Washington, D.C. – Today, Congressman Warren Davidson applauded overall passage of the tax bill calling it a win for hardworking Ohio families and American companies.
H.R. 1 “The Tax Cuts and Jobs Act” passed the U.S. House of Representatives 227 to 203.
“The pro-growth reforms in the Tax Cuts and Jobs Act fix the broken elements of our existing tax code. No bill is perfect and thinking that all our problems can be accomplished in one miracle-bill is foolish. The Tax Cuts and Jobs Act lets hardworking Ohio families keep more of their money and empowers American companies to compete and succeed globally. This bill snaps the status-quo of today and sets the stage for further reform. I look forward to President Trump signing this bill into law.”
“The pro-growth reforms in the Tax Cuts and Jobs Act fix the broken elements of our existing tax code. No bill is perfect and thinking that all our problems can be accomplished in one miracle-bill is foolish. The Tax Cuts and Jobs Act lets hardworking Ohio families keep more of their money and empowers American companies to compete and succeed globally. This bill snaps the status-quo of today and sets the stage for further reform. I look forward to President Trump signing this bill into law.”
Congressman Davidson began talking about the need for pro-growth tax reform during his 2016 Election. While applauding final passage of the tax bill, there were certain provisions Representative Davidson advocated for throughout the committee process. Some of these provisions were included in the final bill and some were not.
The following is an outline of provisions that Representative Davidson supported and opposed.
Individual
- Some Parts of Tax Reform are Permanent and some are not: Rep. Davidson advocated to make all tax rates permanent. The final tax reform bill includes certain corporate provisions that are permanent while the individual tax rate reduction will expire in 2025 due to a Senate provision.
- Medical Expense Deduction is included in Tax Reform: The final tax reform bill retains the medical expense deduction with a temporary expansion. The threshold for this deduction has been lowered to what it was before Obamacare – for medical expenses that exceed 7.5 percent of gross adjusted income. After two years, this will revert to the current rate of 10 percent adjusted gross income. Rep. Davidson advocated to include the medical expense reduction within the final tax reform bill.
- Individual Alternative Minimum Tax (AMT): The final tax reform bill keeps the AMT for individuals; but includes a temporary increase in the exemption amount and the phase-out threshold. The end result is fewer households that will be subject to the AMT. Rep. Davidson advocated for a full repeal of the AMT and expressed concerns about how the individual AMT will interact with his efforts to provide tax relief for pass-through businesses.
- Full repeal of Death Tax not in final bill: Rep. Davidson advocated for a full repeal of the death tax and even led a letter with 54 of his colleagues to GOP leadership asking for a full repeal. The final tax reform bill doubles the threshold for the death tax exemption, but does not include a full repeal.
- Eliminating the Individual Mandate Penalty: The “Individual Mandate” provision is one of the most unpopular provisions in Obamacare as it penalizes individuals who do not purchase health insurance. The final tax reform bill eliminates this monetary penalty which is a provision Rep. Davidson advocated for.
- Higher Education: The final tax reform bill expands the use of 520 accounts to cover homeschooling and tuition for k-12 private schools. Additionally, the tax reform bill retains the current loan interest deduction for law students and tuition waivers paid for graduate school education. Rep. Davidson supports keeping these provisions.
Business
- New Corporate Rate Tax Structure: The final tax reform bill eliminates the multi-bracket corporate income tax structure and instead creates a single rate of 21 percent. This new rate is effective for tax year 2018. Rep. Davidson advocated for a 20 percent tax rate as he believes it will make America more competitive globally.
- Support for Full Business Expensing: The final tax reform bill allows for full expensing of capital investments. The full expensing provision in the tax reform bill expires after five years and then will gradually phase out over the remaining five years. Rep. Davidson advocated for this provision.
- Opposition to Mandatory “First in First Out” Provision: This was a Senate provision that would have increased taxes on investment by requiring the selling of stocks on a first-in, first-out basis. Rep. Davidson opposed this provision and is glad to see it is not in the final tax reform bill.
?International
- Base Erosion Provisions: Rep. Davidson wanted to ensure that the base erosion provision dealt with the “Bermuda loophole.” This loophole is a provision which allows foreign insurers to move to offshore tax havens, thus avoiding U.S. tax and putting domestic insurers at a disadvantage. The final bill does address the Bermuda loophole.
Miscellaneous
- Historic Tax Credit (HTC) and New Market Tax Credit (NMTC): The final tax reform bill preserves the existing law for New Market Tax Credits. Additionally, HTC is retained but with small changes. For example, the ability to claim the HTC is spread out over five years. (Currently, you can claim full value of the credit in the first year). The current bill also repeals the 10 percent building rehabilitation credit for non-historic buildings that were in operation pre-1936. Rep. Davidson supported the NMTC and HTC.
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