GALESBURG — The three candidates in the race for Galesburg’s seat in the U.S. House of Representatives have differing views on the Tax Cuts and Jobs Act, the tax reform law that President Donald Trump signed Dec. 22.
The law is expected to increase the United States’ GDP by 0.7 percent on average throughout the 10-year budget window, according to the official report on the law from the Joint Committee on Taxation. The new law also includes a permanent corporate income tax reduction and reformed income tax rates for the seven income brackets.
Under the new tax brackets and rates, single Americans making $9,525 to $38,700 annually and married couples filing jointly who bring in $19,050 to $77,400 annually will pay 12 percent in income tax under the new system compared to 15 percent under the current system. Galesburg’s median household income is $32,962, according to Data USA.
However, Eric Toder of the Tax Policy Center cautioned that the cuts are expected to change after 2027.
“Under the new formula, the adjustment for inflation would be smaller than the adjustment under the prior law,” Toder said. “As a result, compared with prior law, more taxpayers would move into higher rate brackets and some low-income families would see their earned income tax credits decline. As a result, individual income tax liability in 2027 would increase on average for all income groups. Taxpayers would continue to benefit in 2027 and after from the cut in corporate taxes, which is permanent, but this benefit goes disproportionately to higher income households.”
The three candidates running for the seat representing the 17th Congressional District expressed differing views on the new law. Incumbent Rep. Cheri Bustos, D-East Moline, agreed that the income tax rates should have been cut, but disagreed with how the tax package’s benefits will continue for higher-income households over average-income households in the long run. Her communications director Jared Smith said the personal-side tax cuts will go away away after eight years, including the increased standard deduction, but many of the offsets used and tax provisions eliminated to offset those cuts in some ways were permanent.
“There are all kinds of approaches that we can take to tax reform, but this approach I don’t think was the right one,” Bustos said.
The two Republican candidates, Mark Kleine and Bill Fawell, emphasized the affect the new plan would have on businesses and job creation.
“My opinion of the tax reform is that we’re going to see significant gains in economic growth and job creation throughout the country,” Kleine said. “… Corporations are going to get tax breaks, and what are they going to do with that money? They’re going to invest it in infrastructure, and they’re going to invest it in people. They’re going to hire people, which is going to provide a tremendous boost to our economy.”
Fawell said he’s spoken with small-business owners in various states who said they’re “thrilled” with the new law. He said he personally supports most of the bill but would like to have seen more taxes placed on those making $1 million and more in unearned income.
“What this new tax code did is good because it allows (business owners making earned income) to expand and hire more employees,” Fawell said. “My problem is unearned income.”
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