Congressman Adrian Smith sits on the tax-writing House Ways and Means Committee which has unveiled its $1.5 trillion tax reform plan.
“It’s not everything that I personally was hoping for, but I’ll tell you what, it is certainly better than what we have right now,” Smith tells Nebraska Radio Network.
The proposal would have a wide-ranging impact on the federal tax code, both for individuals and for corporations.
Under its provisions, individual income tax brackets would shrink from seven to three: 12, 25, and 35%. It would retain a top rate of 39.6% for the wealthiest. No income tax would be assessed on those making up to $24,000. The alternative minimum tax would be eliminated.
The standard deduction for the middle class would nearly double. The child tax credit would increase from $1,000 to $1,600. A $300 credit would be added for nonchild dependents.
Other tax credits would be eliminated under the proposal, including a 15% tax credit for those 65 and older who are retired or on disability as well as the deduction for medical expenses.
Mortgage interest would remain deductible, but the cap would be lowered from $1 million to $500,000. Homeowners benefiting from the deduction now would be grandfathered in.
The deduction for state and local taxes would be limited to property tax payments and would be capped at $10,000.
Corporations would pay a 20% tax, down from the current 35%. A new, global minimum tax of 10% would be established in an effort to keep U.S. companies from shifting profits overseas. It also changes provisions for how businesses deduct expenses to encourage investment.
Smith says Congress owes the country a thoughtful approach to tax reform.
“And that’s why I was supportive of this measure, because it’s exactly that, a thoughtful approach It is one that I think positions us well for the future.”
AUDIO: Brent Martin reports [:45]