COLUMN: The Tax Cuts and Jobs Act Will Help Colorado
This past week the House of Representatives took a historical step forward and passed a comprehensive tax reform package. The last time the tax code was reformed was 1986, and since then, it has become convoluted, burdensome and has started working against Coloradan families and businesses. It is past time for tax reform, and the House delivered on its promise to provide relief for Americans at every income level.
In my travels around the 3rd Congressional District, I have met and spoken with many hardworking Coloradans who are living paycheck to paycheck. They are single parents who work two jobs, seven days a week, but still cannot pay their bills. They are small business owners on Main Street, who are weighed down by federal regulations and a tax code that punishes them for being successful. They are families who are forced to make the difficult decision of paying their mortgage or putting food on the table.
Despite the pleas for help from their constituents, some lawmakers in Washington voted to keep our current, harmful tax code in place. There are some in Congress who would prefer to preserve tax loopholes for special interests and tell Americans how they should spend their money, rather than deliver relief for families and job creators.
These are the same individuals who have characterized the Tax Cuts and Jobs Act as a tax cut for the rich, despite independent analysis that shows it will help Americans at every tax level, especially Americans at the low- and middle-income level.
The tax reform bill will reduce the number of tax brackets from seven to four, reducing tax rates for those who need it the most. Under the Tax Cuts and Jobs Act, individuals who are currently taxed in the lowest bracket, at 10 percent, will have an effective tax rate of zero percent. Individuals in the second lowest tax bracket, who are currently taxed at 15 percent, will be taxed at 12 percent under the Tax Cuts and Jobs Act.
The legislation doubles the standard deduction so that hardworking families can keep more of their paychecks. This is extremely important in the 3rd Congressional District, because data from the Internal Revenue Service shows that 70 percent of individuals and families claim the standard deduction. By doubling the standard deduction, the first $12,000 for individuals and $24,000 that families take home each year will be free from federal income tax – putting that money straight back into the taxpayer's pocket.
Another widely spread misconception about this legislation is that it will only help major corporations. This accusation is inaccurate. The truth is that The Tax Cuts and Jobs Act will also help Colorado's small businesses, which are truly the backbone of our economy.
Under our current tax code, small businesses can be taxed at a rate as high as 44.6 percent and are also currently taxed on the money they reinvest in their business to expand and create more jobs. The tax reform legislation that passed the House will correct this blunder by capping the rate at which small businesses can be taxed to 25 percent.
As a former small business owner myself, I am all too familiar with the obstacles in place that punish small businesses rather than empower them to do what they do best: create good-paying jobs. By reducing the tax rates for small businesses, the Tax Cuts and Jobs Act will allow the 57,000 small business owners in Colorado's 3rd Congressional District to keep their doors open and create jobs in their communities.
In short, the Tax Cuts and Jobs Act will be good for Colorado. A recent study by the nonpartisan Tax Foundation estimates that, under the new tax plan, Colorado will add 15,993 new jobs and median-income families will see a $2,682 increase in their income.
The duty now falls to the United States Senate to champion tax reform for the American people. I look forward to working with my colleagues in both the House and Senate to finalize a comprehensive tax reform plan that delivers the relief Coloradans, and all Americans, need and deserve.