Making Sense of the "Tax Cuts and Jobs Act of 2017"

We are to fill in the trajectory of letting more of their own mind family development are going to be more money an opinion. This is family policy with NC family Pres. John Preston thanks for joining us this week for family policy matters. I'm sure most if not all of us have heard about the new tax reform bill recently passed by the U.S. Congress and fond of the law by Pres. Donald Trump on December 22 will if you're like me you had a pretty difficult time filtering through all the news reports and frankly the talking points that have been put forth by politicians, political parties and advocacy groups today were fortunate to be speaking with Andrew Guernsey, a legislative assistant for government affairs with the family research Council in Washington DC about the real effects of the tax cuts and jobs that I Andrew welcome the family policy matters. It's great to have you on the show and I appreciate you helping us make sense of this somewhat complex matter. Great to speak with you today. What are the biggest of short-term changes that the average American family can expect to see from this national tax reform bill. One of the biggest changes for families is the increase of the child tax credit and child tax credit is something every family can get out. They have a child under 17 and the bill double it to $2000 for each qualifying child under 17. That's a huge benefit for families who have to suffer some of the hardships of the economy to have finally bit of a boost.

That's one of the main reasons why families that they can look forward to this tax bills implementation this year. Other big thing is the elimination of marriage penalties. The bill gets rid of a lot of the marriage penalties there in the tax code when it comes to the income brackets which aired penalties often will make it so that if you get married if a higher tax bill and that the Republican caucus looking at that said marriage and family stability is something that I we ought to encourage as a vehicle helping families flourish rather than analyze note was there in across-the-board tax cut. Also, when should families start to see the impact of these changes in their weekly or monthly paychecks absolutely. So this is in across-the-board tax cut that nearly every person will benefit in some way from the provisions in the tax bill up with a few exceptions, but the paycheck increases to that, you'll start seeing, you know, as early as February this year. Some of Artie started to see it out once employers process the guidance from the IRS on how much to withhold in the paycheck were already seen those changes and hopefully all your listeners here will start to see those changes early the next couple weeks old, very good. And that's exciting.

I want to encourage all its listeners to pay attention to your paycheck stubs and note when those tax cuts become effective, and you start seeing a real all implication your pocketbook. It's it's very important understand of the things that the actions the Congress takes definitely do have an impact directly on us. No entry tax benefits are often tricky tricky to calculate because each family situation is different depending upon things like income, geography, which state they live in that sort of thing. The number of children in the family and you talked about the child tax credit and also in individual's investment portfolio and other factors. Do you consider the changes made by this legislation to be mostly good, mostly bad or count of a mixed bag for American families. I'm competent, mostly good for families.

And there's a couple reasons why mention Mattel tax credit is one thing, it also includes a new child and dependent care credit of about $500 for dependence at the true credit so that people taking care of an elderly grandparent or you know an older child or can't qualify for the child tax credit can benefit from that fact that they're paying for a lot of these dependent care expenses so that's a big win for helping keep the family structure incentivize together also great that the bill provides and keeps the adoption tax credit current law that helps families open their hearts and homes for forever family for an adopted child. The next important provision that they retained in the belt about 13 years of $1300 range and current law what families can get in a credit for those high cost expenses that go along with adoption but it's so great to see that a lot of these profamily provisions are retained in the bill and improved in many cases I we also saw strewed the family to be impacted by the loss of the personal exemptions but that's folded into a larger standard deduction so there doubling the standard deduction for which means that your marriage or not to beget $2100 deduction which is quite a boost compared to the current law, so that those that's more money in your pocket which you can use to help families keep keep care of their young ones. And that's something I think we can celebrate.

Well, that's great. And I think I will will surely dig into this a little bit. During our conversation, but some of the things that you mentioned.

I know were areas of significant concern throughout the negotiations of this tax cut proposal all will bill that ultimately passed as it was a proposal in both the House and the Senate. I know that we heard from constituents that were concerned about the things that you mentioned the child tax credit. The adoption tax credit. Other things like that. Being significantly impacted and not in a positive way. But ultimately it seems like most of what happened in most of the concerns were expressed by those things were addressed.

Now some of the effects of the tax cuts and jobs act can differ pretty substantially from state to state. Do you have a sense of how North Carolina families will fare us a compared to families in other states across the country assure us of the state that does impact the state you live in does impact whether and to what extent the benefit from some of the changes that the law provides seek specifically about the deductions for state and local taxes.

The final bill allows people and families to deduct up to $10,000 in state and local taxes, property taxes and or sales taxes you choose the combination to fill up your $10,000 deduction tank so that change will no doubt impact some higher income earners in more liberal states that have high tax rates, but if you look at the in the context of the bill also cutting tax rates impact lowers the highest tax rate income bracket that would have more the bigger impact of salt, which is the state and local taxes. It's clear that the bill moves in the trajectory of letting people keep more of their own money and the vast majority of income earners, across-the-board organist see those cuts so families regardless of the state you live in are going to see more money in their paychecks you're listening to policy not as a resource to listen to our radio show online resources that will be a voice of persuasion in your community to our website family.org now. We heard critics throughout the process claim that the tax cuts and jobs act only benefits businesses in the most wealthy Americans and really couldn't potentially harm the middle and lower income families.

How did FRC respond to these claims, but a lot of that is based on the talking points. You know that we'd seen from the other side that for the longest time they're saying you guys going to fall. Some people are gonna die.

You know there's a lot of rhetoric on the other side. How damaging letting people keep more than money would be, but it's good to see now that you know now that people start to see the bonuses rollouts that started to see now starting just at the beginning of seen people keep more than money. The paycheck so they can provide for their families. I think this is already sort of mitigating so that narrative you referred to that all is just a cut for the 1%, but in reality. Also, it benefits a lot of small businesses with a pass-through deduction that the brand-new extremely important provision because a lot of people your businesses. Small businesses will file their taxes for their business on their individual returns and the fact that they were cutting the individual return rate in the corporate income taxes down to 20% or rather a 21% allows this pass-through deduction so that people who you small businesses that use that file on their individual tax rates can get a deduction so that they're not penalized because they're not a corporation, so I think it's important that the bill provides important ways to sort of level playing field and reduce those loopholes that allow the big corporations to benefit that fact patterns of benefits, many of them along to people and middle-class families and small businesses very good stability with respect to education savings. That's one of my favorite dialects talked about provisions in the bill.

I'm glad you mentioned it, what it does is allows 529 education savings accounts. I could be expanded from what currently can only be used for college tuition and graduate school tuition to now been able to use for families for elementary or secondary public-private and religious schools. So this means concretely, is that you can start contributing to your child's not just their college education through a tax benefited 529 savings account but also for your kids K-12 expenses. You can tap into those funds earlier and help promote school choice and this is also key in a lot of states that provide huge benefits that the state income tax level so that many states across country to provide tax credits and deductions in your state taxes based on how much you contribute to your child's now college, but now K-12 education so that the big win across the country. Now I know that there were a number of groups, nonprofits, among them in this is an issue that we were looking at quite closely because it certainly could impact organizations like the family research Council and like to throw on a family policy Council and that is the concern that the bill could have a negative impact on charitable giving a talk about that little bit if you would like to bring it up as you know, no guilt, perfect and often there are unintended consequences of a lot of policy changes here in one of those that were concerned about was the increase in standard deduction by twice so now it's $24,000 for married couples that often incentivizes a lot of people who would otherwise be getting that deduction for charitable giving, God, now to become nonaudit miters and to start taking the standard deduction so we what we are urging Congress and in addition to the legislation Artie passed to consider bills like universal charitable giving acts which would allow it above the line deduction and other you know means like this to try to mitigate some of the impact where fewer people itemizing our fear yet will result in potentially less giving but it's only way to see is what comes in the next year as far as how people behave in response to the tax bill I were hopeful and we want to encourage people to take more.

The money you keep in your paycheck and and consider supporting many those organizations that are instrumental in trying to protect life and family and other things we care about what Shirley does charitable deductions for many and we just come through the end of the year, which were many charitable organizations is a is a big time because people are really trying to limit their tax exposure and and in doing that balance their giving to chirp organizations to maximize the charitable giving that they do so it will be interesting to see what kind of impact this has all giving, but we certainly want to encourage our supporters and certainly expect that they will continue to to give generously to the efforts of groups like the family policy Council and the family research Council and other organizations that work for things that they believe in. And finally, Andrew does the law include what you would consider to be any long-term changes to our national tax policy that American families need to be aware of in the coming years. That's great question tax cut and jobs act actually urgently due to Senate rules was only able to extend the individual tax cuts through the year 2025, which is about seven years from now. So either. Then there'd have to have a decision whether they will continue or make permanent the cuts to the individual rates so your average tax bracket or whether to change though so that's good to be up to future Congress or this Congress that they can develop a bipartisan consensus to make those cuts to the individual rate permanent so we would definitely want to pay attention when it gets closer to 2025 to make sure that one plans accordingly to stay on top of where the political scene is that but at the same time. I think once people see the impact it can have in their lives to keep more their money in the paychecks. They're not going to want to elect members of Congress were going to jack up their individual rates.

So that's something to keep aware of in the long-term future.

But I think this is a big win for the American people will grace before we depart our conversation today, working our listeners go to learn more about this particular act, but also about the great work of the family research Council go to FRC.org you can find everything family research Council have the offer, but all of our publications online so you can go check it out. We have peace out that I wrote on the new tax bill and how it helps and affects families but yet logging on FRC will end up sign up for emails and would be happy to keep track of you of what Congress is doing and how you listeners can make an impact by calling your congressman and staying abreast of these things will about Andrew Guernsey.

I want to thank you so much for being with us on family policy matters and for helping to bring clarity to a complex but very important issue and we are so grateful again for all the wonderful work. The family research Council, those in our nation. You've been listening to family policy matters production of NZ only to listen to our radio show online, and for more valuable resources and information about issues important to families in North Carolina website and see family.org and follow us on Twitter and Facebook