Congressional Republicans last week unveiled a sweeping overhaul of the American tax code that they hope to pass in the coming weeks.
Proponents of the bill say the plan will cut taxes for middle class Americans and simplify the tax code. The White House said a typical family of four could expect their taxes to be reduced by $1,182 annually.
Proposed changes to the tax code include eliminating many write-offs while doubling the standard deduction — a single person’s standard deduction would go from $6,500 to $12,000, and a married couple’s deduction would go from $13,000 to $24,000. The mortgage-interest deduction would be limited to $500,000 whereas under the current law a taxpayer can deduct the interest paid on their mortgage principal up to $1 million.
The bill also proposes establishing three different tax brackets instead of seven.
Reaction to the bill predictably fell along party lines. Republicans championed the bill as a much-needed overhaul for the complicated tax code. If successful, it would be the first time since 1986 that Congress passed tax reform. But Democrats blasted the bill and said that it would only benefit those at the top. The bill significantly lowers the corporate tax rate from 35 percent to 20 percent, which by some estimates could reduce federal revenue by $1.5 trillion over the next decade.
Republican Rep. Greg Gianforte said the simpler tax code would increase Montanan’s paychecks, create jobs and promote economic growth.
“The legislation makes the U.S. competitive with other countries again,” Gianforte said. “This tax reform bill brings back jobs to the U.S., and it encourages business investment, which will jump start our economy.”
Democratic Sen. Jon Tester was critical of the bill because it would add to the national debt and did not do enough to help middle-class people.
“I want to hear from Montana families, small businesses, experts, and anyone who has ideas on how to cut taxes without adding to the debt,” Tester said. “We need real tax reform that seriously addresses our $20 trillion debt, not handouts to billionaires that are put on the nation’s credit card.”
Bryson Pelc, a certified public accountant in Kalispell for more than a decade who currently works at Jordahl & Sliter, said that it’s still too early to tell how the tax code overhaul will impact local residents. He said it was possible that the proposals would change drastically before it actually becomes law.
“It really all depends on your personal situation, and it will impact different people in different ways,” Pelc said, adding that some could find themselves paying more and others paying less.
The only certainty, Pelc said, is that the proposal as it stands is a “big change” for everyone involved.
Joe Unterreiner, president of the Kalispell Chamber of Commerce, said tax reform is a top priority for his members and that the chamber has signed on to efforts by the U.S. Chamber of Commerce to support the lowering of rates and simplification of the tax code.