Sen. John Thune
Up until 2018, the only good news about Tax Day was the fact that we had 365 days until the next one. This year is a little different, though. There’s plenty to celebrate, not the least of which is that 2018 is the last time you and your family will need to file your federal taxes under the old, burdensome system. It’s out with the old, and in with the new. And not a moment too soon.
When Republicans decided to tackle tax reform, we knew it wouldn’t be an easy road. At the time, the entrenched D.C. bureaucracy and many of my colleagues in Congress seemed content with the status quo. They seemed to believe – and it’s likely many of them still believe – that they know how to spend taxpayers’ hard-earned money better than taxpayers do. I disagreed then, and I disagree now, too.
Our goals for tax reform were simple. First, we wanted to put more money back in the pockets of hardworking Americans. It’s their money in the first place, after all. Second, we wanted to reform the tax code in a way that created the right kind of environment so businesses could create better-paying jobs and the economy could reach its potential and grow at a faster rate.
Less than four months after this landmark legislation became law, the American people are already seeing the benefits. The Tax Cuts and Jobs Act cut individual tax rates across the board, and this relief started showing up in Americans’ paychecks in February, thanks to new employer withholding tables and the IRS’ withholding calculator. According to the Treasury Department, 90 percent of Americans are seeing bigger paychecks in 2018 because of the Tax Cuts and Jobs Act.
Since the Tax Cuts and Jobs Act reduced the highest-in-the-industrialized-world tax rate on larger businesses that operate in the United States, many of these companies have started passing their savings onto employees and customers. In the few months since the new law took effect, more than 500 American companies, including Great Western Bancorp and Aaladin Industries, Inc., right here in South Dakota, have reinvested in their employees by offering pay raises, bonuses, or benefit increases. Numerous energy companies around the country, like Black Hills Energy here in South Dakota, are slashing utility rates for their customers, which means smaller bills and more money in the family budget.
If you file your own taxes, you’re likely familiar with the standard deduction. It’s a set amount of money that you’re automatically allowed to deduct from your taxable income each year. It reduces your tax liability and allows you to keep more of your hard-earned money.
Most tax filers already take the standard deduction, but this will be the final year they take it at its current level. That’s because the Tax Cuts and Jobs Act nearly doubled it, which means you’ll be able to keep a lot more of your money when you file your taxes next year. The higher standard deduction also means more taxpayers are likely to claim it instead of itemizing, which will substantially reduce the complexity of filing taxes for millions of Americans.
The Tax Cuts and Jobs Act did more than significantly expand the standard deduction. It doubled the child tax credit, too. It also increased the child tax credit’s refundability and phaseout limits, which not only means that more American families will be able to claim the credit, but, again, that there will be more money in the family budget, too.
In the four months since tax reform became a reality, the economy has added more than 600,000 jobs, and the unemployment rate currently sits at a 17-year low. The nonpartisan Congressional Budget Office says tax reform will create more than 1 million jobs, and the increase in economic activity “generates more demand for labor and consequently higher wages.” This is all good news for South Dakota taxpayers, and all signs point to more good news to come.