A Nebraska Congressman praises passage of the tax bill in the House as a historic step toward the first overhaul of the federal tax code in three decades.
The United States House has approved a $1.5 trillion tax bill on a 227-to-205 vote.
Congressman Adrian Smith, a member of the tax writing Ways and Means Committee, applauds passage.
“I think we found some good middle ground with this House bill,” Smith tells Nebraska reporters during a conference call. “And, like I said, this is not the final step, but it is a huge step forward.”
The bill doubles the standard deduction, while eliminating many others. A couple filing a joint federal income tax return would not pay taxes on the first $24,000, rather than the current $12,000 standard deduction.
One of the most controversial aspects of the bill is the elimination of the deduction for state and local taxes. It has been harshly criticized by members of Congress from both coasts where local and state taxes normally run higher than in the middle part of the country. Still, Nebraska state officials have expressed concerns about the elimination of the deduction, saying it would be hard to estimate its impact on state revenue.
Under the House bill, 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. 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.
A move closely watched by farm states such as Nebraska would eliminate the Section 199 deduction which provides a tax break to farm co-ops. Smith says the Senate is working to restore the deduction.
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 hopes House action will trigger ultimate passage.
“Really, I think, gives some momentum for the Senate to finish their work and get this done,” Smith says. “It’s good for the economy. It’s good for individuals. It’s time to put it across the finish line.”
AUDIO: Brent Martin reports [:45]