A staggering 13 billion dollars. More than the value of the entire “Star Wars” franchise. That’s the minimum amount taxpayers will save under the recently-passed Tax Cuts and Jobs Act now that lawmakers have made compliance with the U.S. tax code less of a chore. Taxpayers will now also save an estimated 210 million hours of time they used to squander on the clumsy 1040 “long form.” Lighter paperwork burdens like these will begin showing up in other portions of the tax code for businesses and individuals as the new law is implemented.
For these reasons, and many more, President Trump and Congress should be applauded for delivering on their promise to bring long-awaited tax relief to Americans. That relief will manifest itself in many ways. For example, tax changes for individuals mean that the typical family of four earning the median income of $73,000 would put an additional $2,000 in its pocket. The new tax code achieves this not only through lowering rates but also by significantly increasing the standard deduction and expanding the child tax credit.
And despite all the teeth-gnashing from the mainstream media about the loss of deductions, important write-offs such as state and local taxes, mortgage interest, and charitable giving were not repealed. Two outrageously complex levies — the death tax and the personal alternative minimum tax — will hit fewer family-owned businesses and millions fewer households thanks to the new law.
For businesses, tax reform means that 2018 will be the year that the tax system begins working to create opportunities to help everyone prosper, rather than destroy them. Lowering the corporate tax rate to 21 percent from 35 percent — the largest reduction in the U.S. corporate tax rate in our nation’s history — will boost economic growth and shore up America’s competitiveness with foreign businesses. The U.S. will no longer levy the highest corporate tax rate in the industrialized world.
Combined with provisions such as 100 percent expensing of capital investments, this long-overdue tax reduction will make for a more business-friendly environment to grow jobs and take the risks that come with entrepreneurship.
Those small businesses organized as S corporations, partnerships or LLCs will benefit from a new tax deduction of 20 percent (generally with no clawbacks on the first $315,000 of qualifying joint income earned). Lawmakers are to be commended for their commitment to ensuring that small businesses, the engine of the American economy, will get tangible savings they can invest in their futures.
Businesses also benefit by the elimination of the notoriously cumbersome Corporate Alternative Minimum Tax and by a transition away from the “worldwide” tax system that double taxes American firms. Moving forward, U.S.-based businesses that earn revenue abroad will only pay taxes where goods and services are sold, helping to bring home more dollars from abroad and reduce the incentive to ship American jobs overseas.
Throughout the arduous debate over tax reform, National Taxpayers Union (NTU) was proud to have a major role on the front lines in promoting the case for tax reform. To give just a few examples, in late December NTU led a coalition statement supporting the bill’s passage that was signed by 34 free market, limited government, and pro-taxpayer organizations. To drive momentum, NTU hosted an event with Treasury Secretary Steven Mnuchin, White House Counselor Kellyanne Conway, and 13 U.S. senators to highlight the importance of tax reform for growing the economy.
I traveled across the country to appear with key leaders such as Arizona Sen. Jeff Flake and make the case for why tax reform will improve the economic climate in places like Arizona. NTU sponsored television and radio ads as well as social media alerts across critical states urging lawmakers to support tax reform. We are grateful to the citizens across the country and our elected officials who listened to our message and took action.
Yes, more can be done to provide simplicity, relief, and protection for taxpayers in federal laws. The National Taxpayers Union is already planning new efforts to do so. But because of the Tax Cuts and Jobs Act, in the days ahead middle-income taxpayers will keep more of their own earnings under tax code that offers less complex filing alternatives. Small business owners will have more financial opportunities, while larger U.S.-based firms can look to their nation as a more friendly place to create jobs.
All of this will be possible because a devoted group of our nation’s leaders did not waver in their mission to bring real, lasting, and transformative tax relief to the American people. They believed, as we do, that the passage of comprehensive tax reform would be far more than a political win, but a victory for the future of the American economy and for the working men and women who drive it.
• Pete Sepp is president of the National Taxpayers Union.