[Congressional Record Volume 163, Number 206 (Monday, December 18, 2017)]
[Senate]
[Pages S8054-S8056]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
Tax Cuts and Jobs Bill
Mr. CORNYN. Mr. President, listening to my friend, the Democratic
leader, leads me to conclude that he and his party have given up on the
American dream. They want to settle for the status quo, which is
stagnant growth of our economy and jobs where people haven't seen an
increase in their wages for years. They even seem to be rooting for
failure. That seems to be the attitude of our missing-in-action
congressional Democrats on the Tax Cuts and Jobs Act.
We, on the other hand, think American families need more take-home
pay, higher wages, more jobs, and a competitive economy, and we believe
they shouldn't have to settle for less. I will come back to that in a
moment.
I do want to talk about tax reform and make the perhaps obvious
statement that tax reform is hard. That is the reason it hasn't been
done since 1986. It is even harder when we have a political party that
is determined to fight against every single proposal we have made in
our tax cut and tax reform bill, including ones they themselves have
championed in the past.
I have heard the ranking member of the Senate Finance Committee,
Senator Wyden, talk about corporate giveaways, and the Democratic
leader just alluded to the same thing. Yet we are embracing the same
sort of approach they took in previous proposals and that President
Obama advocated for in his State of the Union Address in 2011, when he
asked Republicans and Democrats alike to work together to lower the
highest corporate tax rate in the industrialized world because he knew
it was chasing jobs overseas, and he knew it was important to bring
that investment and those jobs back to the United States. That is
exactly what our bill does.
My friend Kevin Brady, the chairman of the House Ways and Means
Committee, called tax reform a Rubik's Cube. He is right, but now,
thankfully, we have figured out how to solve that Rubik's Cube.
We confess that this legislation is not perfect, but it is good, and
it is much better than the status quo, which our Democratic colleagues
seem to have settled for. Last week, the conference committee met
between the House and the Senate, and members, including myself, had
many difficult conversations about how to reconcile the differences
between the two bills. Those discussions were necessary, they were
prudent, and they were productive. We now have a consensus about how to
get this bill across the finish line and to the President's desk before
Christmas.
We will vote on this final bill after the House does tomorrow--
hopefully by tomorrow night. Perhaps it will carry over into Wednesday
morning, but we will get it on the President's desk for him to sign
into law before Christmas, as we pledged.
I want to talk for just a few moments about why I am so excited at
the prospect--and so are so many other people across the country--
because oftentimes their words get lost in the chatter, some of which
is designed to mislead and presents an inaccurate picture of just how
consequential this tax reform will be. Their voices--those who believe
this good bill will help them--deserve to be heard.
Let me first talk about manufacturing. There was a survey released
last week that showed historically high optimism among 14,000 small and
large employers in the manufacturing sector. How long have we heard
that we need to bring manufacturing back to the United States rather
than outsourcing it to Mexico or China or other places around the
world? Well, we tried to address that, and I think we met with some
success because more than 94 percent of manufacturers are now positive
about their company's outlook. Nearly 64 percent said that tax reform
would encourage their company to increase capital spending. Capital
spending is what goes into infrastructure, equipment, and things that
allow them to become more productive and to create more jobs. A
majority of these manufacturers said that they would indeed expand
their businesses and they would hire more workers after this bill is
signed into law by the President. In fact, manufacturers predict that
the number of jobs could surge to 2 million by the year 2025. Now there
are roughly 350,000 American manufacturing jobs, so a leap to 2 million
is almost fantastic--hard to contemplate--but very exciting if true.
The second group I want to mention that is very excited about the Tax
Cuts and Jobs Act is small businesses. We know small businesses are the
economic engine of the country. Indeed, 70 percent of new jobs are
created not by Fortune 500 company businesses but by small businesses.
As one piece in the Houston Chronicle recently pointed out, the 2.6
million small businesses that call Texas home are enthusiastic because
tax reform will provide them much needed relief.
Small businesses, of course, all have to pay taxes, which is
burdensome enough, but they also have to spend hours and money to
comply with our unnecessarily complex tax laws. According to a 2017
survey by the National Small Business Association, 58 percent of small
businesses reported that the administrative burden of Federal taxes
posed a greater challenge than the cost of the taxes themselves. The
burden of compliance was worse than the check they had to write to the
[[Page S8055]]
Federal Government. The Houston op-ed put the matter succinctly. It
said:
For large corporations that can afford a small army of
lawyers and accountants, the tax laws are a nuisance. For
small businesses, they are a nightmare.
Now that situation will change. Our bill will simplify the Tax Code
by eliminating many special deductions and credits while broadening the
base and bringing down rates.
To those cynics here inside the beltway who roll their eyes, who
think that changes to the business provisions of the code don't matter,
I would point out two more important pieces of news. First, the Federal
Reserve, an independent government institution, recently said that this
tax package is one of the factors that led them to increase their
projections for growth next year. That is welcome, to say the least.
Tax reform, said Federal Reserve Chair Janet Yellen, last appointed by
President Obama, will boost spending and could do the same for
productivity. So the Federal Reserve has raised its growth projections
for next year, particularly in response to what we are doing.
For those who worry about deficits--that we are cutting taxes too
much--and who don't believe the economy will grow to compensate for
those cuts in taxes, all they need to do is look at the projection of
the Federal Reserve. They currently project the economy to grow at 2.1
percent, but she said that next year it could go to 2.5 percent. So
even if you believe that very conservative estimate, that is enough
growth to compensate for the cut in taxes and the loss of revenue next
year, but we expect that will continue and will grow over the next 10
years.
It is another thing to note how the rest of the world is reacting to
what we are doing here. To name but one example, China is worried,
which should tell us something. According to a Wall Street Journal
story printed last week, China sees these tax plans as making the
United States a much more attractive place to invest, which means less
investment will occur in China. One official in Beijing has called our
tax plan a huge and imminent danger that can't be ignored. China is
worried that job creators will relocate here in America, which is a
well-founded concern and one of the goals of this tax bill. That is
exactly what they will do when we lower the corporate rate and go to a
territorial system. Rather than taxing these businesses twice and
encouraging them to keep the money they earn and the jobs they create
overseas, we encourage them to bring them back to America by making our
businesses more internationally competitive.
So to summarize what we are seeing already, and we haven't even
passed the bill yet--the conference report, at least--we have passed
the Senate bill, the House bill, and now the conference report, which
is the reconciled version between the House and the Senate versions,
was released Friday.
To summarize what we have seen already, nationally, manufacturers are
raving about the tax plan. In places like Texas, small businesses
desperately need the relief this bill offers. The Federal Reserve, an
independent financial body of the Federal Government, has increased
their growth estimates, in part, based upon the tax relief provided in
this bill. And our chief competitor in the global economy is startled
by what we are doing and afraid of what it might mean in terms of
America's competitiveness globally.
Put all this together and what do you have? A brief snapshot of the
huge economic impact of the tax overhaul that will be signed by the
President in the next few days. Signs of that impact are all around us,
almost everywhere I look.
I know of at least one major airline--Southwest Airlines--that has
already announced big plans as to what they plan to do with their tax
savings. With the benefits afforded by this tax reform, they said that
they will purchase new aircraft. Well, this means more jobs for the
people who build those aircraft. It means more jobs for the pilots and
the flight attendants who travel on them. It means better customer
experiences, and it may even mean lower fares for consumers.
Let's talk about what this bill does for Americans who get up and go
to work every day and just try to eke out a living, providing for their
families. Well, I will tell you, for those worried about how tax reform
will affect real people's actual lives, let me give you a couple of
concrete examples. Let's take a single teacher making $50,000 a year.
She will see a significant reduction in her tax burden--between 17 and
20 percent--less taxes that she will have to pay. This comes from a
lower marginal rate and a higher standard deduction. How about a
married couple with three children and with median earnings of $75,000
a year? Well, their tax bill will decrease, as well, by as much as
$2,000 from a lower rate and a higher child tax credit.
As I have said before, maybe some of our Democratic friends don't
believe this is a big deal; maybe they don't care about those American
families living paycheck to paycheck, who would welcome an additional
$2,000 each year. Their actions make me think they are OK with the
status quo because they have refused to even participate in the
process, and they have been rooting for failure every step along the
way.
Well, we saw the latest example of this over the weekend when a
leftwing website, masquerading as a legitimate news outlet, led by a
former staffer of the junior Senator from Vermont, published what it
advertised as a breaking news story about the final bill. This story
breathlessly claimed, without a shred of evidence, that a provision had
been airdropped into the final draft in secret in order to secure the
vote of a Member who would supposedly personally benefit from it. This
is a salacious tale from beginning to end. It was also completely false
and invented.
As a member of the Senate Intelligence Committee, I have joined with
my colleagues over the last year to investigate the efforts of Russian
intelligence operatives to undermine public confidence in our last
elections. Well, the way this phony news story broke and was picked up
on social media and in the mainstream media would make a Russian
intelligence officer proud. The whole purpose of this exercise--this
false and invented story--was to undermine public confidence in this
tax reform package that we will pass, perhaps as early as tomorrow, to
be signed by the President, perhaps before Christmas.
Some of our friends on the other side of the aisle and their allies
in the so-called mainstream media ran with it in a dishonest attempt to
derail us from passing the bill and undermine the reputation or
integrity of one of our fellow Senators--all from a made-up story.
Again, the Russian intelligence officials--it is well-documented by
now--through a combination of cyber theft, propaganda, creative use of
social media, and a gullible mainstream media, undermined American
confidence in our most basic obligation, an institution of our
government, which is our election system. But what we saw happen this
weekend, as I said, would have made a Russian intelligence officer
proud.
As a letter from Chairman Hatch, who is chairman of the Senate
Finance Committee, makes clear today, this website, which, by the way,
also posted a false report about an amendment I had introduced several
weeks ago and later had to correct it, spread a false story
irresponsibly and dishonestly. In his letter, Chairman Hatch writes:
It takes a great deal of imagination--and likely no small
amount of partisanship--to argue that a provision that has
been public for over a month, debated on the floor of the
House of Representatives, included in a House-passed bill,
and identified by [the Joint Committee on Taxation] as an
issue requiring compromise between conferees is somehow a
covert and last-minute addition to the conference report.
It reminds me of another quote sometimes attributed to Mark Twain,
perhaps apocryphally, who supposedly said: A lie can travel halfway
around the world while the truth is still putting on its shoes. Well, a
lie can travel even faster than that today because of social media.
Shame on those who would perpetuate lies in an effort to deny the
American people a much needed tax cut and tax relief. Thank goodness
that attitude isn't shared by most Americans and by the Texans I
represent who want and deserve much better than the same old same old.
They don't believe we have to settle for the status quo. We are going
to give them something better. We are going to keep our promise, and I
can't wait until this bill gets on the President's desk.
Let me just close by saying that I am a proud son of a World War II
veteran.
[[Page S8056]]
My dad was in the Army Air Corps, flew B-17s out of Molesworth Air
Force Base in England over Nazi Germany during the end of World War II.
He was a member of the 8th Air Force, 303rd Bomb Group. On his 26th
mission, he was shot down and captured as a prisoner of war. Thank
goodness he survived, came home, met my mom, married, raised a family,
and became a productive member of civilian society after his military
service. But I remember, as if it were yesterday, what my parents said
they wanted for me, my brother, and my sister. It is what parents of
that entire generation wanted for their children and grandchildren.
They wanted to know that their sacrifice, their willingness to fight
and win America's wars against terrible tyrants, such as Adolph
Hitler--that the consequence of their sacrifice and their service would
be a better standard of living, a safer world, and a better quality of
life. In short, what they wanted for us and what I want for my children
and what I believe every American parent wants for their child or their
children is exactly what my parents wanted for me and my sister and my
brother. We sometimes call that the American dream.
Some of us believe that the American dream is still alive, that we
don't have to settle for second place. We don't have to settle for the
status quo. We don't have to settle for flat wages and fewer jobs. We
can do better. We believe we have done better in this piece of
legislation, which will help reawaken the slumbering giant of the
American economy. It will put Americans back to work. It will mean more
take-home pay. It will mean a better standard of living, but,
surprisingly--and disappointingly--our colleagues across the aisle want
no part of it. I hope they haven't given up on that American dream. I
haven't given up, and I don't believe Americans have given up on that
dream.
I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER (Mrs. Ernst). The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. CORNYN. Madam President, I ask unanimous that the order for the
quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. CORNYN. Madam President, I ask unanimous consent that the letter
from Chairman Hatch be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
U.S. Senate,
Committee on Finance,
Washington, DC, December 18, 2017.
Hon. Bob Corker,
Washington, DC.
Dear Chairman Corker: Thank you for your letter dated
yesterday.
I am disgusted by press reports that have distorted one
particular aspect of the conference agreement on H.R. 1, the
Tax Cuts and Jobs Act. The reports have focused on the final
version of the 20 percent pass-through deduction, the
proposed new Section 199A. As the author of this provision
and the vice chairman of the conference committee, I can
speak with authority about the process by which the
conference committee reached its final position.
There are two false assertions contained in these reports,
and I would like to correct the record on both.
First, some have asserted that a new provision was crafted
for real estate developers and was ``airdropped'' into the
conference agreement. Second, reports have implied that you
had some role in advocating for or negotiating the inclusion
of this provision.
Both assertions are categorically false. With respect to
the second, I am unaware of any attempt by you or your staff
to contact anyone on the conference committee regarding this
provision or any related policy matter. To the contrary,
virtually all the concerns you had raised in the past about
the treatment of pass-through businesses in tax reform were
to voice skepticism about the generosity of various proposals
under consideration.
The first claim--that a new pass-through proposal was
created out of whole cloth and inserted into the conference
report--is an irresponsible and partisan assertion that is
belied by the facts. For more than a year, tax-writers in the
House and Senate have worked to craft legislation that not
only provided relief for ``C'' corporations, but also
delivered equitable treatment for pass-through businesses.
Though the two chambers came at this issue from different
angles, our goal was the same: To provide tax relief to pass-
through businesses at a level similar to that provided to
regular ``C'' corporations. This policy goal was confirmed in
the Unified Framework for Fixing Our Broken Tax Code, which
provided in part:
``TAX RATE STRUCTURE FOR SMALL BUSINESSES The framework
limits the maximum tax rate applied to the business income of
small and family owned businesses conducted as sole
proprietorships, partnerships and S corporations to 25%. The
framework contemplates that the committees will adopt
measures to prevent the re-characterization of personal
income into business income to prevent wealthy individuals
from avoiding the top personal tax rate.''
The House Ways Means Committee and the Senate Finance
Committee achieved this mutual goal by different means.
Section 1004 of the House bill provided a special tax rate
for pass-through income and included a ``prove-out'' option
for capital-intensive businesses. Chairman Brady unveiled
this approach on November 2nd, more than six weeks ago.
The Senate took a different approach, achieving the
intended rate relief through a deduction patterned after
current law Section 199. We also included measures to ensure
that compensation could not be easily gamed into business
income in order to qualify for the deduction. Similar to
Section 199, the deduction in the Senate bill excluded
compensation and guarantee payments to owners and was limited
to 50 percent of compensation paid to employees, with an
exception for small pass-through businesses, including
service providers. The Senate bill did not include a prove-
out option for capital-intensive businesses like the one
contained in the House bill.
The Joint Committee on Taxation (``JCT''), the non-partisan
congressional scorekeeper for tax legislation, released a
side-by-side summary of the two bills for conferees. That
summary, dated December 7, 2017 and available on JCT's
website (JCX 64-17), described the House position in part:
``In the case of a capital-intensive business, a taxpayer
may ``prove out'' a capital percentage by electing the
application of an increased percentage for the taxable year
it is made and each of the next four taxable years. The
applicable percentage is determined by dividing (1) the
specified return on capital for the activity for the taxable
year, by (2) the taxpayer's net business income derived from
that activity for that taxable year.''
It takes a great deal of imagination--and likely no small
amount of partisanship--to argue that a provision that has
been public for over a month, debated on the floor of the
House of Representatives, included in a House-passed bill,
and identified by JCT as an issue requiring a compromise
between conferees is somehow a covert and last-minute
addition to the conference report.
I have sat on a number conference committees, too numerous
to remember. In each case, conferees have come into the
conference expecting to achieve their chamber's position or
negotiate a reasonable compromise. This conference committee
was no exception. The House entered the conference with an
interest in preserving, in some form, the prove-out
alternative as an option for capital-intensive taxpayers.
Through several rounds of negotiations, the House secured a
version of their proposal that was consistent with the
overall structure of the compromise.
The prove-out alternative included in the conference report
was derived from the House provision and is the product of a
negotiation between the House and Senate tax-writing
committees. It is that simple.
If you have any further questions, please feel free to
contact me.
Very Truly Yours,
Orrin G. Hatch,
Chairman, Senate Finance Committee.
Mr. CORNYN. Madam President, I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. KING. Madam President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.