News from Representative Rouzer

   

Dear Friends,

Earlier this month, the House of Representatives passed arguably the biggest tax cut and reform of the tax code in history.  The Tax Cuts and Jobs Act (H.R. 1) is a bold, pro-growth tax bill aimed at improving the standard of living for all Americans, strengthening our economy, and bringing jobs back. 

This legislation respects hardworking taxpayers and the challenges they face by making the tax code clearer, simpler, and fairer.  Our bill expands the current tax brackets to enable Americans to keep more of their paycheck in addition to lowering some of the rates.  Specifically, H.R. 1 lowers the 10% bracket to effectively zero, the current 15% bracket to 12%, and then retains the 25%, 35% and 39.6% brackets.  (Again, you will want to note the new income ranges on the right side below.)

Details on how the tax brackets will be expanded and tax rates lowered under our plan

Most notably, no tax is paid on the first $55,000 earned by the average family of four.  We also roughly double the standard deduction so that everyone – regardless of income level – will benefit.  The first $12,000 an individual earns would be tax free – up from $6,350 under current law.  Married filers would receive a standard deduction of $24,000 versus $12,000 under current law.  Furthermore, the Child Tax Credit is expanded from $1,000 under current law to $1,600.  In addition, the bill establishes a new Family Credit of $300 for filers and non-child dependents. 

There is some confusion as it relates to the elimination of personal exemptions.  The exemptions were replaced with the new Family Credit.

For example, under the current system, a single filer making $30,000 can take a standard deduction of $6,350 in addition to a personal exemption of $4,050 totaling $10,400.  This results in taxable income of $19,600 with $9,325 of that amount taxed at 10% and $10,275 taxed at 15% equaling $2,474 in federal tax owed under current law.  

Under the House passed bill, that same individual would receive a standard deduction of $12,000, therefore his taxable income would be $18,000.  With a tax rate of 12%, this brings him/her to $2,160.  Then subtract out the $300 Family Credit (this applies to those filing as single too) for a federal tax of $1860 owed.  

The House passed bill simplifies the tax code so dramatically, nine out of ten Americans would be able to file their taxes on a postcard.  

This bill would also bring about a healthier economy creating more jobs and increasing wages by:

  • Implementing a new, lower 9% tax rate on the first $75,000 of net business income for active small business owners earning less than $150,000 through their businesses.
  • Capping the tax rate on the net income of small businesses at 25% -- the lowest since World War II.   Under current law, many small businesses are required to pay taxes on net income at the highest marginal tax rate of 39.6%.  
  • Allowing businesses to immediately write off the full cost of new equipment or investments in each year through 2022 dramatically driving up investments that will help spur significant job and paycheck growth. 
  • Repealing the Death Tax after six years and immediately doubling the exemption.
  • Eliminating the personal and business Alternative Minimum Tax (AMT).
  • Eliminating the unintended incentives in the current tax code that have resulted in jobs moving overseas.
  • Lowering the corporate tax rate from 35%, which is the highest in the industrialized world, to 20% to encourage jobs to be brought back from other countries and to increase productivity and wages.

Joining my colleagues following the passage of the Tax Cuts and Jobs Act

I was proud to stand with my colleagues on this historic day in the House of Representatives following the passage of this pro-growth bill.  The Tax Cuts and Jobs Act is the most significant tax reform legislation in three decades.  

I look forward to the U.S. Senate passing their version of a tax cut and reform bill so that the two chambers can then go to what is known as a conference committee, reconcile the differences between the two bills, and produce a final version that can pass both chambers and be sent to the President to be signed into law.




Sincerely, 

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