November 3, 2017 

An Important Step to Advance Tax Reform

 
 

Dear neighbor,

The United States tax code has not seen significant reforms since 1986, and it is so complex the former IRS Commissioner needs to hire an accountant to prepare his tax returns. The current tax code, and the 20 volumes of regulations that accompany the law, includes more than 14.4 million words. Individuals and businesses spend about 6.1 billion hours each year complying with tax-filing requirements. Whatever your situation, I think most of us can agree that taxes are too high and our tax code is too long and too confusing.

Congress has been working hard on tax reform to simplify filing, to lower the overall tax rate for businesses and individuals, and to allow U.S. businesses to compete on a level playing field so they can better innovate and grow. This will spur economic growth, create jobs, and allow you to keep more of your hard-earned money.

This week, Ways and Means Committee Chairman Kevin Brady (TX-8) released the Tax Cuts and Jobs Act, the result of years of work to reform our tax code. Our goal is to create more jobs, implement fairer taxes, and to leave you with a bigger paycheck. I strongly support the House's effort to cut taxes, which will help individuals, families, and businesses. Examples of how the legislation will help Americans can be found here.

For individuals, we have focused on simplifying the system so that most Americans would be able to file on a post card sized document. It reduces the rates to 0 percent, 12 percent, 25 percent, 35 percent, and maintains the 39.6 percent rate for the highest earners. It also nearly doubles the standard deduction for individuals and families, vastly reducing the number of people who need to itemize their deductions.

The plan eliminates loopholes, but preserves important programs that allow those who itemize to deduct mortgage interest, local property taxes, and charitable contributions. The House bill does not affect your ability to contribute to tax advantaged retirement accounts like 401(k)s and Individual Retirement Accounts. This bill also preserves the tax breaks that we just passed for hurricane victims: making the personal casualty loss easier to deduct, encouraging charitable giving and providing penalty-free access to retirement funds. More detailed policy highlights regarding the rates and deductions compiled by the Ways and Means Committee can be found here.

Economic growth will also be accelerated by the business tax provisions. The corporate tax rate would be reduced from 35 percent to 20 percent. For small businesses, the rate would be cut to a maximum of 25 percent. The bill also preserves the research and development tax credit to ensure that American businesses continue to lead the world in technology development. It will also simplify the process for U.S. businesses to bring foreign earnings home to grow their businesses domestically.

The House will be debating this package over the course of the coming weeks, and I’ll be sure to keep you updated on our progress. For the full legislative text of the bill, please click here.

It is an honor and privilege to represent you and Texas in the United States House.

Sincerely,

John Culberson























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