Setting the record straight on tax reform Reviewed by BJournal Editor on . By Congressman Phil Roe My top priority in Congress is working to grow our economy, create jobs and increase prosperity for working families. For my first four By Congressman Phil Roe My top priority in Congress is working to grow our economy, create jobs and increase prosperity for working families. For my first four Rating: 0
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Setting the record straight on tax reform

Setting the record straight on tax reform

By Congressman Phil Roe

My top priority in Congress is working to grow our economy, create jobs and increase prosperity for working families. For my first four terms in Congress, I saw a federal government that discouraged private business and set up unnecessary roadblocks for job creation. When President Trump was elected, I was excited to work on getting the economy moving again, which is why I was proud the Tax Cuts and Jobs Act was signed into law on December 22, 2017. The law lowered tax rates across the board for American families and businesses and is leading a wave of positive benefits for working families ¬¬– including bonuses, pay increases and improved benefits. More than two million employees across the country are receiving a pay raise or bonus because of the tax relief provided to their employers under the new tax code; and more news like this is on the way as employers take into account the effects of this new law.

  With that being said, I’ve heard a number of criticisms of the law that have left some wondering whether tax reform will benefit them. For those who haven’t already felt the positive impact of tax reform, the short answer is you will. Part of the reason Americans are confused is because opponents of the law have engaged in over-the-top rhetoric, declaring the law “Armageddon” for Americans and deriding $1,000 bonuses for hardworking employees as just “crumbs.” An extra $1,000 in your pocket may not mean as much in San Francisco or New York, but it sure does in Stoney Creek or Newport. Despite the fact we’re already seeing the benefits of this law, I want to take a moment to address some of the misconceptions I’ve heard about the Tax Cuts and Jobs Act.

CLAIM: This law only benefits the wealthy.

Every income level will receive a tax cut as the new tax rates will be 10, 12, 22, 24, 32, 35 and 37 percent. As you may know, the top one percent of income earners pay 39.5 percent of all federal income taxes, nearly twice the 20.6 percent share of adjusted gross income (AGI) they earn, and the top 10 percent of income earners pay just over 70 percent of the taxes. At the same time, the bottom 50 percent of income earners pay just 2.7 percent of the taxes despite earning 11.3 percent of all AGI. The Tax Cuts and Jobs Act provides tax relief to all taxpayers, so the more you pay, the more you will save. Further, the announcements of pay increases and bonuses underscore the ways this law benefits the middle class. Not only will they be allowed to keep more of their pay, they’ll earn more in their jobs.

CLAIM: This law benefits businesses more than families because business tax cuts are permanent but individual tax relief will expire in 2025.

Businesses have to have long-term certainty in order to create more jobs, increase wages for employees, expand benefits and give bonuses; and the fact that the bill included permanent tax relief for businesses is why so many have already announced positive news for their workers. For example, just last week, Walmart announced its plan to increase their starting wage for hourly associates to $11 per hour; provide one-time bonuses; and expand parental leave benefits for employees as a result of the Tax Cuts and Jobs Act. While the individual tax rates are set to expire in 2025, House Republicans believe they should be made permanent. I expect that just like the 2001 tax cuts – which were initially set to expire in 2011 but almost all were permanently extended – once people see the benefits of having higher take home pay there will be broad support for making these provisions permanent as well.

CLAIM: This law will hurt East Tennesseans who deduct sales or property taxes from their federal return and removes other deductions taxpayers rely on. 

One of our goals in the Tax Cuts and Jobs Act was to reduce the number of special interest loopholes and expand the standard deduction, giving tax relief to all Americans regardless of circumstance. By almost doubling the standard deduction, the vast majority of taxpayers will likely opt to utilize the increased standard deduction. For taxpayers who rely on itemized returns, the law continues the practice of allowing taxpayers to write off the cost of state and local taxes up to $10,000. What does that mean for East Tennessee families? In 2014, just over 43,000 taxpayers claimed the state and local tax deduction with an average deduction of $2,411. This means the vast majority of taxpayers in East Tennessee will be unaffected by the law. The law also preserves the mortgage interest rate deduction on their home up to $750,000. Only 0.7 percent of homeowners in the First District have a mortgage over $750,000, so 99.3 percent of East Tennessee taxpayers will be unaffected by this change as well.

  I’m proud of the work Congress has done to streamline and simplify our tax system and provide the most significant tax cuts since the Reagan administration. I encourage anyone with questions about the Tax Cuts and Jobs Act to learn more at fairandsimple.gop or contact my office if I can be of assistance.

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