[Congressional Record Volume 163, Number 188 (Thursday, November 16, 2017)]
[House]
[Pages H9416-H9418]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       THE REPUBLICAN TAX BILL IS A BLOW TO SENIORS AND FAMILIES

  (Mrs. NAPOLITANO asked and was given permission to address the House 
for 1 minute.)
  Mrs. NAPOLITANO. Mr. Speaker, I rise in strong opposition to H.R. 1, 
the Republican tax bill, which is a giveaway to corporations and the 
richest 1 percent, and a tax hike on working class Americans and their 
children.
  It is unconscionable, as it cripples the State and local tax 
deductions. Thirty percent of my residents will lose these deductions, 
averaging $17,000 per family, according to the IRS, which will 
devastate housing affordability in my district and disadvantage 
California taxpayers, compared to other States.
  It cruelly eliminates the medical expense tax deduction worth over 
$10,000. This is a direct blow to seniors and families in my district 
who have long-term medical needs, as well as families with children who 
have severe disabilities.
  The House bill is terrible, but the Senate wants to include a repeal 
of the Affordable Care Act in their bill, making it even more painful 
for working families. This would kick millions of Americans off their 
health insurance plan, spike premiums, and undermine our entire 
healthcare system.
  It also abolishes the tax-exempt status of private activity bonds 
used by San Gabriel Valley cities, water agencies, and transportation 
agencies to provide low-cost financing.
  Mr. Speaker, I urge my colleagues to vote against it.
  Mr. Speaker, I include in the Record letters from the League of 
California Cities, the California Department of Finance, the California 
State Treasurer, and the San Gabriel Valley Economic Partnership in 
opposition to H.R. 1.

         League of California Cities, CSAC, CALED, CSBA, 
           California Association of Realtors,
                                                 November 9, 2017.
     For Immediate Release.

 Coalition of Local Governments, Economic Development Leaders, Schools 
  and Realtors Urge California Congressional Delegation to Reject Tax 
        Reforms that Harm Taxpayers, Homeowners and the Economy


 California Would be one of the States to Lose the Most from Proposed 
                                Reforms

       Sacramento.--The associations representing California's 
     local governments, economic development leaders, schools and 
     realtors urge the California congressional delegation to 
     protect the State and Local Tax deduction and a key economic 
     development tool at risk under the Tax Cuts and Jobs Act in 
     its current form.
       The SALT deduction makes the cost of living more affordable 
     in states like California. Eliminating the deduction for 
     state and local income taxes and capping the local property 
     tax deduction at $10,000 would hurt hard-working California 
     families and only add to the housing affordability crisis in 
     the state by eliminating a key incentive for homeownership. 
     In 2015, 6.1 million California taxpayers claimed the SALT 
     deduction with the average deduction at around $18,000.
       The SALT deduction has been an integral component of the 
     federal tax code since its creation in 1913 and was one of 
     the six deductions allowed under the original tax code. 
     Eliminating or capping federal deductibility for state and 
     local property, sales and income taxes would represent double 
     taxation and would upset the carefully balanced fiscal 
     federalism that has existed since the permanent creation of 
     the federal income tax over 100 years ago.
       Tax-exempt Private Activity Bonds (PABs) are an important 
     tool for state and local governments to help finance major 
     public projects, including transportation and water 
     infrastructure, affordable housing construction, schools--all 
     of which are essential for job growth, healthy economies, 
     safe communities and the nation's economy Eliminating PABs' 
     tax-exempt status would drive up the costs of borrowing for 
     these projects by 25-25 percent and be a disincentive to 
     spurring private sector investment in our communities.
       Given the impact on California families and our economy, we 
     respectfully urge the California congressional delegation to 
     oppose eliminating or capping the SALT deduction or removing 
     the exemption on PABs as part of any tax reform proposal.


                     Quotes from coalition leaders

       Carolyn Coleman, Executive Director, League of California 
     Cities: ``Hard working California tax payers and our 
     communities would be harmed by the current proposal. We hope 
     that California's congressional delegation hears this message 
     and takes swift action to reject any proposals that would 
     cause people to pay taxes on their income twice, would 
     destabilize key incentives for homeownership and increase 
     borrowing costs for state and local governments to finance 
     projects that benefit our communities.
       Matt Cate, Executive Director, California State Association 
     of Counties: ``California Counties are increasingly concerned 
     with several provisions in the House tax reform package. The 
     narrowing of the SALT deduction alone would impact county 
     resources and their ability to meet the service needs of the 
     public. The additional changes to infrastructure financing 
     tools, including the taxable status of Private Activity Bonds 
     (PABs) and the ability to advance refund municipal bonds, 
     will fundamentally harm the way counties do business on 
     behalf of our residents.''
       Gurbax Sahota, President and CEO, California Association 
     for Local Economic Development: ``The current tax proposal 
     eliminates Private Activity Bonds--eliminating an important 
     economic development financing tool California uses to fund 
     manufacturing expansion, health care facilities, affordable 
     housing, schools, nonprofits, and other economic development 
     projects. Combined with a repeal of advance refunding bonds, 
     this will absolutely impact our ability to attract investment 
     to future projects like these, as well as our ability to 
     create and retain jobs in these areas. These provisions are 
     bad for California and our residents.''
       Vernon M. Billy, CEO and Executive Director, California 
     School Boards Association: ``We urge the California 
     delegation to act on behalf of the taxpayers in California 
     who would be hurt by the elimination of the SALT deduction, 
     including the talented school employees who work in our 
     schools educating and training students. Eliminating the 
     deduction has the same impact as raising property, income and 
     sales taxes in every congressional district in our state. By 
     effectively raising property taxes, the deduction also makes 
     local school bonds more expensive, complicating our efforts 
     to build and repair schools and provide students with the 
     resources needed for a high-quality 21st century education.''
       Steve White, President, California Association of REALTORS: 
     ``The move by Congress to eliminate state and local tax 
     deductions essentially levies a double tax on California, 
     this and other attacks on real estate tax incentives removes 
     the tax benefits for people to buy homes and raises taxes on 
     hundreds of thousands of Californians. Homeownership has and 
     continues to be the best way for families to grow wealth and 
     increase the middle class. Congress should look at ways to 
     incentivize and increase homeownership rates, not increase 
     taxes on families wanting to buy a home.
                                  ____

                                            Department of Finance,


                                       Office of the Director,

                                 Sacramento, CA, November 9, 2017.
     California Congressional Delegation,
     Washington, DC.
       Dear Members of the California Congressional Delegation: As 
     the Governor's chief fiscal advisor, I write to express the 
     Administration's significant concerns with several provisions 
     currently contained in H.R. 1 measure now under consideration 
     before the Ways and Means Committee.
       Removing the state and local tax (SALT) deductions while 
     capping the property tax deduction at $10,000--Over 6 million 
     California tax returns--one of every three--claim SALT 
     deductions, including millions of middle-income households 
     that may not benefit from the increased standard deduction. 
     While allowing up to a $10,000 deduction on property taxes 
     provides some offset, only one-fourth of the state and local 
     tax deduction consists of property taxes paid. The average 
     deduction for state and local income taxes alone is nearly 
     $16,000 per return, while state and local property taxes 
     average less than $6,000 per return.
       Reducing the cap on the mortgage interest deduction to 
     $500,000 ($250,000 single)--This change will increase the 
     cost of homeownership for many middle-class Californians. 
     Given the high cost of housing in the state, mortgages for 
     many mid-level homes are significantly above these caps, 
     particularly the $250,000 cap for single filers. More than 4 
     million California tax returns claim the mortgage interest 
     deduction at an average of over $12,000 per return.

[[Page H9417]]

       Elimination of the interest exclusion for Private Activity 
     Bonds (PABs)--This will remove an important tool used by the 
     Low Income Housing Tax Credit program to construct affordable 
     housing, which was used to fund nearly 20,000 affordable 
     housing units in 2016.
       The state's Infrastructure and Economic Development Bank 
     (iBank) has issued Private Activity Bonds in support of 
     museums, schools, performing arts centers, charitable 
     organizations and research institutes throughout the state. 
     Elimination of Private Activity Bonds would greatly increase 
     borrowing costs for such borrowers resulting in the delay; 
     downsizing or outright abandonment of these socially 
     beneficial projects and the people and jobs who depend on 
     them.
       Further, this would hurt California veterans by ending bond 
     issuances that help around 1,000 veterans buy a home every 
     year. This program has been around since at least World War 
     II. It serves veterans that would not otherwise qualify for 
     private financing, while maintaining foreclosure rates of 
     less than 0.25 percent.
       Repeal of Casualty Loss Deduction--Last month's devastating 
     wildfires in northern California have alone caused billions 
     of dollars in losses, with more than 10,000 homes damage and 
     over 4,700 more destroyed. For this and other disasters to 
     come, it is important to maintain the casualty loss deduction 
     as a way of providing relief to the victims of casualty 
     losses both large and small. The repeal of the casualty loss 
     deduction starting in 2018 under H.R. 1 is an unnecessary 
     step that will only compound the difficulty for the many 
     thousands of Californians who either are or will be 
     struggling to recover from devastating losses.
       Negative impacts on Education--Multiple provisions now in 
     H.R. 1 negatively impact the cost of education for both 
     students and educators, including the elimination of the 
     student loan interest deduction, imposing a new tax on 
     tuition waivers, elimination or reduction of various tax 
     credits, and a new tax on net investment income of private 
     colleges and universities if their endowments exceed $250,000 
     per full-time student. In total, all of the changes to 
     education provisions will raise taxes on Americans by over 
     $60 billion over ten years, which indicates a negative impact 
     on California of at least $7 billion.
       Unfavorable treatment of children and families--The new 
     $300 Family Flexibility Credit for the tax filer, their 
     spouse, and for non-child dependents is temporary and expires 
     in 2023. While it provides a tax benefit for many low-income 
     families in the first four years, its expiration leads to 
     those same families having much smaller net tax cuts or 
     overall tax increases in 2023 and beyond. In addition, unlike 
     the current dependent exemptions it is intended to replace, 
     there is no indexing of the Child Tax Credit, which leads to 
     its positive impact eroding over time.
       Also, requiring a Social Security number for the refundable 
     portion of the child tax credit punishes working undocumented 
     immigrants in California who file their tax returns using a 
     Taxpayer Identification Number. More than $3.4 billion in 
     federal refundable child tax credits were claimed by 
     Californians in 2015, and a portion of those would have been 
     undocumented immigrants filing with a Taxpayer Identification 
     Number
       Overall tax cuts for the wealthy--Lower tax rates on 
     business income will disproportionately benefit higher-income 
     individuals who are more likely to have income from limited 
     liability companies, S corporations, or partnerships. 
     Further, the repeal of the estate tax will disproportionately 
     benefit the wealthy. The estate tax would be fully repealed 
     for deaths after December 31, 2023 and there would be no 
     change to the basis step-up rule that currently revalues 
     appreciated capital assets at market value at the time of 
     death. As a result, wealthy people would be able to simply 
     hold on to assets until they die, pass the assets on to their 
     heirs, and all the increase in the value of the asset during 
     the wealthy person's life will not be taxed. Removing the tax 
     on inherited wealth without also repealing the basis step-up 
     rule leads to increasing inequality. The Joint Committee on 
     Taxation analysis shows that for 2027, the highest-income 
     Americans--less than three-tenths of one percent of 
     taxpayers--will realize almost one-third of the total 
     benefits.
       Prioritizes corporations over individuals--The net benefits 
     of H.R. 1 are weighted heavily towards corporations, with the 
     significant cut in the corporate tax rate coupled with the 
     removal of relatively few corporate tax breaks. Instead, many 
     deductions and tax credits taken by lower-and middle income 
     households are either reduced or eliminated. A November 3 
     Joint Committee on Taxation analysis indicates that more than 
     half of the tax cut goes to corporations while about one-
     third goes to businesses that pass through income to 
     individuals.
       Massive expansion of the deficit by at least $1.7 trillion 
     over ten years--Deficit-financed tax cuts are not likely to 
     lead to significant growth effects because the negative 
     economic effects of the debt would crowd out investment. 
     Further, fiscal stimulus at this point in the business 
     cycle--with the economy at full employment, corporate profit 
     margins at all-time highs, and corporate cash balances at 
     all-time highs--is unlikely to lead to significant growth 
     above what would have occurred in the absence of these 
     changes.
       If you need any additional information on any of these 
     subjects, please do not hesitate to contact me.
           Sincerely,
                                                    Michael Cohen,
     Director.
                                  ____



                                          State of California,

                                                 November 9, 2017.
     Re Tax Reform and the Low-Income Housing Tax Credit.

     Hon. Grace Napolitano,
     House of Representatives,
     Washington, DC.
       Dear Rep. Napolitano: Last week you received a letter from 
     me and other prominent signatories respectfully urging you to 
     preserve the 4 percent Low-Income Housing Tax Credit (4 
     percent Housing Credit) and Private Activity Bond Program 
     (Bond Program). The Tax Cuts and Jobs Act, introduced in the 
     House of Representatives on November 2, proposes the 
     elimination of the Bond Program and the effective elimination 
     of the 4 percent Housing Credit.
       I reiterate the vital role these programs play in building 
     and preserving affordable housing throughout the nation, but 
     especially in California where, as you know, we struggle with 
     a housing crisis that is quickly metastasizing into a 
     humanitarian and public health catastrophe. Today, the 
     state's housing shortage stands at one and a half million 
     units and is growing by an alarming 60,000 units each year. 
     The 4 percent Housing Credit and Bond Program are the large 
     sources of funding for affordable housing in California, with 
     $2.2 billion worth of 4 percent housing credits last year and 
     more than $6 billion of private activity tax exempt bond 
     funding for multifamily and single-family housing. Together, 
     they created or preserved more than 20,000 affordable homes 
     in 2016, nearly all of which were for low-income households, 
     including veterans, seniors, persons with disabilities, and 
     persons experiencing homelessness.
       The purpose of this letter is to highlight the projects in 
     your district that have received funding from these programs 
     over the last four years. Attached is a spreadsheet with a 
     list of the projects. Any projects listed in red have pending 
     applications, and these projects could be brought to a halt 
     by a sudden cessation of the programs.
       As the list of projects shows, this is not an abstract 
     issue, or one that impacts only one region or a small number 
     of Californians. It is broad-based and affects constituents 
     like yours and those in congressional districts across the 
     state. We all have seen the tangible benefits of these vital 
     programs; now we must come together to save them.
       I know you will agree with me that we cannot allow even 
     more Californians to be driven into homelessness. That is why 
     I strongly urge you to reject the elimination of the Bond 
     Program and the 4 percent Housing Credit.
           Sincerely,
                                                      John Chiang,
     California State Treasurer.
                                  ____

                                                San Gabriel Valley


                                         Economic Partnership,

                                  Irwindale, CA, November 8, 2017.
     Re Concerns with the provisions of the Tax Cuts and Jobs Act 
         of 2017 (H.R. 1).

     Hon. Grace Napolitano,
     House of Representatives,
     Washington, DC.
       Dear Congresswoman Napolitano: On behalf of the San Gabriel 
     Valley Economic Partnership, I wish to express concerns with 
     several provisions of the Tax Cuts and Jobs Act of 2017 (H.R. 
     1). While the Partnership has long supported federal tax 
     reform to encourage economic growth and provide tax relief 
     for middle-class and working families, the elimination of 
     several key deductions will have a negative effect here in 
     the San Gabriel Valley.
       The elimination of the Private Activity Bonds (PABs) tax 
     exemption will hit municipal governments and non-profit 
     organizations especially hard and would have ripple effects 
     across the healthcare and housing sectors. Many non-profit 
     organizations rely on local governments as partners to issue 
     PABs to obtain cheaper financing for a variety of endeavors 
     like the construction of affordable housing, education 
     programs, and elder care. Although recently state legislation 
     will provide more funding for affordable housing, PABs are 
     the finance backbone for these types of housing projects. 
     PABs funded 20,000 affordable housing units in California 
     last year; it is estimated the federal deduction alone is 
     worth $2.2 billion in projects throughout the state. Were the 
     exemption to be eliminated for PABs, the result would likely 
     be a 15-20 percent reduction in the overall size of the U.S. 
     municipal bond market.
       Additionally, the limitation of the state and local tax 
     deduction (SALT) and the reduction in the mortgage interest 
     deduction will hurt first time home buyers in the San Gabriel 
     Valley as well as Californians in other expensive housing 
     markets in the state, costing them several thousand dollars a 
     year that they could have saved under the existing 
     deductions. One-fifth of all American taxpayers claim the 
     state and local tax deduction. Retaining this deduction is an 
     important way to allow Americans to keep more of their 
     income.
       The Partnership is supportive of revising the federal 
     business tax code which has grown outdated and overly 
     burdensome for American companies competing abroad.

[[Page H9418]]

     Lowering the corporate rate from 35 percent to 20 percent, 
     allowing the repatriation of foreign-made profits, and 
     removing incentives to locate offshore are all positive steps 
     in improving the tax climate for American business. But these 
     positive changes are too costly if the major deductions 
     discussed above are eliminated to pay for these changes. We 
     ask that you work with your colleagues in Congress to keep 
     these deductions intact.
       Sincerely,
                                                      Jeff Allred,
     President & CEO.

                          ____________________