By: Congresswoman Mimi Walters
I was born and raised in California and have been lucky to call Orange County home for over 50 years. The Golden State is home to beautiful weather, great people and a rich history. Unfortunately, it is also the highest taxed state due to the California State Legislature, which irresponsibly raises taxes and spends beyond its means. From income to property to gasoline, there is nothing Sacramento will not tax.
After witnessing the fiscal recklessness of the Democrat supermajority in Sacramento, I ran for the U.S. House of Representatives to ensure the federal government doesn’t similarly abuse hard-working taxpayers. I previously expressed reservations about this bill, but after successfully negotiating the best deal for Orange County residents, I voted in favor of tax reform legislation that lowers federal tax rates for everyone, protects popular deductions, and puts America back on track to prosperity through economic growth.
The status quo was unacceptable. For too long, our tax code was broken – full of special interest loopholes and a tax structure that encouraged companies to ship jobs overseas. The Tax Reform and Jobs Act ends those perverse incentives and establishes rules that benefit American workers and businesses. This bill is the product of many years of hearings, debate, and discussion, and embodies the pro-growth tax reform principles that Republicans, including myself, have always supported.
These reforms provide relief for middle-class Americans. Rates are decreased across the board, and the standard deduction is nearly doubled, meaning that under the new tax code, the first $12,000 of income for individual filers and first $24,000 of income for joint filers, is tax-free. This means Americans keep more of their paychecks. It’s the people’s money, not the government’s.
This bill will also make more Americans secure in their retirement plans. A majority of the country invests in the stock market through 401(k) accounts, pension plans, and other means. The reforms contained in this bill will jumpstart the economy, helping to create future earnings for millions of Americans who will be able to enjoy a comfortable retirement.
Additionally, rates for small businesses and job creators are significantly reduced. In an increasingly competitive global marketplace, U.S. companies need a business climate that allows them to create jobs and reinvest in our country, while increasing opportunities and wages for American workers.
As I mentioned, I had serious reservations about previous versions of this legislation. However, after a great deal of negotiation, I secured substantial improvements to the bill that will benefit Orange County taxpayers. First, the state and local tax deduction was preserved up to $10,000, which will help Californians offset some of the burden that comes from Sacramento’s out of control fiscal policies. For California’s 45th congressional district, where the average income is just under $95,000 a year, people earning between $100,000 and $150,000 per year deduct an average of $6,600 in state and local taxes, according to the Internal Revenue Service.
Orange County residents will also benefit from an increase in the mortgage interest deduction to $750,000 for new mortgages, up from $500,000 in the original bill. Existing mortgages are grandfathered under current law. According to 2016 Census Data, the median home price in California’s 45th congressional district is $685,800. This improvement helps the middle class attain the American Dream of homeownership.
Additional improvements will help families, students, and working adults. The childcare tax credit is doubled to $2,000, so families across the country will receive the tax relief they need to raise the next generation. Important deductions for medical expenses, charitable contributions, student loan interest, graduate school waivers, and school supplies purchased by teachers with their own money are preserved.
Much like when California’s own Ronald Reagan overhauled America’s tax code, defenders of the status quo are quick to spread misinformation and obstruct long overdue tax reform. In fact, in the three years after the John F. Kennedy era tax cuts, the country experienced over 6.5 percent annual economic growth. The Reagan tax cuts resulted in 4.6 percent annual economic growth. There is historical proof that tax cuts that let Americans keep more of their own money results in robust economic growth and strengthens our Nation.
While those in Sacramento love to stick it to California taxpayers, I was sent to Washington, DC to improve the lives of Orange County residents. This bill will do just that. The American economy will flourish and, as the sixth largest economy in the world, California will benefit the most. I wish you all a very happy holiday season and a prosperous 2018.
Mimi Walters represents the 45th Congressional District.