses to deduct 20 percent of their income for tax purposes, saving small businesses over $400 billion for growth and investment
In total, the non-partisan Tax Foundation estimated GDP growth will increase by 1.7 percent due to this legislation, resulting in 339,000 new full-time jobs and a 1.5 percent boost in wages. In a separate analysis, the Tax Policy Center determined all income groups will see reduced taxes on average, receiving an average tax cut of $2,100 and a boost in after-tax income of more than 2 percent.
In the days ahead, I will continue working to ensure tax dollars are spent wisely and that congressional decisions regarding taxes allow Americans to keep more of their hard-earned money. I will also work to ensure the Internal Revenue Service (IRS), which oversees the collection of taxes and administration of the tax code, operates efficiently and is responsive to filers. In 2019, I was proud to support the Taxpayer First Act, which overhauled the structure and accountability systems of the IRS, as well as its taxpayer assistance programs.
More on Taxes
Regardless of political points of view, most Americans can agree that good stewardship of the earth and its precious resources is important. And I am always encouraged by the special efforts made by individuals, families and communities to do their part today to ensure a fruitful and beautiful world for generations to come.
Since the Tax Cuts and Jobs Act was passed by Congress and signed into law by the president, the country has undoubtedly been better off as a result. Wages are steadily on the rise, unemployment has reached its lowest level in nearly 50 years, jobs are being created and the economy is booming. Since this historic tax relief and reform effort was enacted earlier this year, the benefits have not slowed or diminished. Certainly, the lasting impact continues to be felt by individuals, families, small businesses, entrepreneurs and indeed, by all Americans.