The U.S. House of Representatives passed H.R. 1, the Tax Cuts and Jobs Act, by a vote of 227-205 in the chamber Thursday.
Representative Steve Knight (R, CA-25), is sending this letter to constituents who inquire about the bill’s provisions.
Thank you for contacting me with your thoughts about H.R. 1, the Tax Cuts and Jobs Act. I appreciate hearing from you on this very important issue.
As you may know, the United States tax code is an incredibly complicated and cumbersome maze of loopholes, special interest breaks, and regulations that have overburdened hardworking Americans and stunted the growth of our economy.
It’s been over 31 years since the last time Washington delivered comprehensive tax reform to American businesses and families. In that time, our world and economy has changed dramatically. It’s about time that our country has a tax code that reflects this change and contributes to growth that will benefit the middle class.
This is why I voted in support of the Tax Cuts and Jobs Act as it passed in the House of Representatives on November 16, 2017.
Simply put, this bill represents unprecedented tax relief for the vast majority of Americans that will allow families to keep more of their hard earned money to save, invest, or spend it however they best see fit.
Rep. Steve Knight
While many are falsely claiming that this is a handout for the wealthiest Americans, the reality is that this bill maintains the existing 39.6% tax rate for the top bracket of incomes. Simultaneously, the individual tax rate for low and middle-income brackets would be reduced to 0 percent, 12 percent, 25 percent, and 35 percent.
In addition, the Tax Cuts and Jobs Act nearly doubles the standard deduction to allow people to get a larger tax refund when filing their taxes in April.
This plan also allows taxpayers in high-tax states to deduct state and local property taxes up to $10,000 from their federal taxable income as well as up to $500,000 for new mortgage interest costs.
This bill does not affect already existing mortgages.
According to a study by the nonpartisan Tax Foundation, a middle-income family in California would see an increase of $2,932 in their annual after-tax income. This money can be used to invest in education, pay for a vacation, improve a home, or any other expense best seen fit.
There is a lot of misrepresentation about the new tax rates for businesses. As it stands today, the significant difference between the U.S. and foreign corporate tax rates creates a negative incentive for shareholders to move business abroad. When they do, they remove jobs, investment, and wage growth potential.
The lower business rates in the bill are designed for one reason only: to bring those jobs and resources back home. By doing so, the Tax Cuts and Jobs Act will create more opportunity for full-time work and grow the economy at a steady and strong rate. Nonpartisan studies have estimated that this could lead to an economic growth rate of 3.9 percent and 3.1 percent growth rate in wages.
These numbers on a national level are unprecedented in the last several decades. This will create more wealth for all Americans, and many predict that this will increase tax revenues even with lower rates.
Small businesses are some of the biggest winners of this tax plan. Given the current conditions where more businesses are exiting the market than entering, this bill is imperative for small business sustainability.
According to the Small Business Administration’s Office of Advocacy, 99.9 percent of all firms are small businesses. It is our women-owned, minority-owned and veteran-owned small businesses that represent half the GDP and create half the jobs in this country. This bill will unleash the ability for people to become entrepreneurs and live the American dream.
Our national tax code is in dire need of reform. This bill is a major step forward in sparking economic growth and boosting job creation and wages. I am pleased that this bill passed in the House of Representatives and I am committed to working with my colleagues in both the House and Senate to continue to improve this legislation as the legislative process continues.
To read the bill in its entirety and find more information on it, click [here]. To read the Tax Foundation’s nonpartisan study of the bill, click [here].
As always, I appreciate your feedback and look forward to hearing from you in the future. It is an honor to represent you in Congress. For more information on constituent services, current legislation, and to sign up for my E-newsletter, please visit my website at www.knight.house.gov.