Tax reform renewing confidence in America
Taxes have been on the minds of North Dakotans this week as we have completed our state and federal returns to meet the annual filing deadline. Actually, they have been a topic of robust discussion since December, when President Trump signed into law historic tax reform legislation passed by Congressional Republicans.
Since then, families and businesses alike have been recalculating their budgets as they move forward with lower tax rates and larger paychecks, thanks to the largest tax cuts in American history. Already, revised federal withholding tables from this massive overhaul of the U.S. tax code have meant more money in the pockets of North Dakotans. Employers have given thousands of workers bonuses and raises. And, businesses of all sizes are revising plans to include new equipment purchases, facility expansions and additional employees.
I supported tax reform in Congress because I was convinced a more simple and fair tax code would benefit the people of North Dakota and grow our nation’s economy. Recently, a liberal think tank released an analysis of the new law and affirmed its positive impact on our state. The Tax Policy Center, which is backed by the Urban Institute and the Brookings Institution, listed North Dakota as the state that will see the largest average tax reduction in the nation. It estimated average savings to North Dakotans of 10.8 percent or $2,170 per filer.
Tax reform was long overdue, and this new law corrects a tax imbalance created by decades of special interest lobbying in Washington. Rewriting the federal tax code was a campaign promise of President Trump and a top priority in the “A Better Way” agenda developed by House Republicans prior to the 2016 election. Several House committees worked intensely to develop blueprints for significant reform. And with the election of President Trump and Republican majorities in Congress, this long-held dream became a reality within a year.
This new law will raise our nation to new levels of prosperity for several reasons. Tax rates have been lowered and standard deductions have been doubled, benefitting individuals and families at all income levels. Families will double their child tax credit and retain their mortgage interest deduction.
Farmers and ranchers now have permanent Section 179 expensing up to $1 million in assets, and full expensing of capital investments for five years. Cash accounting is preserved, as is full interest deductibility for farming, ranching and businesses with average receipts of $25 million or less.
America is again open for business as one of the most competitive countries in the world. The new corporate tax rate of 21 percent is down from 35 percent, which was the highest in the industrialized world. Small businesses have a first-ever 20 percent tax deduction on the first $315,000 of joint income earned in all S corporations, partnerships, LLCs and sole proprietorships. And, the corporate alternative minimum tax has been eliminated.
North Dakota’s strong economy has held its unemployment rate at among the lowest in the U.S. And now, the nation’s overall February unemployment rate of 4.1 percent, a 17-year low, indicates how consumer confidence is sweeping across the nation.
The legislative achievements of Congressional Republicans in this past year have been highlighted by our focus on pro-growth and pro-family tax reform. This has unleashed a new optimism that is bringing greater prosperity and economic growth to this and future generations of North Dakotans and Americans.