Tax Day 2018: Out With The Old, In With The New
For most Americans, filing tax returns is as much of a chore as spring cleaning. Fortunately, this Tax Day is the last time Americans will use the nation’s three-decade-old tax system, and moving forward – thanks to Republicans in the Senate, the House and the executive branch – will file based on a tax code that provides:
1. Middle-class tax relief
2. Support for American families
3. More jobs, higher wages and increased economic growth
4. Greater opportunities for American businesses, large and small, to bring jobs and investment home
Middle-Class Tax Relief
Under the old system:
• Many tax breaks favored upper-income earners
• The tax code was so complex that some middle-class Americans failed to take advantage of available tax relief
Tax reform:
• Cuts taxes for nearly all Americans. A family of four with income of around $73,000 (median family income) will receive a tax cut of more than $2,000
• Doubles the standard deduction so Americans can keep more of their hard-earned income
• Increases the Alternative Minimum Tax (AMT) exemption to reduce tax burdens and complexity for millions of Americans
• Better promotes savings and investment for the future
Support for American Families
Under the old system:
• A maze of complex exemptions and deductions was difficult for many families to navigate
• The cost of raising children was not prioritized
• Small and family-owned businesses and farms subject to the burdens and complexity of the estate tax
Tax reform:
• Doubles the Child Tax Credit to allow families to better provide for their children
• Eliminates the Obamacare individual mandate tax – that disproportionally hit low-income families – and gives families flexibility to determine what health care plan is best for them
• Helps incentivize saving for retirement and other future needs by improving popular savings programs such as 401(k)s, Individual Retirement Accounts (IRAs) and college savings plans
• Doubles the estate tax exemption amount protecting small and family-owned businesses and farms
More Jobs, Higher Wages and Increased Economic Growth
Under the old system:
• Middle-class families struggled because their wages hadn’t increased
• Economic growth in America had been disappointingly low
• Punitively high tax rates pushed many businesses abroad
Tax reform:
• Boosts economic growth and improves the ability of businesses, large and small, to create and retain more jobs here in America
• Increases wages for American workers
• Lowers taxes on American small businesses, which already create two-thirds of new American jobs
• Sparks savings and investment across the country
Greater Opportunities for American Businesses to Bring Jobs and Investment Home
Under the old system:
• American companies paid some of the highest business tax rates in the industrialized world – which put them and their workers at a competitive disadvantage
• Iconic American businesses – household names – were relocating offshore at an alarming rate
• More than $2.6 trillion in earnings of American companies was locked offshore because of the tax system and couldn’t be used to invest in American jobs and operations here at home
Tax reform:
• Lowers the corporate tax rate well below the previous, punitively high and uncompetitive rate
• Updates the international tax system to allow U.S. companies to compete on a level playing field in the 21st century global economy
• Makes the United States a more inviting place to invest, do business, innovate, and keep jobs at home
For more information, visit the Senate Finance Committee’s website at finance.senate.gov/taxreform.
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