Tax reform: Good for families, good for jobs
In a country whose war for independence was to some degree a tax revolt, taxes can be a touchy subject. A lot of complicated questions are involved. How do we encourage economic growth? How do we raise revenue to pay for spending? What is a fair tax rate? Answering these questions means setting priorities and balancing them.
My priorities for the Ninth District are helping average families and creating jobs. Judging by this benchmark, I support the Tax Cuts and Jobs Act.
While this tax reform is good for businesses, individuals of all income levels will benefit as well. Individual rates are lowered and the standard deduction is nearly doubled. For families, the Child Tax Credit will expand from $1,000 to $2,000. Most of the deductions tax reform eliminates went to higher-income households. This bill’s benefits will be felt most by working and middle-class American families.
The tax system currently in place treats job creators poorly. At 35%, the corporate tax rate stands among the highest in the developed world.
Companies are also taxed heavily when they bring money home from overseas. If they leave it abroad, they avoid most of the taxes. This encourages them to leave money abroad. It’s no wonder they find other countries better for business instead of investing it in the United States.
The Tax Cuts and Jobs Act offers reforms that will encourage businesses to locate their facilities and hire their workers right here in America. It cuts the corporate tax rate to 21% while eliminating many deductions that primarily favored special interests. It lets companies bring money back from abroad to invest here by paying a low one-time tax. It also helps level the playing field between small businesses and large corporations. The bill provides tax incentives for investment in lower-income communities designated as “qualified opportunity zones,” which could include areas of Southwest Virginia.
Throughout the tax reform process, I heard from people living in the district with concerns about particular parts of the code. I heard the historic tax credit has boosted economic development for parts of Southwest Virginia. Accordingly, I had several conversations with House Ways and Means Chairman Kevin Brady about keeping this credit. I am pleased to say that it has been preserved with minor modifications.
I also heard many students express concern about the initial House bill’s treatment of income made as a condition of tuition waivers for graduate students, but the current deduction for this income has been maintained.
While the bill isn’t perfect, it has come under unfair attack for some of its provisions. For example, some say that capping the state and local tax deduction to $10,000 unfairly imposes double taxation.
In truth, the state and local tax deduction primarily benefits high-income earners in high-tax states. An unlimited deduction means lower-income taxpayers are subsidizing high-tax states.
In Southwest Virginia, few people are likely to be hit by this provision. According to the U.S. Census Bureau, the median housing unit value in the Ninth District is $124,100. If a homeowner in the City of Salem, the Ninth District jurisdiction with the highest local real estate tax rate, wanted to deduct his real estate tax on his federal return, the value of his home would have to be $847,457.63 to hit the deduction cap. Other states like New York or California may be hit harder because they have higher property values and more wealth.
But I would ask the question: is it right for Southwest Virginians to pay taxes on behalf of fat cats in New York City in a condo overlooking Central Park or living in San Francisco’s Nob Hill?
No wonder Nancy Pelosi opposes the tax bill. As long as she can convince people from poorer areas of the country to help pay her taxes and the taxes of the wealthy liberal elite, why wouldn’t she? Today, I voted to end this reverse Robin Hood scheme of Nancy Pelosi’s. It’s hard enough for the people of Southwest Virginia without being required to underwrite the expensive homes of the rich.
There are pieces of this tax reform that may need to be revisited in the coming years, but overall, I believe it will do good things for our country, our economy, and most importantly, our people. To judge for yourself, you can read the conference report in its entirety at fairandsimple.gop.
If you have questions, concerns, or comments, feel free to contact my office. You can call my Abingdon office at 276-525-1405 or my Christiansburg office at 540-381-5671. To reach my office via email, please visit my website at www.morgangriffith.house.gov. Also on my website is the latest material from my office, including information on votes recently taken on the floor of the House of Representatives.