Barletta Votes for Historic Tax Reform
WASHINGTON – It’s been 31 years since the last significant reform to the U.S. tax code was undertaken. Today, the U.S. House of Representatives passed the conference committee report on H.R. 1, the Tax Cuts and Jobs Act, by a vote of 227 to 203, cementing a once in a generation win for the American people. Barletta voted in favor of the legislation.
“Today Congress gave millions of American families a renewed and revitalized shot at prosperity,” Barletta said. “For a generation, Americans have seen good paying jobs leave our shores and their wages stagnate, while the government continued to take more and more money out of their paychecks. Washington forgot the American family and worker. Instead of fighting for Americans, Washington has been fighting to fill the coffers of faceless, nameless bureaucrats. Today, we made clear to Washington the old way of doing business is over. This is a new era of American prosperity. The plan will bring higher wages, create more employment opportunities, and deliver a tax cut to every income group. This tax plan is a much needed Christmas gift every American family. I am very excited to have been part of such a historic event.”
The Tax Cuts and Jobs Act provides significant relief for the workers and middle income families of Pennsylvania by simplifying and lowering rates for individuals, making America the global jobs magnate, and cutting red tape and taxes on small businesses, the backbone of our country’s economy. According to estimates provided by the Tax Foundation, this legislation will lead to a 1.7 percent increase in GDP over the long term, 1.5 percent higher wages, and an additional 339,000 full-time equivalent jobs.
Specifically, this legislation provides significant relief to American families by doubling the standard deduction to $12,000 for single filers, and $24,000 for joint filers. The expansion of the standard deduction will dramatically lower the tax liability for the average American taxpayer. This is a significant change for the Commonwealth as 70.8 percent of Pennsylvanians use the standard deduction.
The Tax Cuts and Jobs Act maintains seven income brackets; however, it reduces rates and allows Americans to take home more of their paychecks. Estimates have shown this structured reduction for all income groups will provide the average family of four with an income of $73,000 a tax cut of $2,059. The State and Local Tax Deduction (SALT), which is most commonly used by those with an income of more than $100,000, will be capped at $10,000.
Furthermore, this legislation provides much needed support for families and single parents by increasing the child tax credit from $1,000 to $2,000 per child, and increasing the refundable portion from $1,000 to $1,400. It also includes a $500 non-refundable credit for those individuals taking care of a sick grandparent or disabled adult. The Tax Cuts and Jobs Act also preserves the medical expense deduction.
Barletta pushed for multiple preservations of certain deductions many Pennsylvanians rely on, which were maintained by the conference committee. These signed letters included calls to preserve the $2,500 student loan interest deduction, the tax exempt status for graduate tuition waivers, the full repeal of the corporate alternative minimum tax, and tax preferred status of private activity bonds.
The Tax Cuts and Jobs Act reforms certain education related tax provisions. The bill will streamline and enhance the American Opportunity Tax Credit, providing individuals with a tax credit of up to $2,500 for tuition and expenses. In addition, this legislation makes targeted changes to preserve and enhance the 529 Education Contribution Accounts to help families afford rising school costs by expanding the coverage of up to $10,000 for qualified elementary and high school expenses and allowing contributions to be used for apprenticeship programs.
Finally, the bill addresses the United States’ uncompetitive corporate tax rate, the highest in the developed world, and shifts to a territorial tax system. The Tax Cuts and Jobs Act lowers the corporate rate from 35 percent to 21 percent, which will eliminate an Obama Administration policy that rewards companies for shifting jobs, profits, and manufacturing plants abroad.