For the first time in 30 years, Congress is about to pass a major update to make taxes suck less in the United States. Of course, in the era of Partisan Politics: Extreme Edition, there is a lot of mis-information floating around.
What you need to know about the tax plan is this: after the talking heads have all finished screaming their heads off, for the first time since 1986, Americans will see a better, leaner system that lowers taxes and increases household income.
New laws are made about the same way as sausage, only messier, so the details are subject to change. However, here are several facts about the 2017 tax reform bill in Congress as it stands now:
1. Colorado families will see a tax cut
According to the non-partisan Tax Foundation, over the next 10 years the average middle income family in Colorado will see $2,682 in extra after-tax income from the changes in the version of the bill just passed by the House. That’s a family vacation or three.
It gets better: when you look at the Senate version of the bill, the Tax Foundation estimates that their changes would result in $3,105 in extra after-tax income for the average middle-income Colorado family. Hello Disney World.
2. Colorado families will (finally) see an increase in wages
This has been a long time coming. After a decade of our regulation-heavy economy either in recession or growing at a snails pace, tax reform will likely boost long-stagnant wages for working Americans. Estimates peg the average wage increase at almost three percent.
Part of this wage increase comes from a decrease in the corporate tax rate. You will likely hear Democrats in the news making a lot of noise about decreasing the corporate tax rate. But look past the headlines and you’ll find analysis like this one from the Council of Economic Advisers:
“Reducing the statutory federal corporate tax rate from 35 to 20 percent would, the analysis below suggests, increase average household income in the United States by, very conservatively, $4,000 annually. The increases recur each year, and the estimated total value of corporate tax reform for the average U.S. household is therefore substantially higher than $4,000.”
3. More jobs in Colorado will be created
Colorado is already a booming state, but as always happens, tax cuts will add more jobs to make sure we continue to have good options. According to the Tax Foundation, the current version of the bill being debated by the Senate will create about 16,000 new jobs here in Colorado.
Keep in mind that as more jobs are created, employees have more choices about where to work. This forces employers to compete for talent, resulting in higher salaries, more benefits and better work environments. Because really, who wants to turn in T.P.S. reports anyway?
4. No more mandate to own health insurance
The Senate has added a wrinkle to the tax debate: repealing the mandate that every American must buy health insurance. Many Coloradans who either can’t afford or don’t want to enroll in Obamacare pay a penalty each year. By repealing this penalty (which is, ironically, charged for not doing anything), Coloradans will see an additional tax break. Currently, this tax break is only in the Senate bill, but hopefully it will be adopted as part of the final law.
Repealing the individual mandate has an immediate and direct impact on lower income families. According an analysis of IRS data conducted by tax expert Ryan Ellis, 80 percent of families who pay the penalty, typically around $450, make less than $50,000 a year.
As more information comes out, we’ll keep this article up-to-date. The tax plan making its way through Congress would help more Coloradans keep more of their paycheck, and more options on where to work.
What are your thoughts?
Have you heard the scare tactics, that the Congressional tax plan is just for the wealthy and that there will be a tax increase on the middle class? Hopefully this data helps set the record straight on these overused, false talking points.
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