I will get straight to the point.
Imagine you’re a single mother, working 50 or 60 hours a week as a nurse or a teacher and making around $41,000 a year. The Senate’s tax reform plan could cut your taxes in half. For a typical family of four making $70,000 a year, it would cut taxes more than 40 percent. That’s a good deal for hardworking, middle-class American families.
Here in South Carolina, the Tax Foundation reports that the Senate bill will create more than 13,000 jobs, and raise the after-tax income of middle-class families by $2,400 a year.
That’s great news for our state, and for men and women from the manufacturing floor in the Upstate to the loading docks at the Port of Charleston.
When we started drafting this proposal, now formally titled the Tax Cuts and Jobs Act, it was with two goals in mind. First, we wanted to make certain that hardworking American families are able to bring more of their paychecks home. Second was to ensure that the jobs of the future are created right here in America by reforming our tax structure so that we are more globally competitive.
As the numbers above show, we are taking those goals seriously. We’ve lowered the individual rates for the middle class. The bill doubles the standard deduction, doubles the child tax credit, and protects the charitable and mortgage deductions. The Tax Cuts and Jobs Act also repeals the individual health care mandate, which, as the Supreme Court ruled, is a tax on the middle and working class. In fact, more than 80 percent of those paying the penalty make less than $50,000 a year.
The Senate’s tax reform package also includes my Investing in Opportunity Act (IIOA), which has been a central plank of my Opportunity Agenda. American investors currently hold trillions of dollars in unrealized capital gains, and the IIOA changes the way those gains are taxed if they are invested long-term in distressed and low-income communities. This provision will help create jobs, spur entrepreneurship and small business, and restore hope where it has been fading for far too long.
We have done this while also making our business tax system more competitive. By lowering the corporate tax rate to 20 percent, we are ensuring job creators and business owners have more dollars available to create new jobs, promote current employees, and expand their operations.
We’ve also protected small business to deduct the interest on loans so they can expand. Also of importance here at home in South Carolina, the Historic Preservation Tax Credit will continue, which will aid both preservation and tourism across our state.
The attacks from those who, I suppose, seek to keep our current tax system in place, are incredibly misplaced. Attempts to deflect from what the bill will actually do are commonplace, and while disappointing, wholly expected.
Over the past six years, the Finance Committee has held 70 hearings on tax reform. In the last Congress, the Finance Committee produced five bipartisan papers to set the foundation for this year’s tax reform efforts. This very week, we are having open hearings in the Senate Finance Committee, where both Republicans and Democrats are free to offer whatever amendments or changes they like. The process has been open to Democrats this entire time; whether or not they chose to participate was wholly up to them.
The bottom line is we will give more than 90 percent of middle-class Americans a tax break. The tax code maintains its current progressivity, and does not shift the burden from high earners to the lower brackets. And our tax system will be much less burdensome and complicated, which in turn will encourage nationwide job growth to the tune of nearly a million jobs.
This is a once in a generation opportunity to help families bring more money home, and at the same time jumpstart economic growth. To those folks who haven’t seen a raise in more than a decade, we have heard you. Tax relief is coming.
Tim Scott is a Republican representing South Carolina in the U.S. Senate.
