A bill sponsored by House Republicans to cut tax rates and reform the tax code has passed the House of Representatives, with Rep. Adam Kinzinger (R-IL 16) voting in favor while Rep. Cheri Bustos (D-IL 17) voted against in a largely party line vote.
The bill would simplify tax rates, double the standard deduction and cut the business tax rate to 20% among other things. Republicans argue reform of the tax code is long overdue, and the cuts will further stimulate the economy.
Rep. Kinzinger in a statement, “Nearly 70% of IL-16 residents pay the standard deduction. This tax plan doubles the standard deduction, repeals the death tax, and consolidates tax brackets to put money back into the pockets of more Americans. According to the Tax Foundation, this tax plan will create more than 37,000 new, full time jobs here in Illinois.”
While Democrats in the House unanimously opposed the plan, Democratic Members of Congress from Illinois have argued it is a bad deal for many taxpayers in Illinois especially because the House plan ends deductibility or state and local taxes, which is a benefit many filers in higher tax states such as Illinois claim.
Sens. Durbin and Duckworth, both Democrats, believe that provision alone would increase taxes for 30% of the families in Rep. Kinzinger’s 16th Congressional District. Both note that nearly two million Illinois taxpayers claimed more than $24 billion in state and local tax deductions in 2015 for an average of $12,500. It is unclear, however, how much doubling the standard deduction would reduce the number of filers who would itemize to claim the deductions.
A handful of Republicans in higher tax states voted against the bill for that reason. Only 13 Republicans voted ‘no’ overall.
Rep. Bustos in the past has accused the Republican plan of being, “a shell game that will raise taxes on millions of hardworking families by capping state and local tax deductions while eliminating middle-class tax relief on things like student loan interest and medical expenses.”
But Republicans argue that doubling the standard deduction will eliminate the need for other deductions while providing a simpler and fairer system of taxation. As for the deduction of state and local taxes, they contend it is not fair to ask taxpayers in high tax states to receive a benefit that those in low tax states do not.
The U.S. Senate is debating its own tax plan, which makes several key changes to the House version.