The start of a new year brings about new possibilities for folks across the country. This might be a year that parents will see their child go to college, small businesses and entrepreneurs may be looking to hire more employees and expand, or for others, perhaps this is the year they are hoping to buy a new home. In fact, we should have a tax system that encourages investment, boosts middle- and low-income earners, and helps our struggling families.
Over the last several months, there has been a great deal of discussion about what the new tax reform bill, also known as the Tax Cuts and Jobs Act, will mean for Iowans. Unfortunately, there have been many misconceptions, which is why I wanted to share just some of the benefits of reforming the tax code for the first time in more than three decades.
First, on average under this new reform, every single income bracket will see tax relief. Despite what you may have heard stating otherwise, hardworking Iowans will see lower taxes on their take-home pay as soon as February. A typical family of four earning $73,000 per year will save about $2,000 under this new law. In other words, you’ll have more of your own paycheck to decide how to spend, rather than giving it to the federal government — which does not have the best record of responsibly spending your hard-earned dollars.
Whatever Iowans’ financial goals might be in 2018 and beyond, this new law will help put more into money into paychecks each month. Meanwhile, job creators of all sizes will be more competitive and can reinvest in their most important resource — their employees. This includes large and small companies. We have already seen major companies giving back to their employees.
I have also had the chance to visit with families, as well as day care facilities, to hear firsthand the struggles young families face when trying to access adequate child care. While my youngest is now grown, I understand the difficulties and stress working parents with little ones face. I emphasized these points to my colleagues as we continued to work on the tax bill, and I am thrilled that Iowans will now see the child tax credit doubled under this new law.
We were able to do all this without changing the adoption tax credit, the deductions for teacher supplies purchasing, or the work opportunity tax credit. We also maintained a strong historic tax credit, a robust mortgage interest deduction, and allowed folks to deduct up to $10,000 in their state and local taxes.
There are also important bipartisan efforts included in this new law, such as the Investing in Opportunity Act. By incentivizing private investment in struggling communities, we can help spur economic growth in poverty-stricken areas, bringing hope and opportunity back to many distressed rural communities across the country and here in Iowa.
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Additionally, my legislation called the Stop Questionable, Unnecessary, and Excessive Allowances for Legislators Act, also known as the SQUEAL Act, was included in the Tax Cuts and Jobs Act. This provision will cut a perk for Washington politicians by eliminating a part of the tax code that allows Members of Congress to deduct, for income tax purposes, up to thousands of dollars annually in living expenses while in the Washington, D.C., area. Iowans sent me to Congress to make Washington squeal and that includes eliminating handouts to politicians.
Lastly, the Tax Cuts and Jobs Act also lifts the costly penalty crushing families and individuals who could not afford ObamaCare’s skyrocketing premiums or who simply decided a one-size-fits-all health care plan was not right for them. Across the country, roughly 80 percent of the people who pay this penalty earn less than $50,000, and it’s important we help them in this manner. In the year ahead, we still must find effective ways to provide relief for Iowans suffering from high premiums and dwindling individual market options.
We have made significant progress in 2017, and as 2018 begins, I am looking forward to starting my fourth 99 county tour, hearing directly from you about the issues on your mind, and bringing those thoughts and ideas back with me to Washington to continue building on the gains we have made this year.
• U.S. Sen. Joni Ernst is a Republican from Iowa.