House Passes H.R. 1, The Tax Cuts and Jobs Act
Washington, D.C. – The U.S. House of Representatives today passed H.R. 1, the Tax Cuts and Jobs Act, legislation that will bring tax relief to hardworking families in Southeastern Pennsylvania and the first comprehensive overhaul of the tax code in over 30 years.
The Tax Cuts and Jobs Act will benefit almost every taxpayer in Pennsylvania’s Sixth Congressional District who currently claims the standard deduction, specifically the hardworking taxpayers in the middle class.
A Tax Cut for the Middle Class
The median household income in Pennsylvania’s Sixth Congressional District is $82,139, and the overwhelming majority of taxpayers with an income under $100,000 in the District have chosen to claim the standard deduction. In fact, of the 264,000 taxpayers with an income under $100,000 in the District, only 26 percent claimed itemized deductions – meaning most taxpayers took the standard deduction. The House bill will now double that standard deduction for these taxpayers, so that their tax return is bigger. In addition, these taxpayers will save money because their tax return will only require the filing of a simple form. This is a middle-class tax cut.
The bill is also a pay raise for workers across Pennsylvania and our country, with the increase in income for median households expected to be $2,317 in Pennsylvania.
How H.R. 1 Helps Different Taxpayers
Of the 19,166 taxpayers in the District who were subject to the Alternative Minimum Tax (AMT), 82 percent were tax filers with incomes between $200,000 and $500,000. The Tax Cuts and Jobs Act repeals the AMT, easing the tax burden on 24 percent of taxpayers in Pennsylvania’s Sixth Congressional District.
Less than half of taxpayers in the District claim the State and Local Tax (SALT) deduction, but for those who do claim the deduction, Rep. Costello fought to make sure the bill preserves the property tax component of SALT.
The Tax Cuts and Jobs Act also includes much-needed relief for the small businesses on Main Street by reducing the tax rate on business income of small businesses and allowing small businesses to immediately write off their equipment expenses – purchases made to ensure employees have the tools they need to work at their full potential. Each of these provisions helps small business owners invest more in their employees and grow their company.
In order to support innovation and help spur new jobs, for those on Main Street who are just starting out, H.R. 1 creates a new tax rate of 9 percent for new businesses that are earning under $75,000 in income.
Finally, over $2 trillion dollars of foreign earnings from U.S. based companies are trapped overseas. The legislation is expected to almost immediately bring back these earnings, which would result in investment here at home, triggering wage growth and new investments in employees.
Rep. Costello’s Statement on H.R. 1, the Tax Cuts and Jobs Act
“Tax cuts for middle income families and making the American tax code more competitive in the global economy are the most important elements of tax reform from my perspective. Consequently, I voted for the House bill because it reduces income tax rates for low-and-middle income families, as well as for businesses, which are the job creators in our country.
“The tax bill also reduces the double taxation on foreign earnings for multinational companies, which I believe will create more jobs and lift wages for middle income Americans across the country. Additionally, I fought very hard to ensure that the property tax deduction up to $10,000 remains because many in my District may continue to itemize.
“Testimony at the Ways and Means Committee indicated that upwards of 94 percent of all Americans will take the standard deduction now that we have doubled the standard deduction. As a consequence, very few people are estimated to itemize their deductions.
“I do wish certain things were different in the House bill but ultimately, I voted in favor of it so that we can continue the debate on tax reform and review the Senate bill, which, if passed, will lead to a Conference committee and require another vote by me on tax reform legislation. I do not believe we need to totally eliminate the estate tax at this time. I also would like to see the medical expense deduction remain in our tax code, as well as the student loan interest deduction. I am optimistic that the Senate will pass a tax bill which includes these provisions, and then ultimately I may have the opportunity to vote on a tax reform bill that would maintain the best elements of the House bill and include some elements of the Senate bill which are not included in the House bill.” –Rep. Ryan Costello (PA-06)
What Pennsylvanians & Residents of Pennsylvania’s Sixth Congressional District are Saying About the Tax Cuts and Jobs Act
"I'm a widow on a fixed income. I need every bit of money I have. I think this tax plan will let me keep more of my money.” –Sara from Spring City
“A lower tax rate means more cash to put back into my business. Construction today relies heavily on technology, like CAD design programs, that my firm needs to buy. Also, if the economy booms due to tax reform I will be getting new business and I would hire new employees.” –John Keevill, Small Business Owner of Keevill Construction in West Chester
"I understand how important it is for tax reform to move forward. We are losing jobs here in Pennsylvania because of the tax code. We need to get parity with the rest of the world. I'm not a Republican. I'm not a Democrat. I'm just a citizen." –Roberto from Berwyn
"If you can reduce the overall tax rates and simplify the tax code, I'd rather not itemize my taxes. I'd rather have taxes simplified and keep more money rather than try to get the money back from the federal government." –Wanda from West Cornwall Township, Lebanon County
“We’re going to create a lot of jobs. We’re going to get the economy moving again.” –Frank from Royersford
"This Act is the first opportunity in over 30 years for Congress to reform the tax code to allow small businesses like Riley Sales to reinvest revenue in the growth of our companies. The Tax Cuts and Jobs Act is not for the benefit of ‘the rich’ but will instead help all working Americans. Because of the rate cuts and the full expensing, we can use the profits created by the hard work of our 70 employees to improve their wages and benefits, to open new stores which will employ more people, and to purchase more inventory and materials to support our customers." -Michael Riley, President of Riley Sales in Plymouth Meeting
"Agriculture is an uncertain business. As a result, farmers need a tax code that recognizes the financial challenges faced by agricultural producers and that is why we supported passage of the Tax Cuts and Jobs Act (H.R. 1). We believe that the lower individual tax rates and the new business tax rate in H.R. 1 has the potential to reduce income taxes for farmers.” –Rick Ebert, President of Pennsylvania Farm Bureau
The median household income in Pennsylvania’s Sixth Congressional District is $82,139. The median household income nationwide is $53,889.
Under H.R. 1, the standard deduction would double from $6,350 for single filers and $12,700 for married couples filing jointly to $12,000 for single filers and $24,000 for married couples filing jointly. The standard deduction for single filers with at least one qualifying child is $18,000.
Several valuable deductions would be preserved and enhanced under H.R. 1: the child tax credit is increased from $1,000 to $1,600 per child; the property tax deduction is preserved up to a maximum deduction of $10,000 (the average property tax deduction in PA-06 of all who claim it is $6,008); the mortgage interest deduction is preserved for existing mortgages; and a new $300 credit is available to every taxpayer, a spouse, and non-child dependents.
For additional information provided by the House Committee on Ways and Means on the legislation, click here.