Hoeven: Tax reform bill is good for the long-term growth of our economy
Last week, the U.S. Senate took an important step forward in advancing tax relief for middle-class families and our small businesses. After an open floor debate and voting on amendments offered by members of both parties, we passed a tax reform package that lowers rates across the board, makes our nation more competitive and allows our workers to keep more of their paychecks. That's good for the long-term growth of our economy, meaning more jobs and rising wages.
One of the most significant ways we are helping families is by doubling the standard deduction. That means Americans will not be taxed on the first $12,000 of income for individuals, $24,000 for married couples and $18,000 for single parents with dependents. This expanded deduction will likely be used by nine out of ten taxpayers, significantly simplifying the tax filing process and saving families time and money. On top of this, the bill doubles the Child Tax Credit to $2,000 and lifts the caps on eligibility, meaning more families will benefit. All told, our bill provides a net tax cut of about $2,200 for a median family of four.
On the business side, we drop our corporate rate to be more in line with our foreign competitors, which will help give our nation the edge and attract greater investment here at home, rather than overseas. That means more jobs. At the same time, we are providing an easy-to-comply-with deduction for small businesses, the backbone of our economy. These same benefits accrue to our farmers and ranchers. Further, we worked to ensure our agriculture producers and small businesses will not only see lower rates, but will have a greater ability to write off their expenses. Specifically, our bill:
• Allows full expensing or writing off the cost of new investments for the first five years. This is phased down over an additional four year period.
• Expands the Section 179 expensing of equipment on a permanent basis.
• Doubles the estate tax exemption, while maintaining the step-up in basis for capital gains.
• Maintains interest deductibility as well as the property tax deduction for small businesses, farmers and ranchers.
I worked throughout this process to improve upon the tax bill and ensure it works for North Dakotans. Among other things, we included an increased tax deduction of 23 percent for small businesses with pass-through income; maintained the state and local property tax deduction up to $10,000 for individuals and families; preserved IC-DISC, a deduction on a portion of small and medium-sized businesses' export income; and provided greater flexibility for implement and auto dealers to expense interest on their inventory.
As we move forward on tax relief, we are focused on ensuring we can continue investing in our nation's priorities. Tax relief, combined with regulatory relief, will empower the economy to grow and increase government revenues. The evidence for this is apparent, as our efforts to roll back burdensome regulations have already helped push economic growth to an annualized rate of more than 3 percent for the past two quarters. Claims that the legislation will increase the deficit do not account for, or underestimate, revenue from a growing economy. History shows us it's true, as demonstrated in a bipartisan way by the tax cuts made during the administrations of President Kennedy and President Reagan.
Passing the Senate's tax reform package is a crucial part of our effort to provide much-needed relief to taxpayers and get our economy going and growing. Now, we'll go to work to resolve the differences between our legislation and the bill passed by the House of Representatives. As we move forward in this process, I continue working to deliver the best possible bill for our small businesses, farmers, ranchers and hard-working Americans.
Hoeven represents North Dakota in the U.S. Senate.