[Congressional Record Volume 163, Number 203 (Wednesday, December 13, 2017)]
[Senate]
[Pages S7999-S8001]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                            Tax Reform Bill

  Mr. HOEVEN. Mr. President, I come to the Senate floor to once again 
talk about the need to pass tax reform for hard-working Americans. The 
House has passed a bill, the Senate has passed a bill, and now, of 
course, we are working through the conference committee to get the very 
best product we can for the American people.
  This tax relief is not just about reducing the tax burden on hard-
working Americans and making sure they can keep more of their hard-
earned dollars after tax, but it is also very much about economic 
growth. The tax relief package we are putting together that is coming 
together through the conference efforts, working to improve on both the 
House version and the Senate version, is designed to grow our economy. 
That is incredibly important because over the last decade, what we have 
seen are stagnant wages and income. So workers are working as hard as 
ever--harder than ever--but they are not seeing that growth in their 
paycheck. That is why we have to make this tax relief package pro-
growth, so at the end of the day, that worker has a lower tax burden, 
but they also have a rising wage and more income. It is the combination 
of those two things that really--it is the rising tide that lifts all 
boats, if you will. That is how we generate that higher standard of 
living for workers and taxpayers across this great Nation.
  So that is what we are working to do: tax relief, grow the economy, 
create more jobs--and create them here at home versus overseas--and 
higher wages and income.
  These are just some of the statistics from the tax relief package 
that we put together. These are provided by the nonpartisan Tax 
Foundation as well as the White House Council of Economic Advisers. The 
objective is to grow wages by $4,000 over the 10-year scoring period, 
making sure our workers are seeing real wages. The estimate right now 
is that this tax bill is pro-growth and will generate, on average, 
$4,000 in higher wages, combined with an average tax cut of about 
$2,200. That is an average family--a family of four with median income.
  It will generate almost 1 million new jobs, and that is what, of 
course, pushes wages higher. When you create more jobs, it is that 
demand for labor that pushes wages higher. That is how it works. We are 
talking about almost 1 million new jobs over the 10-year period and a 
3.7-percent larger economy. So growing the economy, creating more jobs, 
and it is that demand for labor on the part of business that pushes 
wages and income higher.
  When we look at the next chart I have, we see that we provide tax 
relief across all incomes. So it is really focused on lower income, 
middle class, making sure that, like I said, wage earners are saving 
more of their hard-earned dollars, but the effort is to cut taxes 
across all income groups, and that is what we do. It starts by taking 
the seven brackets we have and reducing them. It is just kind of simple 
math.
  The House plan reduces the number of brackets to only three. We keep 
the seven different brackets. The reason for that is because the 
objective is to lower everyone's tax rate, and we are better able to do 
that by keeping the seven tax rates.
  Some might say: You want to do simplification. We do want to do 
simplification, and we do tax simplification. There is no question that 
we do tax simplification because the complexity in calculating your 
taxes is calculating your taxable income, your adjusted gross income 
subject to taxes. That is the complicated part. Whether we have three 
different rates to apply to it or seven different rates to apply, 
depending on which bracket you fall into, that really doesn't add 
complexity.
  So we keep the simplification intact while we make sure that we 
provide tax relief across all of the different tax brackets or tax 
rates. That is what we see in this second chart.
  In addition, we keep or expand many of the tax deductions or tax 
provisions that are important to families, and that starts with the 
child tax. Well, I should say it actually starts with the standard 
deduction. We double, in essence, the standard deduction. For an 
individual, right now it is a little over $6,000 a person. We double 
that standard deduction to $12,000. For a married couple, you are 
talking over $24,000 that is covered under the standard deduction, no 
tax.
  In addition, if you are an individual and you have dependents, either 
children or maybe taking care of a parent or something like that, you 
get $18,000 in that standard deduction. Why is that important? Because 
by doubling that standard deduction, we go from 7 out of 10 filers not 
itemizing to something like 9 out of 10 tax filers not itemizing. This 
means real simplification. It means doing your tax return on maybe just 
a one-page form. This means you are not only reducing rates but also 
greatly simplifying the Tax Code.

  We keep other provisions that are very important for American 
families and, in fact, enhance them. For example, the child tax credit 
is doubled. So not only do we double the standard deduction, but we 
also double the child tax credit. We go from $1,000 to $2,000 per 
child. This is going to make a huge difference for families.
  Also, for family businesses, family farms, and small business we 
double the estate tax, the death tax unified credit, and include the 
step-up in basis. It is hugely important to make sure you can 
transition a small business, farm, or ranch from one generation to the 
next.
  To save for college, we enable the 521 savings accounts to continue 
for parents. Another very important one is we encourage businesses to 
provide paid family and medical leave by giving them a tax credit to 
partially offset an employee's pay while caring for a child or family 
member.
  Other things we keep, in terms of deductions that are very important, 
again, to hard-working families are as follows:
  The mortgage interest deduction. We make sure they can continue to 
deduct the interest on their home mortgage.
  The deduction of charitable contributions. It is obviously very 
important for the greater good of our society that people can continue 
to contribute to charities they believe in and support and that they 
can deduct those charitable contributions.
  The child and dependent care tax credits, the adoption tax credit, 
and the earned-income tax credit. We make sure people can continue to 
contribute to their 401(k) accounts on a basis that is tax-advantaged.
  Then, medical expense deductions. Obviously, for our seniors, this is 
very important. For somebody who has a medical condition or an illness, 
being able to deduct those medical expenses is extremely important.
  This is about making sure hard-working Americans can have not only 
tax relief but also the pro-growth aspect they see in the rising wages 
of incomes.
  That is what I want to talk about in this third chart, which goes to 
supporting our businesses across this great country. Small business is 
the backbone of our economy. Small businesses, farms, and ranches are 
the absolute backbone of our economy. Small businesses typically are 
passthrough businesses, which means the income flows

[[Page S8000]]

through the business and is then taxed at the individual level. So part 
of the tax relief we are providing to small businesses comes from the 
reduction in the individual rates, as I have already gone through, 
because that income has flowed through.
  Passthroughs can be a partnership, a sub-S corporation, a limited 
liability partnership, a limited liability corporation. These are all 
passthroughs. So when the income flows through that small business to 
the individual, because we have lowered the rates, that already 
provides a lower net tax on those small businesses and the people who 
own and work and invest in those small businesses.
  The other thing we do is provide a 20-percent distribution 
deduction--a reduction in the taxable amount as far as income 
distributed by those businesses. We have gone through various 
iterations. We started at about 17 percent. We had hoped to move it 
higher. I think we will end up around 20 percent. What this means is, 
when income flows through that passthrough business, 20 percent is 
deducted before you calculate the income. For example, if you flow 
through $1,000, you would be taxed on the $800. Now, apply those lower 
tax rates I talked about, and you can see clearly that you 
significantly reduce that tax rate on these small businesses.
  Why is that so important? It enables small businesses to keep more of 
their hard-earned dollars, to invest in equipment, to expand and grow 
their business. It enables them to hire more people, like perhaps these 
great young people we have here working as pages. It enables them to 
raise wages and income and to grow their business, or, for an 
entrepreneur, to maybe start up a business.
  So it is those dollars that instead of going to taxes, stay with the 
business. They are invested in the businesses, create more jobs, more 
opportunity, and higher wages. That is the pro-growth aspect of this 
tax relief I mentioned at the outset.
  The other way this tax is really pro-growth is also for larger C-
corps bringing down that rate. Of course, smaller businesses use the C-
corp as well, but by bringing down that rate, we make companies in 
America more competitive in the global economy. Companies that do 
business not only here in America but in other countries around the 
world have to decide where they are going to invest. Are they going to 
invest and grow their plant and operations here in America or are they 
going to grow their plant and operations somewhere else? Of course, if 
they grow here, they are hiring people here. They are paying wages and 
salaries here in America rather than in some other country. We want 
companies that do business internationally or globally growing their 
operations here, not overseas.
  Right now, economists estimate that, currently, in excess of $2.5 
trillion is held overseas by these companies and is not brought back to 
the United States and invested here because we have one of the highest 
tax rates in the world. Our corporate tax rate is one of the highest in 
the world.
  So when we talk about the current 35-percent tax rate, companies look 
at that and say: Why would we bring back earnings from another country, 
say, Ireland--pick a country anywhere in the world. Why would we bring 
those earnings back and pay a really high tax, versus reinvesting 
overseas or somewhere else where the tax is much lower, and we can be 
more competitive?
  This is what we are having to deal with, and that is why we lower the 
corporate rate--because that then creates the incentive to come back, 
invest dollars in the United States, and create more jobs here in 
America, and, in so doing, as they bring that revenue back, which is 
called repatriation, they generate tax revenues which help us provide 
more tax relief for hard-working Americans.
  So that is what I mean. That is the two-fer aspect of this tax relief 
plan. It is making sure individuals have real tax relief so they keep 
more of what they earned, but it is also about making sure they earn 
more, that their wages and income grow, and that there are more jobs 
and opportunities here in America. That is absolutely the focus of this 
tax relief plan and what we are working to achieve.
  Both the House and Senate have passed versions of this tax bill. We 
are now working to get the very best product we can through the 
conference committee. We are making real progress, and we need to 
continue to work together and get this tax relief done. We have been 
working on it for a long time. A lot of effort has gone into it. It is 
time now to finish it up this week, to vote on it, and to get this tax 
relief passed before the end of the year so, as Americans go into 2018, 
they know they are able to keep more of their hard-earned tax dollars 
and we also have a vibrant economy, where there is going to be more 
jobs and opportunity and higher income and wages.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Gardner). For the information of the 
Senate, under the previous order, 30 minutes of postcloture time 
remained on the Willett nomination as of 4 p.m.
  The Senator from New Hampshire.
  Mrs. SHAHEEN. Mr. President, I was interested to hear my colleague 
and friend from North Dakota talking about this tax bill because, 
sadly, there has not been a lot of bipartisan work on the bill.
  I really agree there is a consensus that tax reform is it long 
overdue, but we need tax reform that simplifies the Tax Code, bolsters 
the middle class, and helps small businesses create jobs. I think those 
principles could have been the basis for really good bipartisan work 
here in the Senate, and in Congress, generally, to come up with a bill 
that would have done all of those things, but, unfortunately, the 
legislation in front of us does none.
  The result is a partisan tax bill, written in secret and without 
public hearings, adds to the national debt, punishes the middle class 
and small businesses, and gives massive tax cuts to corporations and 
the wealthy.
  Last week, I came to the floor to share the concerns of Granite 
Staters about this legislation. They were amplified at a forum I had on 
Monday at Southern New Hampshire University, where I heard from 
students, graduate students, and higher education leaders in the State 
about the damage this bill would do to our State and to our national 
economy.
  I have heard some reports today that there will be changes that come 
out of the conference committee that may address some of the concerns 
about the bill's impact on education. I hope that is true. 
Unfortunately, I haven't heard what those changes are. I don't know if 
any Democrats here have heard what those changes are. Unfortunately, 
these negotiations, like the bill, are being done in secret, and the 
future of students and so many people in New Hampshire and the country 
hang in the balance.
  In particular, what I heard at the forum with the students and 
educators was that the bill as it passed the House would raise taxes on 
New Hampshire students and would make it financially impossible for 
many of them to continue their educations.
  As passed, the House tax bill would eliminate the ability of 
individuals to deduct the interest they pay on their student loan debt. 
Nationwide, student loan debt has roughly tripled since 2004 and now 
totals a staggering $1.3 trillion--more than the total credit card debt 
in the country. It is particularly burdensome for those of us in New 
Hampshire because New Hampshire's 2016 graduating class had the highest 
per capita student loan debt in the country--an average of $36,367.
  The Republican leader's tax bill would make this crisis far worse not 
only for current students but for those who graduated many years ago 
but are still burdened by student loan debt. It would prevent nearly 
80,000 Granite Staters from deducting interest on their student loans.
  The House legislation would also make it far more expensive to get an 
advanced degree because it eliminates tax-free waivers for tuition 
assistance. I am hearing recent reports that this provision may be 
taken out of the final bill. I certainly hope that is the case because 
as currently written, it would put graduate school financially out of 
reach for many students.
  A Dartmouth College student pursuing a Ph.D. in biomedical sciences 
wrote that counting tuition waivers as earned income would raise his 
yearly taxes by more than $10,000. He said he

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would no longer be able to afford rent and groceries and would have to 
consider dropping out of school.
  Ken Ferreira, the associate vice president for student financial 
services at Franklin Pierce University, told me, in no uncertain terms, 
that tuition waivers are not income, and it is wrong to tax them. I 
could not agree more.
  Tyler Kane is pursuing a master's degree in environmental engineering 
at the University of New Hampshire. He told me he already owes close to 
$40,000 in student loans and works nearly 60 hours a week. After paying 
rent and other expenses, his stipend leaves him with less than $200 a 
month. If his tuition waiver becomes taxable, that would be a tax 
increase of $2,500, and it would wreck his budget, leaving him in a 
$33-a-month hole. Along with many of his graduate student colleagues, 
he would have to consider dropping out of school.
  It makes no sense to increase the burden of student debt and to 
impose new taxes on graduate students struggling to get by so we can 
give the biggest corporations in this country and the wealthiest a tax 
cut.
  It is estimated that by 2020, two-thirds of all jobs in the United 
States will require some form of higher education. Yet today less than 
45 percent of Americans have at least a 2-year degree. As I talk with 
small business owners across New Hampshire, one of their biggest 
challenges is finding skilled workers. The last thing we need to do is 
make education more expensive and unaffordable for millions of young 
Americans. As one New Hampshire businessman told me, it is like eating 
our own seed corn. For the United States to stay competitive in the 
global economy, we can't afford to discourage talented young people 
from going to college or pursuing a graduate degree.
  I also had the opportunity to talk with Nate Stafford. He is pursuing 
a Ph.D. at the University of Hampshire. Because he serves as a teaching 
assistant, the university provides a tuition waiver of nearly $27,000, 
which would be taxed under the provision of the House bill. If his 
tuition waiver were taxed, that would force him to consider opting out 
of graduate school entirely.
  I also heard from university administrators, who shared their 
concerns.
  Sister Paula Marie Buley, president of Rivier University, pointed out 
that the proposed new taxes on students is ``a tax on our future.''
  Jan Nesbit, the senior vice provost for research at the University of 
New Hampshire, warned that taxing graduate students' tuition waivers 
would have a cascading impact that would raise undergraduate tuition 
across the board because losing graduate students would affect both 
teaching assistants and research and drive up costs.
  I heard from Cari Moorhead, the interim dean of the graduate school 
at the University of New Hampshire. She pointed out that many 
international students at UNH would be lost and noted that Canada has 
recently seen more than a 40-percent increase in international 
students. They are very pleased to be benefiting from the brain drain 
from the United States because of the financial barriers that we are 
putting up for graduate students.
  The other damaging aspect of this legislation, which I think many 
people are not aware of, is that the tuition assistance that many 
companies provide to their employees would count as taxable income. 
Forty years ago, Congress provided employers with the flexibility to 
offer up to $5,250 in annual tax-free educational benefits to 
employees. This was designed to advance competitiveness and fill the 
need for more skilled workers. If we eliminate those benefits, how many 
of those employees who are looking to advance themselves through 
education will not be able to do that?
  In so many ways, this tax overhaul legislation would take America 
backward, not forward. Tax reform should be about helping Americans 
prepare for the jobs of the 21st century; it shouldn't make it harder 
to afford college or graduate school. Tax reform should be about 
strengthening the middle class, not burdening it with higher taxes. Tax 
reform should be about growing the economy, not growing the deficits 
and the debt.
  Like my colleagues on this side of the aisle, I am eager to work to 
genuinely reform the Tax Code. Reform is long overdue, but the bill we 
have before us is not reform. We need a bipartisan bill that puts the 
middle class first, puts small businesses first, and doesn't leave a 
massive debt for our children and grandchildren.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from West Virginia.