The U.S. House passed Tax Reform 2.0 on Friday that includes a resolution (H.R. 6760) from U.S. Rep. Rodney Davis.
Part of Davis’ measure would make certain individual tax cuts permanent in phases, finishing in 2025.
Critics say this is a measure to benefit the wealthy. Davis said the bill “clearly benefits the individual” by making individual rates permanent.
“What we’re seeing today is (the) percentage of taxes owed by middle-class families has gone down substantially. More money in their pocket,” the Taylorville Republican said. “What would happen is that would be reversed if we went reverted back to the old tax rates. And that is why it’s essential today that we pass this individual permanence to ensure that middle-class families continue to be the main recipient of our tax relief.”
Analysis from the Center on Budget and Policy Priorities finds that starting in 2025, the top 1 percent of households will receive a tax cut of over $40,180. Those in the bottom 60 percent, or those making less than $95,000? About $480 on average.
Davis also said doubling the standard deductions would likely lower the number of residents who need to file itemized deductions on their taxes.
“So, 75 percent of my constituents, before we even lowered their tax rates, were not itemizing anything, because they weren’t submitting any itemized deductions. Seventy-five percent of my constituents before this tax bill were not itemized,” Davis said. “Many actually believe now that 90 percent will not have to itemize because of an increase in doubling of the standard deduction.”
A review by the Joint Committee on Taxation found that Davis' proposal would increase the level of economic output in the next 10 years by 0.1 percent, leading to an increase in revenue by $93 billion. However, the committee also found the estimated loss in revenue over that same period to be $631 billion, tapering off in the decades after 2028.
The bill passed the House with 220 votes, including two Democrats. A vote in the Senate has not yet been scheduled.
House members are expected to return to their home districts next week to continue campaigning ahead of the midterm election. Davis will face Democratic challenger Betsy Dirksen Londrigan.
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