As you know, the tax code in this country is vast, often contradictory and indecipherable. On average, more than one new tax provision has been added to the tax code each day, with nearly 4,500 changes in the last decade. As a result of our current complicated, 70,000-page tax code, U.S. businesses and families spend nearly 3.25 billion hours and $37 billion annually on filing compliance alone.
The problem is not that we tax our citizens too little; it is that we spend too much. Tax rates cannot go up indefinitely and are not a solution to the hard choices we must make as a nation. Accordingly, Congress in December 2017 passed, and President Trump signed into law, the Tax Cuts and Jobs Act -- the first comprehensive tax reform passed in over 30 years.
With the provisions in this bill, the average family of four making $90,000 a year in California’s 10th congressional district will see a savings of $1,279. Specific benefits include the following:
Lowers individual tax rates to 10%, 12%, 22%, 24%, 32%, 35% and 37%
Down from 10%, 15%, 25%, 28%, 33%, 35% and 39.6%
Doubles the Standard Deduction from $6,350 to $12,000 for individuals and $12,700 to $24,000 for married couples
Expands the Child Tax Credit from $1,000 to $2,000 for each child and providing new credits of $500 each for other dependents.
Preserves the Adoption Tax Credit
Preserves the deduction for charitable contributions
Preserves the deduction for medical expenses
Preserves the home mortgage interest deduction for existing mortgages and maintains the home mortgage interest deduction for newly purchased homes for interest on up to $750,000 of mortgage principal
Continues to allow people to write off the cost of state and local taxes up to $10,000 for both property and income (or sales) taxes
Eliminates the ACA individual mandate penalty beginning Jan. 1, 2019
Lowers the corporate tax rate from 35% to 21%
Provides a deduction of 20 percent of qualified pass-through income for small businesses
Allows businesses to immediately write off the full cost of purchases of new or used equipment
Protects the ability of small businesses to write off the interest on loans
Retains the tax-preferred status of private-activity bonds to encourage infrastructure investment
Modernizes our international tax system to prevent double taxation of American businesses
Returns income trapped overseas to encourage domestic investment
Includes provisions to prevent companies from hiding U.S. profits in offshore affiliates