[Congressional Record Volume 163, Number 194 (Wednesday, November 29, 2017)]
[Senate]
[Pages S7499-S7505]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TAX CUTS AND JOBS ACT--Continued
Orders for Thursday, November 30, 2017
Mr. McCONNELL. Mr. President, I ask unanimous consent that when the
Senate completes its business today, it adjourn until 10:30 a.m.,
Thursday, November 30; further, that following the prayer and pledge,
the morning hour be deemed expired, the Journal of proceedings be
approved to date, the time for the two leaders be reserved for their
use later in the day, and morning business be closed; finally, that
following leader remarks, the Senate resume consideration of H.R. 1,
under the previous order.
The PRESIDING OFFICER. Without objection, it is so ordered.
Order for Adjournment
Mr. McCONNELL. Mr. President, if there is no further business to come
before the Senate, I ask unanimous consent that it stand adjourned
under the previous order, following the remarks of Senators Portman,
Van Hollen, Warren, and Wyden.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Ohio.
Mr. PORTMAN. Mr. President, tonight I want to talk about the
opportunity we have before us in the Senate, and that is for tax reform
that can truly help our economy and help the middle-class families we
represent. It is a once-in-a-generation opportunity.
The last time we reformed our Tax Code in any substantial way was 31
years ago. Ronald Reagan was President and Pete Rose was still playing
for the Cincinnati Reds. That is how long ago it was. In 1986, tax
reform gave our economy a much needed shot in the arm, and it led to
more jobs and higher wages in the 1980s and 1990s. Now, 31 years later,
after a decade of disappointing growth and flat wages, we need that
shot in the arm again.
We need a tax code that better reflects the needs of today's workers,
today's families, and our 21st century economy. There is bipartisan
agreement that the Tax Code is broken--hopelessly broken--and it is up
to Congress to fix it. No one else can.
Through the Tax Cuts and Jobs Act now before us, we have a chance in
the Congress to create a better economy and a better future. We have to
get this done for the people we represent. It starts with tax cuts for
the middle class. While the economy has seen some improvement recently,
and I saw some good numbers today for last quarter's growth, the people
I represent, hard-working Ohioans, and people across the country are
not feeling these benefits of a growing economy. For more than a decade
now, expenses have increased, including healthcare costs, which have
increased the highest, at a time when wages have been flat. When you
take inflation into account, wages have stayed relatively flat for
almost two decades. That increase in expenses and flat wages is the
middle-class squeeze, and people are feeling it.
For years, my colleagues on both sides of the aisle have been calling
for middle-class tax cuts to help ease this burden. The Tax Cuts and
Jobs Act will actually deliver. The proposal helps us in a lot of ways
but three main ways.
First, there is a doubling of the standard deduction. This is a
doubling
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for families from $12,000 to $24,000. That means, for a lot of families
in America, the first $24,000 is a zero tax bracket. Two-thirds of
Ohioans already, by the way, use the standard deduction. The estimate
is, now that we are doubling it, over 90 percent of Ohioans will use
that standard deduction. That helps to keep the tax bill down but also
is a tremendous simplification of our Tax Code.
Second is the doubling of the child tax credit. That is in this
legislation. The American dream starts with the American family, and
parents shouldn't have to reconsider starting a family because of the
financial burden that comes with it. This doubling of the child tax
credit will help working families afford childcare and will help
strengthen middle-class family budgets all across the country. By the
way, it includes increasing the refundability of that tax credit for
taxpayers who don't have any income tax liability.
Third, of course, is lowering tax rates. There are tax rates that are
lowered all across the board for middle-class families. The independent
Tax Foundation estimates that the tax cuts in this proposal will save
an Ohio family at the median income level 2,375 bucks a year. That
almost $2,400 a year is a big deal. A lot of the people I represent and
others represent here in this Chamber are living paycheck to paycheck,
and this matters. More money staying in the pockets of working families
to make that car payment, to pay for healthcare, maybe put a little
money aside for retirement, is a big deal.
We also know from the Tax Foundation that the lower rates in this
plan will benefit families across middle-class income brackets. For
example, a family with two kids making $50,000 a year will see a 36-
percent tax break, a 36-percent reduction in their tax liability. For a
family with two kids making about $85,000 a year, there is a 20-percent
reduction in their tax liability. And for a family with two kids making
about $165,000 a year, there is an 8-percent reduction in their tax
liability. So there is tax relief across the board, but the biggest
proportional tax cut goes to the folks who need it the most.
This chart shows this. For people who are in these income
categories--$20,000 to $50,000, $50,000 to $100,00, $100,000 and
above--right now paying 4.3 percent in taxes from $20,000 to $50,000,
under this proposal, according to the Joint Committee on Taxation and
the Tax Foundation, it goes down to 4.1 percent. So the burden is
reduced for people at the lower end. From $50,000 to $100,000, the
burden is also lower, from 16.9 percent to 16.7 percent. For those
people with $100,000 and above, the burden right now is about 78.7
percent. The top 10 percent of wage earners pay about 70 percent of the
taxes. That actually goes up from 78.7 to 78.9.
So this notion that we have heard today that somehow these middle-
class tax cuts are not proportionally helping those at the lower end is
simply not true. This is the data. Go on jct.gov--Joint Committee on
Taxation--and look for yourself. Go on the Tax Foundation site, and you
can look at your family income, look at your situation, and determine
how doubling the standard deduction, doubling the child tax credit, and
reducing tax rates will benefit you. The biggest proportional tax cuts,
again, go to people who need it the most.
In total, by the way, when these tax cuts are implemented, it is
estimated that approximately 3 million Americans who are currently
paying taxes will no longer be paying income taxes. They will be off
the rolls altogether. That is tax cuts for middle-class families, for
families who need it the most.
Some of my colleagues on the other side of the aisle have suggested
that our plan will hurt families with incomes below $30,000 because
there is a Joint Committee on Taxation report that, because of arcane
budget rules, counts repealing the individual mandate as a tax hike.
This is an interesting perspective, but I reject it because I don't
think stopping the ObamaCare individual mandate and people choosing not
to buy health insurance and therefore not having both the cost of the
Affordable Care Act and the ObamaCare tax credits that come with that
healthcare is a tax hike. In other words, what they are saying is that
because somebody doesn't choose to buy healthcare partly because it is
too expensive and therefore doesn't get the tax credits that come with
that, that somehow that is a tax hike. That doesn't make sense to me,
and I don't think it makes sense to most Americans.
What the Joint Committee on Taxation did say repeatedly at our
committee markup 2 weeks ago is that when you don't consider this
issue--again, choosing not to buy healthcare insurance a hike--that our
plan does give every single income group, including those under
$30,000, a tax cut. As noted earlier, the biggest percentage tax cuts
goes to those with lower incomes, and that is appropriate. Those are
the folks who need it the most.
What we do know is that right now the individual mandate is an
onerous tax by itself. The Supreme Court has called it a tax. It is a
tax on people that disproportionately affects lower to middle-class
Americans. In fact, 80 percent of the individual mandate falls on folks
making less than $50,000 a year and their families. In Ohio, by the
way, that figure is about 83 percent. Eighty-three percent of that
individual mandate tax falls on people in households that make less
than $50,000 a year.
Getting rid of this penalty removes the financial burden unfairly
affecting those working families, and then we use the savings from
that, that the Congressional Budget Office says we get from this, to
increase the child tax credit and to reduce tax rates on the middle
class. That is one reason we have better middle-class tax cuts in our
bill.
Providing immediate relief to the family budget is incredibly
important, but beyond that, the tax reforms on the business side will
make American workers and companies more competitive, create more jobs
and better wages, and that, to me, is just as important in terms of
helping middle-class families in my home State of Ohio. Why? Because
when you reform the business tax code to make it competitive, the
benefit goes to workers and working-class families all over this
country.
The United States now has the highest corporate tax rate in the
industrialized world. One study by the nonpartisan Congressional Budget
Office estimates that workers bear 70 percent of the burden of our
corporate tax rate being so high. Others say it is less than that, and
others say it is more than that, but all say that workers benefit. If
we lower that rate below the average of the other industrialized
countries, our workers will benefit through higher wages and better
benefits. And by the way, that benefits middle-class families well
beyond these direct tax cuts we were talking about earlier.
A recent study by Ernst & Young, the accounting firm, said that if we
had had the tax rate that we have in this proposal--a 20-percent tax
rate--on these businesses, if we had had that in place since 2004,
there would be 4,700 more U.S. companies today. Let me repeat that.
They are saying that 4,700 companies that were American companies have
become foreign companies because of our Tax Code, and if we had put in
place these changes back 13 years ago, those companies would still be
American companies, hiring more American workers, and investing more
money here.
We did some research on this, some investigation in the Permanent
Subcommittee on Investigations over the past few years, and we
determined that, in fact, when companies are taken over by a foreign
company because of our Tax Code or when U.S. companies choose to go
overseas and invert because of our Tax Code, what happens? We lose
jobs, and we lose investment here in this country. It matters, and it
matters a lot to the communities where those employees are lost and
where those businesses have left. The 20-percent tax rate is going to
mean more jobs and more investment coming right here to this country
instead of going overseas.
It is also true that there will be more foreign investment here.
Companies are now trying to decide whether they are going to invest in
America or whether they are going to invest in some other country with
a lower tax rate, and with the expensing we have in this bill, to be
able to write down new investments they are making, it is going to
encourage them to make an investment here in the United States
[[Page S7501]]
rather than in other countries. That will increase jobs too.
By the way, the Tax Foundation estimates that because of the new
investment and the higher productivity that comes with it because of
this tax reform proposal, we will create nearly 1 million new Americans
jobs and more than 35,000 jobs alone in my home State of Ohio.
In addition to providing relief for middle-class families and making
business rates more competitive for American companies and workers,
this tax reform does a lot to level the playing field internationally.
This is very important. Right now, American workers are forced to
compete with one hand tied behind their back because of our Tax Code. A
broken tax code is something that must be fixed because it is
irresponsible to tell the American people: You have to get out there
and compete, but guess what--your foreign competitor has a big
advantage over you.
It is crazy that Congress has allowed this opportunity to go by for
so many years. The situation where companies are actually encouraged to
move overseas and keep their profits overseas makes no sense. Right
now, it is estimated there is between $2.5 trillion and $3 trillion of
earnings trapped overseas because of this outdated Tax Code. Think
about that. That money can come back here and be invested here in
plants and jobs and equipment. The Tax Cuts and Jobs Act says to those
companies: We want your money back here. We want you to invest in
America. The result will lift the economic condition of our entire
country.
This week, 137 of the country's leading economists wrote an open
letter to Congress in support of this tax reform bill. These former
heads of government agencies, leaders of economic policy groups, and
leading academics said, quite simply:
Economic growth will accelerate if the Tax Cuts and Jobs
Act passes, leading to more jobs, higher wages, and a better
standard of living for the American people.
That is by 137 economists in an open letter. I encourage you to take
a look at it online. These are people who understand what the impact of
the policy we make here is going to be on decisions that are being made
all around the country.
We can debate the exact growth amount that will result from this
bill, and we will have a spirited debate on that this week, but we all
have to agree that this will help to grow the economy if we are
following basic economic theory.
By the way, their letter also states that ``$1 trillion in new tax
revenue for the federal government can be generated by four-tenths of a
percentage in GDP growth.'' In other words, what they are saying is
that if there is just a slight increase in economic growth because of
this tax reform bill, compared to the number we have to use here, that
this will result in actual new revenue coming in to the government to
pay down the debt. I am convinced that is going to happen for a very
simple reason. We have to use a very low number on economic growth.
Under our rules, we have to use a CBO--Congressional Budget Office--
number of 1.9 percent economic growth over the next 10 years. By the
way, the average over the past 30 years has been 2.5 percent. We just
learned today that the average last quarter was 3.3 percent. The
average the quarter before that, the second quarter, was 3.1 percent.
This tax reform proposal will help to actually increase economic
growth, but even if you don't believe that, 1.9 percent economic growth
is unacceptable. We cannot accept that as a country. We can and must do
better than that. We will do better than that, and this tax reform
proposal will be one reason. So I am convinced that the four-tenth's
increase--up to 2.3 percent--is still very conservative and that we
will be able to do better than that, as we have over the past 30 years,
as we have traditionally in this country.
When you hear my colleagues on the other side talk about this bill
being bad for the deficit, I think you ought to think about that. This
means that they are resigning themselves to 1.9 percent economic
growth. That, to me, is not acceptable for our country, and I don't
think that is what we will see.
Of the $44 trillion in new revenue estimated to be coming in over the
next 10 years, yes, out of that amount, we are suggesting $1.5 trillion
be a tax cut relative to that, again, very low economic growth of 1.9
percent.
About a third of that, by the way, is by simply using what we should
use, which is the right policy baseline, so you end up with about $1
trillion in tax relief. And again, over 10 years, with $44 trillion
coming in and with what the economists are saying about it generating
more revenue through economic growth, I am convinced we are going to do
better than that 1.9 percent.
I believe the pro-growth changes in this bill will help drive
economic growth in ways that help every American family. We are in a
position now, if we pass this bill, to be able to help all the people
who are now looking at a tough time making ends meet--it is difficult
for a lot of people living paycheck to paycheck--but it will also help
to grow the economy generally.
Businesses and organizations all around the country are supporting
this legislation because they believe it is going to help American
families. We have about 120 groups already as of yesterday who are
supporting us: the National Federation of Independent Business, which
is the group that represents most of the small businesses in America;
the Family Business Council, which represents a lot of small businesses
that will benefit greatly from the changes we have not just with the
corporation rate but also with how we deal with companies that are
considered to be passthrough companies, the smaller companies. The
National Retail Federation is strongly in support of this bill. The
Small Business and Entrepreneurship Council supports this reform plan
and the opportunities it has to create more economic growth for small
businesses, to let them be more competitive.
You can look at some of the groups here, some of the roughly 120
groups that are supporting this legislation. Why? Because they know it
is going to help. Big businesses will benefit and be more competitive;
therefore their workers can compete. Through these pro-growth policies,
small businesses are going to be able to grow and be more
entrepreneurial, to come up with more innovations and expand
employment.
We can estimate the savings for the middle-class family in every tax
bracket, as I said, but what can't be measured as easily is the
economic boost this is going to have for everybody. We are giving
families freedom to spend more of their own money the way they see fit.
We are putting faith in the American entrepreneurs and businesses to
compete in a global market. We are bringing back some of that money
that is locked up overseas. We are creating a fairer tax system that
encourages jobs and investment here in this country rather than
overseas. That is all good stuff.
The Tax Cuts and Jobs Act is made in America and it is made for
America. We need to come together now as a Congress--and I hope we will
get support from the other side of the aisle as well--to pass this
once-in-a-generation legislation to benefit our country.
Thank you, Mr. President.
I yield the floor.
The PRESIDING OFFICER (Mr. Scott). The Senator from Massachusetts.
Ms. WARREN. Mr. President, Senate Republicans are about 24 hours away
from passing a bill that would make middle-class families in this
country pay more taxes so big corporations and millionaires can pay
less.
A bill like that would never really make sense, but it really, really
doesn't make sense right now. Since 1980, corporate profits have shot
through the roof, while wages for working people have remained pretty
much the same. With corporate profits up and family incomes flat, who
is paying the cost of running the government? Thanks to Congress, over
the past 50 years, corporations have gone from picking up about 25
percent of what it costs to run the government to picking up about 9
percent or, to say it another way, hard-working families now pick up a
much bigger share of the cost of running our government.
I don't care whether you are a Democrat or a Republican, this just
isn't fair. Corporations are wallowing in profits while hard-pressed
families are picking up the bill for our military, for our government
agencies, for homeland
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security, for our infrastructure, and for everything else we have to
pitch in to pay for.
Here comes the Republican tax bill, which would make a bad situation
worse. The Republican tax bill would slash taxes on corporations even
further and raise taxes on millions of working families. It is hard to
comprehend how deeply unfair that is. A survey released last May by the
Federal Reserve found that 44 percent of American families--just a bit
under a half--don't have enough slack in their budget to cover a $400
emergency expense. If the transmission blows up or if a kid gets sick
or the fridge stops working, these families are just plain out of luck.
These are the same families whom the Republicans have targeted to pay
more in taxes under the Republican plan.
In trying to sell a bill that is deeply unfair, Republicans have
landed on a tried-and-true strategy--just lie about it.
The first big lie is that the plan will supercharge economic growth.
Spoiler alert: It will not. We have seen this movie before, and we know
how it ends. There is not one single credible projection that says this
plan will have any meaningful impact on the growth of the American
economy. One group of economists after another has looked at this bill
and said it will not do a darn thing to help the economy grow.
Even Wall Street banks--which stand to pocket billions of dollars in
tax giveaways from this bill--have grudgingly had to admit the bill
will not lead to any growth. Barclays Bank said: ``A permanent boost to
growth remains unlikely.'' Goldman Sachs said: ``We find a boost to GDP
growth of 0.1-0.2 [percentage points] in 2018-2019 and smaller amounts
in subsequent years.''
The second big lie is that if we just give corporations more money,
they will surely do us the favor of raising wages or creating more
jobs. We have seen that movie before too. Over the last 30 years,
corporate profits have exploded, and companies have not trickled down
those profits to workers. They didn't do it before, and they will not
do it after the Republicans give away even more money to these giant
corporations.
You don't have to take my word for it. The top executives at the
companies have already admitted as much. Bank of America and Merrill
Lynch surveyed 300 CEOs about what they would do with their tax
giveaways. What are they going to do with those tax giveaways? The top
three responses: pay down debt, buy back stock, and fund new mergers.
In other words, something for the banks, something for wealthy
investors, and nothing for workers.
The third big lie is that the plan will not increase the national
debt. That is just plain false. The nonpartisan Congressional Budget
Office says this bill will tack on $1.4 trillion to the debt in the
next 10 years, and we all know what comes next. The same Republican
Senators who will vote for this trillion-dollar budget buster tomorrow
will turn around next week and say our national debt is just too high,
and we need to cut Medicare, Medicaid, Social Security, education
funding, affordable housing, and you name it. In fact, the Republican
budget they passed last month tees up more than $1 trillion in cuts to
those very programs.
This bill raises taxes on millions of middle-class families, and it
doesn't create any real economic growth. It doesn't create any real job
growth, and it explodes the national debt. So this bill clearly is not
about helping working families.
You really have to stop and ask the question, What is it about? The
answer is simple. This is about Republican Senators paying off the rich
corporate donors that helped get them elected. It is about the way that
money has corrupted Washington. It is about wealthy donors investing a
few million dollars in political contributions to secure billions of
dollars in tax giveaways.
Here is what one of my Republican colleagues said recently: If we
don't pass a tax bill, ``financial contributions will stop.'' A
Republican Member of the House was even more blunt. He said on the
record that his donors told him to pass this tax bill or ``don't ever
call them again.'' In other words, Republicans have said to each other
they need to pass a tax giveaway to give their donors money in order to
get reelected. This is a smash-and-grab job.
The Republicans are looting the U.S. Treasury so their donors will
keep funding their reelection campaigns. They don't even try to hide
the corruption, and they don't worry about how many middle-class
families get hurt in the caper. My take on this is pretty simple: I
don't think a single middle-class family in this country should pay
more in taxes so big corporations and millionaires can pay less. I
think big corporations should pay more--not less--so we can cut taxes
on working families and small businesses, so we can make investments in
fixing our roads and our bridges and our power grid, so we can help
young people reduce their student loan debt.
This is about basic fairness. We can build an America where every kid
has a shot at success, where every family has some measure of economic
security, where every senior has enough savings to retire with dignity.
We can do that, and we can start by defeating this Republican tax
giveaway.
Thank you.
I yield the floor.
The PRESIDING OFFICER. The Senator from Maryland.
Mr. VAN HOLLEN. Mr. President, let me start by thanking the Senator
from Massachusetts for always telling it like it is because what we
have before us in the Senate is going to do grave harm to our country,
not just next year and the year after but for many years to come. We
still have an opportunity to stop that from happening through our votes
tomorrow.
Let me also say at the outset that we need to enact tax reform in the
United States of America. We need to simplify. We need to streamline.
We need to reform our Tax Code. We need to get rid of all of those tax
loopholes that had been put in our Tax Code by powerful special
interests that have been able to hire high-priced lobbyists and get
something in our Tax Code, not because it is good public policy, not
because it is good for the majority of Americans but because it is good
for some group of special interests.
We need real tax reform. That is not what the bill in front of us
does. What this bill does is take a Tax Code that is already stacked in
favor of the most powerful and the most wealthy and rig it even more in
favor of the most powerful and the most wealthy, and that is hard to
do. You have to work at doing that.
Our Republican colleagues have succeeded in taking something that was
already stacked in favor of those groups and making it even worse. That
is why we see this effort to jam this bill through the Senate in just a
few weeks because our Republican colleagues know the more the American
public sees this bill, the more they will hate this bill, and the more
they will realize it is going to mean their taxes are going up, in many
cases, and harm to the American economy.
We debated the effort to repeal the Affordable Care Act in the
Senate, not for a long time but at least over a couple of months'
period. What happened is, as that debate went on, more and more people
around the country engaged. All the nurses, all the doctors, and all
the hospitals--I mean, rural hospitals, suburban hospitals, urban
hospitals--said that is bad for our healthcare. This Senate, at the end
of the day, did the right thing.
Unfortunately, the lesson learned was not to get the input from the
American public but try to rush something through before people can
figure out exactly what is in it, and that is what is happening in the
Senate today and tomorrow.
One example of the harm this bill will do hasn't gotten a lot of
attention. I want to talk about what this bill does in its changes to
how we tax U.S. corporations that have operations overseas. These are
big multinational corporations that have operations in the United
States but also have the ability to move their plant and equipment
overseas and hire people overseas instead of hiring Americans here at
home. There is a provision in this Senate Republican bill that is going
to dramatically increase the incentives for U.S. multinational
corporations to move operations and jobs overseas, and here is why.
Under this bill, American corporations that are doing business in the
United States will pay a 20-percent corporate tax rate. It reduces the
corporate tax rate down to 20 percent, but
[[Page S7503]]
it also says something else. If you are an American corporation and you
move your operations overseas, the profits you make on your overseas
operations pay zero percent U.S. tax rate.
Immediately, you have an incentive to move your business from
Baltimore City--or from any other city in this country or place in this
country--to another place that has a lower tax rate. For example,
Ireland has a 12.5-percent tax rate. If you move your business to
Ireland, you are going to be paying 12.5 percent on your profits
instead of the 20 percent you are paying here. If you move to Hungary,
you are going to pay 9 percent on the profits you earn in Hungary;
whereas, you would have paid 20 percent on your profits if you keep
those operations in the United States. So immediately you have an
incentive to move those operations overseas.
Even if you move those operations to a country that has a higher tax
rate than, say, Ireland or Hungary, there are easy ways to put those
profits you earn in a place like the UK or Japan and put them in lower
tax areas like the Cayman Islands or Bermuda. Right off the bat, this
creates a perverse additional incentive to put American jobs overseas.
So our Republican colleagues say: OK. Not to worry. We have a fix for
this issue. We are going to create this minimum U.S. tax on large
profits of overseas operations. In other words, if you are a U.S.
corporation, you move to Ireland, you can make a certain amount of
money there, but if you go over a certain amount, we are going to put a
minimum American tax on top of the tax you pay in Ireland.
This is a problem when you rush through a bill like this. The problem
is, the cure is worse than the disease. Here is why. Look at this
chart. First thing you say is, there is a lower tax rate in Ireland
than in Baltimore City so I am going to move some of my operations
overseas--my plant and equipment. In fact, I am going to move $10
million of investment overseas. Now, in Ireland, I am going to be
paying 12.5 percent on my profits, versus 20 percent here in the United
States. That is a pretty good move.
Now let's see if this minimum tax has any impact and what the impact
would be. Well, what the Republican tax bill says is that if your
earnings overseas exceed 10 percent of your investment in tangible
property--what is tangible property? The plant, equipment, your
factory. So if you spend $10 million and move your plant, equipment,
and factory overseas, you are going to be able to make a 10-percent
profit there with no additional U.S. tax. But if you earn more than
that--let's say you earn $1,200,000--instead of a 10-percent return,
which would have been $1 million, aha, now this minimum tax applies but
just to that excess profit. So you are now going to pay the lower tax
rate in Ireland on your first million, but you are going to pay 10
percent on the $200,000. So you are going to pay $20,000 in U.S. taxes.
What if you don't want to pay even that? Here is what is so
outrageous about this bill. I don't know if it is intentional or
unintentional. If I am a U.S. corporation, the way I fix this problem
is I move another $10 million worth of plant and equipment out of
Maryland into Ireland. So now I have got my $10 million investment that
I moved from Baltimore to Ireland, and I am going to move another one.
Now, as long as I keep my overall returns to 10 percent, I am not going
to pay that excess minimum tax. So if my first company has a 12-percent
return and the second one has an 8-percent return, together they have a
10-percent return. So I end up, by moving more plant and equipment from
the State of Maryland to Ireland, that I don't even pay that minimum
U.S. tax.
In fact, every time I get close to having to pay that minimum U.S.
tax, I can solve my problem by moving more American jobs overseas. That
is insane. I hope our colleagues will take a look at this, because this
is going to do great damage to the American economy.
You don't have to take my word for it. You have a lot of economists
who have taken a look at this provision. I am just going to read from
one. His name is Edward Kleinbard. He was the former chief of staff of
the Joint Committee on Taxation. We all know they are the
professionals. They are the nonpartisan professionals who analyze these
bills. Here is what he had to say: ``The administration's tax cut
proposal is coupled with a territorial tax system, which permanently
exempts foreign income from taxation; this will further tilt the
playing field in favor of foreign, rather than U.S., investment.''
I ask unanimous consent that the other quotations from the economists
be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Jared Bernstein, senior fellow, Center on Budget and Policy
Priorities; former chief economist to Vice President Joe
Biden:
``The Republican tax plan . . . . is likely to lead to more
outsourcing of U.S. jobs and a larger trade deficit. The tax
plan moves to what's called a territorial system of
international taxation, which means the U.S. tax rate on the
overseas earnings of U.S. foreign affiliates would become
zero.''
Rebecca Kysar, professor of law, Brooklyn Law School:
``A pressing goal of tax reform is to reduce the incentives
for companies to move their operations overseas. This bill
does the opposite.''
Kimberly Clausing, professor of economics, Reed College:
The House and Senate Republican tax bills create a
territorial tax system that ``exempts foreign income from
U.S. taxation. This tilts the playing field even further
toward doing business abroad rather than at home, since there
will always be countries with lower rates. A territorial
system makes explicit and permanent the preference for
foreign income over domestic income. It accelerates the
profit shifting behind our corporate tax base erosion
problem.''
Carl Levin, former senator:
``The House and Senate tax bills would be a monumental
mistake for the country for many reasons, but one compelling
reason is the disastrous way they treat foreign corporate
profits and encourage companies to shift their operations and
the economic benefits of intellectual property overseas.''
Richard Phillips, senior policy analyst, Institute on
Taxation and Economic Policy:
``The most significant component of the Senate tax proposal
on international taxes is moving to a territorial tax system,
under which active income of U.S. companies earned offshore
will no longer be subject to U.S. taxes. By doing this, the
Senate tax plan moves in the opposite direction of real tax
reform by substantially contracting the base of the U.S.
corporate tax. According to the Joint Tax Committee, moving
to the territorial tax system would cost $215 billion over
the next decade. Exempting offshore income from U.S. taxation
would encourage further profit shifting and would also create
a tax incentive for corporations to move real operations and
jobs offshore to take advantage of lower tax rates.''
Steven Rosenthal, senior fellow, Tax Policy Center; former
counsel to Joint Tax Committee:
``The Tax Cut and Jobs Act (TCJA) that the Senate is
debating this week would fundamentally change the way U.S.-
based multinational corporations are taxed on their overseas
income. But contrary to the claims of President Trump and
congressional supporters, the new approach may still
encourage U.S. companies to shift production overseas.''
Reuven Avi-Yonah, professor of law, University of Michigan:
Certain ``multinational corporations (for example, GE or
Intel) will pay less because they have more tangible assets
offshore. This creates an obvious incentive to move jobs (not
just profits) offshore. Moreover, the proposal standing on
its own would induce profit shifting because of the
combination of the participation exemption and the lower rate
(12.5% is less than 20%).''
Chuck Marr, director of Federal Tax Policy, Center on
Budget and Policy Priorities:
``Another, less-noticed provision would permanently set an
even lower tax rate for U.S.-based multinationals' foreign
profits by adopting a `territorial' tax system, which would
encourage firms to shift profits and investment offshore. As
Senate Republican Ron Johnson said recently, `With a
territorial system, there will be a real incentive to keep
manufacturing overseas.' ''
The FACT Coalition
``This bill would create significant new tax incentives to
move U.S. jobs, profits, and operations overseas, while
exploding the deficit. The bill's complicated structure also
creates multiple new loopholes to allow for expanded tax
avoidance by large multinational companies at the expense of
small businesses and wholly domestic companies.''
Victor Fleischer, tax professor, University of San Diego:
``The international provisions of the Senate tax bill are
worse than I thought--a very nice gift to multinationals.''
Mr. VAN HOLLEN. Now, to add insult to injury, this is not the only
part of this bill that actually tips the playing field in favor of our
economic competitors overseas and against the American worker and
against the American taxpayer. If you look at the corporate tax cuts in
this bill, they are permanent. They go on forever. Year after year,
corporations will get that tax cut in the United States of America.
Whereas, if you are an individual
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household in America, millions of middle-class taxpayers will see an
immediate increase in their taxes. Some will see a small cut in their
taxes for a period of time, but in the long run, those individual tax
cuts go away, and the corporate tax cuts go on forever.
Of course, the theory behind this is trickle-down economics; right?
You are going to give the very wealthy and big corporations the tax
cut, and the benefits of that are going to trickle down and lift
everybody up. I think we know that this theory has run aground and run
into the wall of reality many times over.
Most recently, in the early 2000s, we had the Bush tax cut. It was
the same theory--to cut taxes for the superwealthy and somehow the
benefits were going to trickle down and lift everybody up. I will tell
you who it lifted up. The wealthy did even better. The other thing that
went up is our deficit and debt, but everybody else was either running
in place or falling behind. That was our most recent experiment in
trickle down.
We also have an immediate present example of why this theory of
giving big tax cuts to corporations and the idea that it is going to
raise wages is just dead wrong. As we sit here tonight, American
corporations are making record profits. That is a great thing. But
guess what. Wages are flat. So by increasing the after-tax profits of
those corporations, they are not going to use that extra money to raise
wages. They are not doing it today. They are not doing it today.
The stock market will go up, and stockholders will definitely have
greater value, because you are a corporation. The day after this tax
bill gets passed, if it passes, your after-tax profits just went up.
The stock market is doing great. The problem is, most Americans--the
overwhelming amount of Americans--don't benefit from that rising stock
market. We know the people who benefit most are the folks at the very
top.
Here is the thing that I think many people will be surprised by. A
very large group of those stockholders are not even American citizens.
They are foreign stockholders--stockholders who have these investments
in American corporations.
In fact, 35 percent of the stock in these corporations are foreign
shares--35 percent of the value of that stock. So I can tell you that
they are going to be clicking the champagne glasses in capitals around
the world because those very wealthy foreigners are going to get a big
tax cut. In fact, the Institute on Taxation and Economic Policy
estimates that the value of the tax cut to foreign stockholders just in
the year 2019 will be over $30 billion. That is in 1 year for foreign
stockholders. In that same year, in 2019, taxes will go up by over $27
billion on American citizens.
There is great news for the American public. Some $27 billion are
transferred from American households into the pockets of foreign
stockholders--what a great deal for the American public. They are going
to be thrilled to see that their hard-earned dollars are going to
increase the bank accounts of foreign stockholders.
This is the kind of information that is beginning to come out as
people get a chance to look more at the consequences of this bill. This
is the exact reason that Republicans are trying to rush this through
the Senate. I can tell you, when the American public sees that their
taxes are going up to pay for foreign stockholders, I think all of us
agree that they aren't going to like it.
The problem is this is also part of a pattern. The corporate tax cuts
go on forever, and those foreign stockholders, every year--this is in
2019--keep getting a big windfall, a big bonanza. But if you are an
American taxpayer, you are on the short end of the stick because
millions of American middle-class families will see their taxes go up
right away. As I said, others may see a small tax cut originally, but
it will fizzle out.
So here is the overall impact. In 2019, you are going to see 13
million American families who earn less than $200,000 a year pay higher
taxes under this Republican bill--13 million families. It gets worse
from there because the benefits that some people will get in the short
term begin to fizzle out and then get snuffed out altogether at the end
of 10 years.
By the year 2025, it is going to go from 13 million middle-class
American families to 19 million middle-class families who are going to
be paying higher taxes. By the way, at the same time, the Republican
bill will give a tax cut of an average of $40,000 a year to people who
make more than $1 million a year.
It gets even worse for families in and after the year 2025 because
all of the individual tax cuts expire. Tax cuts for the foreign
stockholders keep going on. They go on forever. By 2027, the Republican
plan will raise taxes on 87 million American families.
Now, we actually just had some information come out. It was just
released to the public this evening. This is from the Joint Committee
on Taxation. These are the folks who are the professionals who look at
the impact of the tax bill. They analyze it, and they let people know
the facts.
Here is what they said. When this bill runs its course in the year
2027--here is the bottom line--23 percent of American households are
going to see their taxes go up, and 16 percent will see their taxes go
down. So more American households will see their taxes go up than go
down. Some 61 percent, they estimate, see virtually no change at all.
Again, these are families, not corporations. The corporations,
including those foreign stockholders, keep seeing the benefits.
Here is the other thing the Joint Committee on Taxation is telling
us. Of the people who get a cut, the largest share of any one group are
people who make $1 million and up. In fact, it says of those in that
category, that 57 percent of the households will get a tax cut. Those
are the millionaires. If you look at middle-income folks, there are
much smaller percentages in those categories.
I just have to ask my colleagues how it is that you try to sell a
plan as a middle-class tax cut when, at the end of the day, more
Americans are going to see their taxes go up than go down. I think the
American people are going to be more and more surprised if this bill
passes as to what is in it.
So we have a chance to actually step back right now. We have a chance
to step back and actually take a good look at the bill, and we can
figure out which of these consequences are intended and which of these
consequences are unintended. There is time to fix some of these issues.
The last point I wish to make is that in addition to middle-class
families--millions of them who are going to have to pay more to pay for
the big corporate tax cut--we are also going to see a number of other
groups of Americans who are going to be hit hard. We know that millions
of people who get their health insurance through the exchanges are
going to see their premiums go up to pay for big tax cuts for
corporations. We know that even after all of that--after those
Americans have to pay more in premiums and after millions of middle-
class families are going to have to pay more--we still have a $1.5
trillion debt.
I am just going to ask my Republican colleagues, with whom I have
worked for many years and with whom I have agreed that we need to find
a bipartisan way to reduce our deficits and debt rather than increase
our deficits and debt, what their plan is.
Here is the secret--not really a secret, actually. I invite everybody
to look at the budget that passed the Senate and the House of
Representatives, because it tells us right there in the budget what the
plan is to reduce some of that debt that will be increased because of
tax cuts. The proposal is right there: A $1 trillion cut to Medicaid
over 10 years, a $473 billion cut to Medicare over 10 years, and cuts
to the whole category of our budget we use to invest in education.
So the bottom line is that this bill is going to provide whopping tax
cuts to corporations. It is going to have the effect of encouraging and
incentivizing more of those corporations to move jobs, plants, and
equipment overseas, and it is going to ask almost everybody else in the
country to pick up the tab. That is not the kind of tax reform the
American people bargained for.
I urge my colleagues to take a step back, to work together on a
bipartisan basis, and to come up with a plan that actually works for
the country. I hope that can happen.
I yield the floor.
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