Sen. John Thune
The U.S. tax code is too large, too complicated, and too outdated. Reforming and modernizing it so more middle-income South Dakotans can keep more of what they earn doesn’t have to be complicated, and it’s something on which both Republicans and Democrats should be able to agree. This is a once-in-a-generation opportunity, and I’m excited to be a part of it.
The tax reform framework the Senate, House, and Trump administration recently released is the result of a months-long process that included significant coordination between Congress and the administration. As we work to turn this broad framework into a bill, members of the Senate Finance Committee, myself included, will continue to have an open process by holding hearings, receiving feedback from the American people, and taking our ideas about tax reform to communities in South Dakota and around the country.
The framework we’ve released would expand the “0 percent tax bracket” by doubling the standard deduction to $12,000 for single filers and $24,000 for folks who file jointly. The standard deduction is the amount of money that’s taken off the top of your gross income and is not taxable. For a family making $24,000 or less per year, that means they won’t pay a dime in federal income tax. Joint filers who make more than $24,000 per year won’t pay federal income tax on that portion of their earnings either.
The Child Tax Credit is important for a lot of middle-class families in South Dakota, which is why I support preserving and strengthening it. As under current law, up to the first $1,000 of the credit would be refundable, and the framework wouldn’t change that. It would, however, increase the phase-out threshold, which means more families would have access to it.
The current tax code has seven tax brackets and way too many itemized deductions. Our tax reform framework would condense these brackets into three progressive tax brackets. With the increased standard deduction, these new brackets would lower the tax burden on hard-working Americans, while high-income earners would still pay a higher tax rate. While it would get rid of most of the complicated tax deductions, it would preserve popular benefits for home ownership and charitable contributions. These are good tax incentives for families, and I believe they should remain in the code.
I’ve been fighting to bury the fundamentally unfair death tax for years, and I’m glad the framework incorporated my idea to protect family-run farms and ranches from this burdensome tax that can strike at the worst possible moment. While critics believe certain folks, including some farm and ranch owners, should be taxed twice on their income or forced to spend valuable time and money dealing with lawyers and accountants just to avoid being a victim of the death tax, I do not. These can be scarce resources that could otherwise be used to grow a business or hire new workers.
The reason I believe we’re headed in the right direction is because this framework would help the people who need it the most. It would provide relief to middle-class families, and it would help small and medium-sized businesses and farms and ranches grow and create jobs. There’s more information about the framework and how we plan to achieve these goals on www.thune.senate.gov. Just click on the tax reform tab on the homepage, and please let me know what you think.