Santa came early for hardworking Montanans. Republicans have kept their promise to the American people and delivered tax reform that will let you keep more of what you earn. In just a couple of months, you’ll see more of your hard-earned money in your paychecks, families will have much needed relief, and small businesses can grow, invest, and create more Montana jobs.
This was long overdue – actually 31 years overdue.
The last time Washington reformed the tax code, Ronald Reagan was in the White House, and I had a full head of hair. Much has changed since 1986, but our tax code did not keep up.
Over three decades, it has grown more complex, punished families and small businesses, and held back low- and middle-income Americans. All the while, special interests and Washington lobbyists carved out their narrow, targeted loopholes and tax breaks.
This historic tax reform makes the tax code work for the American people again, not Washington special interests.
To ring in the new year, hardworking Montanans at every level of income will see their tax rates cut. If you paid a federal income tax rate of 10 percent, you’ll have a rate of zero. If you paid 15 percent, you’ll pay 12 percent. To further help taxpayers, the standard deduction is nearly doubled. Individuals won’t pay federal income taxes on their first $12,000 of income, and a married couple won’t pay on their first $24,000.
Montana families will also get relief. In addition to cuts to their tax rates, parents will better afford the rising cost of raising their kids with the doubling of the child tax credit to $2,000. Lower-income working parents, who struggle to make ends meet, also get a needed tax cut by making $1,400 of the child tax credit refundable against payroll taxes. A family with three kids under 17 will see their tax bill reduced by another $3,000 – money they can use to buy clothes, diapers, and groceries.
The bill also keeps the child and dependent care tax credit and the adoption tax credit for those who open their home and hearts.
A single parent, who has one child and earns $41,000, will see a tax cut of more than $1,300 under the new tax code.
The tax reform measure preserves the home mortgage interest deduction so that more Montanans starting out can buy a home, start a family, and have their part of the American dream.
The legislation keeps intact other tax benefits that hardworking Montanans count on, including deductions for charitable contributions, medical expenses, and state and local taxes.
Tax reform also makes the system simpler. According to a recent study, Americans spent nearly 9 billion hours and $409 billion complying with the tax code in 2016. Tax reform simplifies the system so that 9 in 10 households can file their taxes on a postcard-size document. With a simpler tax code, Americans can spend less time working on their taxes and more time with their families.
Tax reform will grow our stagnant economy. The shocking fact is the economy hasn’t grown more than 3 percent per year since 2005. In fact, the economy has only grown an annual average of less than 1.5 percent. In contrast, it grew an average of 3.3 percent between 1965 and 2007. While these differences in growth may seem small, they have big effects.
Slow economic growth has led to slow wage growth. Since 2007, average household income has increased by only 1.5 percent.
There is promising news. According to the nonpartisan Tax Foundation, the tax reform Republicans enacted will grow our sluggish economy, increase workers’ wages, and create 339,000 jobs.
Montanans have wanted tax relief for years. They’ve wanted to keep more of their hard-earned money to spend, save, or invest as they want. They’ve wanted their wages to grow. They’ve wanted more jobs and opportunities. Though it’s taken more than 30 years to overhaul the complex, anti-growth tax code, we have kept our promise and delivered on tax reform that will increase your paychecks, create Montana jobs, and jump start our economy. I wish you all a prosperous and happy new year!