Since Congress passed the Tax Cuts and Jobs Act last year, the American economy is booming, and Alabama families have more money in their pockets. By lowering taxes and simplifying the tax code, we have unlocked our economic potential and made life better for hardworking Americans.
The economic numbers speak for themselves: higher wages, lower unemployment, more jobs, bigger paychecks, employee bonuses, and much more. Under the Tax Cuts and Jobs Act, the average family in Southwest Alabama will see their tax bill decrease by $2,187 a year.
The good news is that we aren’t stopping here. This week, the House is expected to vote on additional changes and improvements to the tax code, something we are calling Tax Reform 2.0. Working with President Trump, we will continue to make the tax code even fairer and more competitive.
Tax Reform 2.0 includes three major pieces. Here’s a quick overview.
First, we want to make the tax cuts for small businesses and middle-class families permanent. Due to Democrat obstruction and arcane rules in the Senate, the Tax Cuts and Jobs Act was only able to lower taxes for ten years. Under Tax Reform 2.0, we will make the tax cuts permanent.
The non-partisan Tax Foundation found that making the middle-class and small business tax cuts permanent will create 1.5 million new jobs and increase gross domestic product (GDP) by 2.2%. This further expands our economy and makes life even better for families and small businesses.
Making these changes permanent, will also lock-in the simpler tax filing process. As you may remember, the Tax Cuts and Jobs Act simplified the tax code to the point where many Americans are now able to complete their taxes on a postcard-style form. A Tax Foundation study shows that this will save Americans between $3.1 to $5.4 billion in compliance costs.
Instead of needing an accountant to navigate the complicated code, most Americans will be able to file on their own.
Second, Tax Reform 2.0 promotes family savings and helps more Americans plan for retirement. Currently, too many Americans have been unable to save for retirement or put money aside to cover unforeseen emergencies.
We want to help small businesses provide retirement plans to their workers by allowing small businesses to join together to create a 401(k) plan more affordably and by giving employers more time to put new retirement plans in place. Just as important, we will help more workers participate in retirement plans by exempting small retirement accounts from mandatory payouts and by eliminating the age limit on IRA contributions.
We don’t stop there. Tax Reform 2.0 will create and expand additional programs to help Americans save. For example, our plan creates a new savings account to offer a fully flexible savings tool that families can use at any time right for them, expands 529 education savings accounts, and creates a new baby savings program to help with the birth of a new child or an adoption.
Finally, Tax Reform 2.0 will help grow the economy by promoting start-up businesses and spurring innovation. We do this by allowing new businesses to write off more of their initial start-up costs and by making it easier for start-ups to bring in new investors. America must lead the way on innovation.
As you can tell, Tax Reform 2.0 builds upon our efforts in the Tax Cuts and Jobs Act to ensure the American economy remains strong. We do that by allowing Americans to keep more of their hard-earned money in their pockets. I fundamentally believe our country is the strongest when money is with the people instead of the government.