[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
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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.