Tax Reform 2.0

Aug 10, 2018

The Tax Cuts and Jobs Act which was signed into law by President Trump on December 22, 2017 is the first major effort at reforming the tax code in nearly 30 years. As a member of the House Ways and Means Committee, I was proud to help draft this legislation.

Throughout the process, I spent a great deal of time traveling around Nebraska’s Third District to hear your concerns and ensure Nebraska had a seat at the negotiating table. As a result, we were able to preserve a number of provisions vital to Nebraskans such as the property tax deduction for farmers, ranchers, and small businesses.

In addition to simplifying compliance and lowering rates, the Tax Cuts and Jobs Act also included a number of provisions designed to encourage businesses to invest in expansion, such as the increase in bonus depreciation from 50 to 100 percent. By allowing businesses to immediately deduct a large portion of the purchase price of capital goods, the Tax Cuts and Jobs Act is driving investment into our local economies.

Another provision vital to Nebraska small businesses is the 20 percent deduction for pass through entities, meaning business owners who file one return for their personal taxes combined with their businesses. This deduction is particularly important in order for farmers, ranchers, cooperatives, and other small business owners to see a reduction in their tax burden like the one enjoyed by larger corporations. 

As you may have heard, some of the reforms tailored to individuals and small businesses were made temporary in the final version of the Tax Cuts and Jobs Act due to a lack of votes. The original version I helped to draft and pass through the House would have made these provisions permanent and I am eager to follow through on our original intent.

Tax reform has already proven to be a great success, boosting job creation and growing our economy by more than four percent annually. Even still, there are a number of reforms which could further simplify our tax code and carry this growth into the future.

Our second round of tax reform, dubbed “Tax Reform 2.0,” will focus on making these benefits permanent while improving incentives for families to save and for entrepreneurs to start new businesses. Early conversations have included savings accounts modeled on Roth IRAs in which families can save and have future access to funds, including interest, without paying additional taxes. 

Another proposal would allow people to borrow from 401(k)’s for life events like adoption expenses. These changes will help families to save and make better financial decisions both now and over the long term by knowing their money is more accessible.

I have also heard from a number of businesses around Nebraska about the need to ensure Qualified Improvement Properties such as retail and lodging businesses are eligible for bonus depreciation as was intended, and I am working to address this issue in the second round of reforms.

The excitement and consumer confidence generated by the Tax Cuts and Jobs Act is evident throughout the Third District and I can’t wait to further compound this success with yet another round of cuts and simplifications to our tax code. The American people know best how to spend their hard earned tax dollars and my goal will always be to help you keep more of your paycheck.

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