On Thursday, Republicans released their highly-anticipated tax reform bill, which was formulated in coordination with the Trump administration. It is the most important tax legislation in modern American history. Unlike the tax proposals of the past, the Republican bill wouldn’t merely tinker with the broken U.S. tax code; it would radically transform the current tax system and catalyze economic growth in a way we haven’t enjoyed in decades.

The Republican plan was crafted with several important principles in mind. First, the plan would simplify the tax code, making it easier for people to understand what they owe. Second, it would end many of the special-interest tax breaks that have put individuals and families at a great disadvantage compared to wealthier filers and some businesses. Third, it would provide immense tax breaks for tens of millions of families across the country, with an emphasis on middle-income households and working lower-income families. Fourth, it would give businesses, including small businesses, much-needed tax relief, allowing job creators to invest more of their money in business expansion.

The Trump-Republican tax plan would simplify the tax code by reducing the number of brackets to four (five if you count those who will pay nothing), with the vast majority of people falling into one or more of three brackets: 12 percent, 25 percent, and 35 percent. Individuals would pay 12 percent on the first $45,000 of income, and 25 percent on income $45,000 to $200,000. Married filers would pay 12 percent on income up to $90,000 and 25 percent on income from $90,000 to $260,000.

Individuals would pay 35 percent on income from $200,000 to $500,000, while families would pay 35 percent on income $260,000 to $1 million. Individual filers earning at least $500,000 per year and families earning $1 million would pay 39.6 percent.

For many families, the rates under the Republican plan would be lower than what they are currently paying, but the bill offers additional support for those with children, by expanding the Child Tax Credit from $1,000 to $1,600. Further, the income level at which the Child Tax Credit is phased out would go from $110,000 under the current system to $230,000, making it available to the overwhelming majority of households with children and all the households with children who would benefit significantly from it.

Perhaps most importantly for many families, the standard deduction would effectively be doubled for individuals (to $12,000) and families (to $24,000).

Although the Republican plan would eliminate most deductions, making the tax code so simple that most people would be able to file using a very simple post-card-style system, a few important deductions would be kept in place, including a version of the mortgage-interest deduction and a deduction for state and local property taxes (capped at $10,000).

All this amounts to tremendous savings for families of various sizes and circumstances. As House Republicans noted in the bill’s “Policy Details” document, a single parent of one child making $30,000 per year would receive a tax refund of more than $1,000, $700 more than what he or she receives now. A family of four earning $59,000, roughly the median household income, would save more than $1,180, as the family’s tax total would go from $1,582 to $400. This amounts to a family of four saving more than $21,000 over its children’s time living at home (18 years), enough to pay for at least two years of college tuition for both children at some state colleges (and in some cases, all four years of college).

The bill would also repeal the alternative minimum tax, a foolish, destructive, income-redistributionist part of the tax code that requires 5 million households to effectively do their taxes twice. Additionally, the bill would immediately reduce the number of farms, businesses, and families subject to the estate tax, also known as the “death tax,” and phase it out, along with the generation-skipping tax, after six years.

The bill would implement astounding cuts for businesses as well. Corporate tax rates would drop from 35 percent, the highest in the industrialized world, down to 20 percent, unleashing billions of dollars for businesses to use to expand, innovate and grow. The bill would also cap small business income tax rates at 25 percent, which House Republicans say is “the lowest tax rate on small business income since World War II.”

As with virtually all tax plans, the Republican bill would increase taxes for some households, especially those that rely heavily on very specialized deductions and some higher-income people who live in high-tax states (because the Republican plan eliminates the deduction for state income tax).

Overall, these changes will negatively affect a relatively small number of households, and most of them are upper-middle-income or higher. But more importantly, everyone, regardless of income, will benefit from this bill, because it would spur economic growth and wake the sleeping economic giant.

This legislation has the potential to usher in another golden era of prosperity. President Trump and congressional Republicans deserve to be highly-praised for this remarkable plan — a plan that would have been impossible had Hillary Clinton won the presidency one year ago.

It’s now up to Congress to finish the job by passing the bill without gutting its most important provisions in the process and sending it to President Trump’s desk, where he’ll surely sign what could be legacy-making legislation into law.

Justin Haskins (@JustinTHaskins) is a contributor to the Washington Examiner's Beltway Confidential blog. He is an executive editor at The Heartland Institute.

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