Reform lets you keep more money

EDITOR’S NOTE: This guest column was originally published Thursday in the Arkansas Democrat-Gazette.

Ever since the final tax bill was unveiled in Congress, many of my fellow Arkansans have been wondering what it means for them, and I’m glad to give them the good news: Starting in 2018, they’ll see a simpler tax code that lets them keep more of their hard-earned money.

First, the bill cuts taxes by lowering individual income-tax rates and moving up the thresholds at which the rates kick in, all while preserving many important credits and deductions that Arkansan families use, like the adoption tax credit and the graduate-school tuition tax credit.

Second, it shields even more people from the taxman by nearly doubling the standard deduction to $12,000 for single adults and $24,000 for married couples. This will be especially good for our state, because 78 percent of Arkansans currently use the standard deduction—and, under this bill, close to 90 percent are expected to use it instead of itemizing their returns. That means about 150,000 more Arkansans will have a much easier time filing their taxes; they’ll have to spend far less time worrying about digging up receipts and bank records to verify their returns.

Third, the bill will help parents with the costs of raising a family by increasing both the size of the child tax credit and the flexibility of 529 savings plans. It doubles the child tax credit from $1,000 to $2,000 and raises the phaseout threshold to $200,000 for single adults and $400,000 for married couples. The bill also makes $1,400 of the credit refundable, meaning a family will get that amount for every child in its household no matter how much it owes in taxes. The bill also will allow families to use the tax-free distributions from a 529 savings plan on up to $10,000 a year of K-12 education expenses.

It’s the least we can do to help Arkansas families raise the next generation of Americans.

Fourth, the bill will spur companies to create more jobs right here in America. Today, we have the highest corporate tax in the industrialized world: 35 percent. This bill will lower the rate to 21 percent, which is roughly the world average, and, given the U.S.’ many other advantages, this should help stop the rush of companies to other countries and encourage them to set up shop in the United States.

Finally, the bill repeals the most hated part of Obamacare: the individual-mandate tax. Current law requires every working-age American to buy health insurance or pay a penalty equal to 2.5 percent of household income or about $700, whichever is greater. In theory, this was supposed to incentivize the young and healthy to buy insurance. But in practice, what it amounts to is a tax on working-class families who can’t afford insurance.

This tax has hit Arkansas especially hard. Last year, about 65,000 Arkansans families paid the tax, and 53,000 of those families made less than $50,000 a year. In other words, these families already live with all of the anxiety and stress of lacking health insurance, and then the IRS comes along and penalizes them for not buying the insurance Obamacare itself made unaffordable. It was a real injustice, and I insisted that we include repeal in the final bill.

So when you add it all up, this bill will give much-needed tax relief to millions of hardworking families in Arkansas and across America. This is the biggest tax bill to make its way through Congress in 30 years, and it delivers on a major campaign promise Republicans made in the 2016 elections.

I’m confident millions of families will be happy to get this tax relief they’ve been waiting for — and not a moment too soon.