The recent passing of comprehensive tax reform by the House of Representatives ends a dreadful 31-year streak since we last reformed our tax code. The system it will replace is broken, burdensome, and continues to hurt job creation. To compete in a 21st century economy, California families and small businesses need tax relief—not more of the status quo. The Tax Cuts and Jobs Act focuses on boosting growth and helping people across the board keep more of what they earn.
Enacting pro-growth tax policies will directly lead to more economic prosperity for every single American. Ed Royce is committed to ensuring that tax reform works for all Californians, especially for those who need it most.
According to the analysis conducted by the non-partisan Tax Foundation, the Tax Cuts and Jobs Act will lead to a 111,000 or more new full time jobs in California over the next 10 years and an increase of $2,392 in after-tax income for the average California family.
More On the Tax Cuts and Jobs Act:
- Lowers individual tax rates for low- and middle-income Americans and ensures the wealthy pay their fair share.
- Simplifies our increasingly confusing and complex tax code so an individual or family can file their taxes on a form as small as a postcard.
- Roughly doubles the standard deduction, so those struggling most can keep more of their hard earned money.
- Establishes a new Family Credit, which includes increasing the Child Tax Credit by 60% to help parents with the cost of raising children, and providing a credit of $300 for each parent and non-child dependent to help all families with their everyday expenses.
- Continues to allow people to write off the cost of state and local property taxes up to $10,000.
- Lowers individual taxes rates across the board so people can keep more of their hard-earned money.
- Significantly increases the standard deduction to protect roughly double the amount of what you earn each year from taxes – from $6,500 and $13,000 under current law to $12,000 and $24,000 for individuals and married couples, respectively.
- Continues to allow people to write off the cost of state and local taxes – up to $10,000. Gives individuals and families the ability to deduct property taxes and income – or sales – taxes to best fit their unique circumstances.
- Expands the Child Tax Credit from $1,000 to $2,000 for single filers and married couples to help parents with the cost of raising children. The tax credit is fully refundable up to $1,400 and begins to phase-out for families making over $400,000. Parents must provide a child’s valid Social Security Number in order to receive this credit.
- Preserves the mortgage interest deduction – providing tax relief to current and aspiring homeowners. For all homeowners with existing mortgages that were taken out to buy a home, there will be no change to the current mortgage interest deduction. For homeowners with new mortgages on a first or second home, the home mortgage interest deduction will be available up to $750,000.
- Improves savings vehicles for education by allowing families to use 529 accounts to save for elementary, secondary and higher education.
- Provides support for graduate students by continuing to exempt the value of reduced tuition from taxes.
- Retains popular retirement savings options such as 401(k)s and Individual Retirement Accounts (IRAs) so Americans can continue to save for their future.
For job creators of all sizes:
- Offers a first-ever 20% tax deduction that applies to the first $315,000 of joint income earned by all businesses organized as S corporations, partnerships, LLCs, and sole proprietorships. For Main Street job creators with income above this level, the bill generally provides a deduction for up to 20% on business profits – reducing their effective marginal tax rate to no more than 29.6%.
- Allows businesses to immediately write off the full cost of new equipment to improve operations and enhance the skills of their workers – unleashing growth of jobs, productivity, and paychecks.Protects the ability of small businesses to write off interest on loans, helping these Main Street entrepreneurs start or expand a business, hire workers, and increase paychecks.
- Retains the low-income housing tax credit that encourages businesses to invest in affordable housing so families, individuals, and seniors can find a safe and comfortable place to call home.
- Modernizes our international tax system so America’s global businesses will no longer be held back by an outdated “worldwide” tax system that results in double taxation for many of our nation’s job creators.
- Makes it easier for American businesses to bring home foreign earnings to invest in growing jobs and paychecks in our local communities.
- Prevents American jobs, headquarters, and research from moving overseas by eliminating incentives that now reward companies for shifting jobs, profits, and manufacturing plants abroad.