[Congressional Record Volume 163, Number 206 (Monday, December 18, 2017)]
[Senate]
[Pages S8058-S8063]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
Tax Cuts and Jobs Bill
Ms. COLLINS. Madam President, I rise to express my support for the
conference agreement on the Tax Cuts and Job Act, the first major
overhaul of our Tax Code since 1986. This legislation will provide tax
relief to working families, encourage the creation of jobs right here
in America, and spur economic growth that will benefit all Americans.
Let me start by discussing the effects of this bill on individuals
and families. Throughout this debate, I have emphasized that reforms to
our outdated Tax Code must help working families. I, therefore,
authored three key amendments that were retained in the final package.
My amendments allow families to deduct up to $10,000 in State and
local taxes, increase the deduction for medical expenses, and protect
tax-free contributions for retirement savings.
The original Senate bill would have eliminated the deduction known as
SALT that allows taxpayers to avoid paying a Federal tax on State and
local taxes that they have already paid. This provision has been in the
Tax Code since 1913, when the income tax was first established. It is
intended to prevent double taxation. My amendment, which was adopted by
the Senate, restored the deduction for property taxes up to $10,000. I
am pleased that the final bill goes a step further by allowing the
deduction of property and income or sales taxes up to this level, which
will assist even more Americans.
My work to restore this deduction is especially important to families
living in high-tax States like Maine, which has one of our Nation's
highest tax burdens; yet Maine's per capita income ranks only 31st,
which is nearly $5,200 below the U.S. average. Maintaining this
deduction therefore provides important tax relief for those Mainers who
itemize.
My second amendment included in the conference agreement is a very
important one. It is aimed at helping Americans struggling with high,
unreimbursed healthcare costs, including seniors paying for long-term
care for a loved one and those with expensive chronic healthcare
conditions. My amendment lowers the threshold for claiming this
deduction for these unreimbursed expenses from 10 percent to 7.5
percent of income for 2017 and 2018.
The House bill would have eliminated this longstanding deduction used
by approximately 8.8 million Americans annually, nearly half of whom
make less than $50,000 per year. Retaining this important deduction and
lowering the threshold will provide relief for those experiencing
particularly high healthcare costs. That is why AARP and 44 other
consumer groups strongly endorsed my amendments, stating: ``It provides
important tax relief which helps offset the costs of acute and chronic
medical conditions for older Americans, children, pregnant women,
disabled individuals and other adults, as well as the costs associated
with long-term care and assisted living.''
At a time when we need to be encouraging Americans to save more for
their retirement, I am encouraged that the final agreement preserves
the pretax contribution limits for retirement savings plans. We are in
the midst of a silent but looming retirement security crisis in this
country. According to the nonpartisan Center for Retirement Research,
there is a $7.7 trillion gap between the savings that American
households need to maintain their standard of living in retirement and
what they actually have saved.
We should be doing everything we can to encourage more saving, not
less. For this reason, I am pleased that the final bill will include my
third amendment, which struck the original Senate language eliminating
the ability of public employees, such as firefighters, schoolteachers,
and police officers, as well as clergy and those employed by charities
and nonprofit organizations, to make what are called catch-up
contributions to their retirement accounts. These employees are
generally paid less than their counterparts employed by for-profit
companies and thus are less able to save for their retirement. My
provision would allow them to continue making these important extra
investments toward a secure retirement.
The conference agreement benefits lower and middle-income taxpayers
significantly, while simplifying the tasks that no one relishes of
completing their tax returns.
Significantly, this bill nearly doubles the standard deduction to
$12,000 for single filers and $24,000 for those filing jointly. The
child tax credit will be doubled from $1,000 to $2,000. Thanks to
Senator Rubio's efforts, which I strongly supported, up to $1,400 of
that tax credit will be refundable in order to benefit low-income
families.
Let's be more concrete. What do these reforms mean to families across
our country? The 72 percent of Mainers who already use the standard
deduction will have their taxes reduced. A family with $24,000 in
income will pay no Federal income tax. A single mom earning $35,000 a
year with one child will see her taxes drop by nearly 4,000 percent.
Instead of paying money back to Washington, she will be getting back
nearly $1,100 to help her make ends meet. A couple with no children
earning $60,000 will see their taxes fall by more than $900. A couple
with two children earning $60,000 will get a tax cut of about $1,700.
That is a reduction of more than 100 percent. The bottom line is that
most Maine households will see their taxes go down.
I was very concerned about a number of important deductions for
individuals that would have been eliminated under the House bill.
Having worked at Husson University in Bangor before my election to
the Senate, I am well aware of how critical education deductions and
credits are to our students and their families; therefore, I had
several fruitful discussions with a key conferee, Senator Rob Portman,
about preserving those deductions that help students afford higher
education. I appreciate his strong advocacy for these provisions that I
care so much about as a result of
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my direct experience working with college students. In fact, one of the
very first bills that I introduced in the Senate as a new Senator in
1997 was to provide a deduction for interest paid on student loans. The
conference agreement maintains that deductibility of interest on
student loans, as well as the tax exemption for employer-provided
tuition assistance and for graduate student tuition waivers. All of
those important deductions are maintained in this bill and will help
Americans improve their earnings because of the increased education
they will have.
The bill also maintains a $250 deduction--a provision I authored some
15 years ago--that allows teachers to deduct the costs of classroom
supplies they purchase with their own money. Having visited more than
200 schools in the State of Maine, I know firsthand how dedicated
teachers dig deep into their own pockets to buy supplies to enhance the
education of their students.
In addition, this bill would modernize the ABLE accounts, which are
tax-preferred savings accounts essential for providing long-term
support for individuals with disabilities and their families.
The bill also continues the tax credit to encourage adoptions.
The final agreement also preserves a number of deductions and credits
that are so important to our communities. I worked hard to preserve the
historic tax credit so businesses rehabilitating older buildings in
communities like Lewiston, ME, will continue to do so.
I am also pleased that private activity bonds, which are vital to
many hospitals and institutions of higher education, are continued, as
are the affordable housing and new markets tax credits. We have found
proven ways to encourage public-private partnerships, and we ought to
continue to incentivize these important partnerships.
How this legislation treats employers has also been the subject of
much debate, but the reality is the United States cannot continue to
have the highest corporate tax rate in the developed world at 35
percent. We are losing jobs as businesses make the calculation to
invest overseas.
I have talked to the executives of General Dynamics, which owns Bath
Iron Works in Maine and employs more than 5,000 Mainers; to United
Technology, which employs more than 1,900 people in North Berwick at
its Pratt & Whitney plant; to General Electric, which has a major plant
in Bangor; to Proctor & Gamble, which employs 400 workers in Auburn;
and to Idexx, which is such an important high-tech employer in
Westbrook, about the positive difference this legislation will make in
their ability to create jobs in America.
New Balance, which has about 900 workers in Maine manufacturing
footwear, describes the tax reforms as follows: ``New Balance will be
more competitive and manufacture more footwear in Maine that we can
export across the globe.''
This significant Maine employer went on to say: ``Companies like New
Balance, which already has a strong domestic manufacturing presence,
will be able to increase investments in their facilities and be more
globally competitive while remaining a U.S. company hiring U.S.
workers.''
These words are echoed by the manager of the Pratt & Whitney plant
who wrote to me: ``The reforms . . . will allow companies like ours to
bring home earnings from abroad to invest in research and development,
advanced manufacturing, energy efficiency, and workforce initiatives. .
. . Pratt & Whitney plans to hire thousands of people over the next
several years across our U.S. operations, and this tax reform will
further support our efforts.''
Isn't that what we seek? Isn't that what tax reform should bring
about--more jobs, right here in America?
The bill also includes changes important for our small businesses
which employ nearly half of all workers and generate two out of three
net new jobs in our country. They are the true engine of our economy,
especially in the great State of Maine. The bill would provide tax
relief that enables them to create more jobs, increase paychecks, and
grow our economy.
As the president of the Retail Association of Maine recently
commented about this tax reform bill, ``For Maine and its nearly 9,000
retail establishments and the more than 80,000 retail jobs, this is
welcome relief for small businesses.''
According to the National Federation of Independent Business, Maine
ranks fifth in the Nation for the share of workers employed by
passthrough businesses, as most small employers are structured. The
NFIB, our Nation's small business advocacy group, has strongly endorsed
this final bill.
Small businesses make an outsized contribution to our Nation's
economy; yet they face a tax burden that can reach nearly 40 percent at
the Federal level and can be significantly higher than the corporate
tax rates paid by larger firms. Small businesses are forced to devote
more resources to tax payments and fewer resources to creating good
jobs and investing in their communities. This bill provides important
tax relief to small businesses that are the backbone of our economy.
Let's listen to the words of some of the small businesses from Maine
that have written or talked to me. The owner of Windham Millwork, an
architectural woodworking company, described the relief for small
businesses and how it will help manufacturing workers and families this
way: ``Most importantly, it means Windham Millwork will have more money
to spend on what matters--our workers and community. With the money
we'll save, we can create new jobs or offer better pay to our workforce
. . . which helps everyone in our community and contributes to a
growing Maine economy.''
The innkeeper of the Nonantum Resort in Kennebunkport noted: ``This
tax reform bill helps level the playing field for small businesses not
only in the hotel industry, but across the economy. With a lower tax
burden, small businesses in all industries can continue to grow,
creating more jobs.''
Moreover, a family-owned business in southern Maine described for me
how the bill would benefit Maine companies and the people who work for
them: ``When [companies] become more profitable, they reinvest faster,
grow faster, and increase profit-sharing. Employees benefit when
companies grow. There are more jobs, more opportunities, more security,
more mobility, more innovation.''
Tax reform should spur this kind of economic growth. The weak growth
and stagnant wages we have seen in recent years cannot be accepted as
the new normal for our country. It is clear where the current path
would lead if we do not act. CBO projects the current slow growth of
just 1.9 percent per year will continue throughout the next decade--far
below the historic average of 3 percent. This would result in our
public debt exceeding 90 percent of GDP by 2027, just as our
obligations to the baby boom generation begin to crest.
Surely, we can do better. Tax relief and reform will lift our
economy, leading to higher wages for workers and more revenue for
government. Extrapolating from a CBO estimate, an increase of just
four-tenths of 1 percent in economic growth could produce revenues that
are in excess of $1 trillion over the next 10 years.
If we remain on our present trajectory, however, growth will remain
stagnant. Continued slow growth will crowd out many funding priorities,
harm our national security, place significant strain on Federal
programs, and impose a burden on our children and our grandchildren. We
must act now to reignite the engine of growth, to provide for the next
generation the same promise of a brighter future we received from those
who came before us.
Finally, let me discuss the critical issue of healthcare. It has been
deeply disturbing to see seniors frightened about the possibility that
this tax bill could trigger an automatic 4-percent cut in the vital
Medicare Program. Although I knew that the law that could cause this
reduction has been waived 16 times, I felt it was essential that our
leaders publicly commit that Medicare reductions would not be triggered
by this legislation. I don't know of any Senator on either side of the
aisle who is seeking to have an automatic 4-percent cut in Medicare go
into effect.
I ask unanimous consent that my exchange of correspondence with the
Senate majority leader be printed in the Record at the conclusion of my
statement.
[[Page S8060]]
This pledge is ironclad and, I hope, reassuring to our seniors.
I am also concerned about the inclusion of the repeal of the
individual mandate of the Affordable Care Act as part of this tax bill.
I don't think the two issues should have been combined, but let me be
very clear: I have never supported the individual mandate. There is a
big difference between fining people who choose to go without health
insurance versus the bills considered last summer and fall that would
have taken away insurance coverage from people who have it and want it.
Those bills also would have made sweeping cuts in the Medicaid Program.
The financial penalty under the individual mandate for failing to
comply with it falls disproportionately on lower-income Americans.
Eighty percent of those who pay the fine make under $50,000 a year. For
many of these individuals, the cost of insurance under the ACA is
simply unaffordable. Individuals making 250 percent of the Federal
poverty level--that is just over $30,000--are not eligible for the
subsidies to reduce deductibles and other out-of-pocket costs that are
known as the cost-sharing reductions. So, essentially, the insurance
they are being fined for, if they don't buy, is virtually useless to
them because the deductibles and the copays are so high, and if they
make over 250 percent of the poverty level--over $30,000 a year--they
cannot afford it.
I want to make an important point that has been overlooked in this
debate. Any Senator, Democratic or Republican, could have offered an
amendment on the Senate floor to strike the repeal of the individual
mandate. None--not one--chose to do so. That is telling, indeed, and
reflects both how unpopular the mandate is and how burdensome its
impact is.
Nevertheless, repealing the individual mandate without other
healthcare reforms will almost certainly lead to further increases in
the costs of health insurance premiums that are already too expensive
under the ACA.
For these reasons, I have made it a priority to secure passage of two
bipartisan bills that will help make health insurance more affordable.
Shouldn't that be a goal that all of us can embrace? Both of these
bills have the support of the President, the Vice President, and the
Senate Republican leaders. In fact, Majority Leader McConnell and I
engaged in a colloquy affirming that commitment.
The first bill, the Bipartisan Healthcare Stabilization Act,
sponsored by Senators Alexander and Murray, will provide vital funding
to help low-income families pay their out-of-pocket costs, including
deductibles and copays associated with certain ACA health insurance. I
am proud to be one of the 22 cosponsors of the bipartisan Alexander-
Murray bill.
The second is a bipartisan bill that I introduced with my friend and
colleague Senator Bill Nelson. It would protect people with preexisting
conditions while lowering the cost of health insurance through the use
of high-risk pools. This plan will provide $5 billion annually for 2
years in seed money for States to establish invisible high-risk pools
or traditional reinsurance programs.
We don't have to guess about the impact. I am going to quote some
actuarial studies shortly. The fact is that we know from experience in
States like Maine and Alaska that high-risk pools can help to lower
premiums substantially, by an average of 20 percent.
Analyses show that enactment of these two bills together will reduce
the cost of health insurance, thus making it more affordable. According
to analysis by experts at Oliver Wyman, the passage of these bills will
more than offset the premium increases caused by the repeal of the
individual mandate. In fact, Oliver Wyman suggests in its estimate that
the $5 billion in funding would be sufficient to allow States to
leverage more than $15 billion in reinsurance coverage, and it would
result in premiums that were more than 20 percent lower than if the
individual mandate were repealed and the package of provisions were not
implemented.
Furthermore, analysis by experts at Avalere project that ``in
combination, CSR funding and $5B in annual reinsurance could lower 2019
premiums by 18% and increase enrollment by 1.3M people.''
The National Association of Insurance Commissioners wrote that these
two bills would significantly reduce health insurance premiums and help
promote more stability in insurance markets. The NAIC said: ``Providing
reliable federal funding to reimburse health insurance carriers for the
Cost-Sharing Reduction (CSR) program assistance they give to low-income
consumers and grants for states to establish invisible high risk pools
or reinsurance programs would reduce premium increases as much as 20
percent and could encourage some carriers to stay in the market.''
In evaluating this bill, the question we should ask is not, Does this
tax cut make Washington better off? The right question to ask is, Does
this tax cut make the American people better off? The answer to that
question is yes.
The bill puts money back into the pockets of American taxpayers with
tax cuts beginning January 1. As soon as the IRS updates withholding
tables this winter, taxpayers will see the benefit of this bill in
their paychecks. Over time, Americans will also see more benefit from
this legislation in the form of higher wages. Businesses, small and
large, will make the investments that will create more jobs.
The PRESIDING OFFICER. The Senator's time has expired.
Ms. COLLINS. Madam President, I will cast my vote in support of the
conference agreement on the Tax Cuts and Jobs Act. While it is by no
means perfect, on balance, this reform bill will provide much needed
tax relief. It will benefit lower and middle-income families, while
spurring the creation of good jobs and greater economic growth.
There being no objection, the material was ordered to be printed in
the Record, as follows:
U.S. Senate,
Washington, DC, November 28, 2017.
Hon. Mitch McConnell,
Majority Leader, U.S. Senate, Washington, DC.
Dear Majority Leader McConnell: I write to express my deep
concerns with the Congressional Budget Office's determination
that an automatic four percent cut to Medicare, estimated to
be roughly $25 billion for fiscal year 2018, could be
triggered by the passage of tax reform legislation as a
result of the Pay-As-You-Go Act of 2010 (PAYGO) even though
there is no intention for such a reduction to occur.
Since I do not believe it is anyone's intention to allow
automatic cuts to Medicare to occur, I urge swift action to
waive the PAYGO requirements. Medicare provides essential
benefits to our nation's seniors, and we must remove
immediately the threat that an automatic reduction in the
program's funding could occur.
Since PAYGO was enacted, sixteen laws that would have
otherwise triggered PAYGO's automatic spending cuts have
included provisions to exclude all or part of the law's
budgetary impact, including the American Taxpayer Relief Act
of 2012 that was enacted under the previous Administration.
I look forward to working with you to ensure that no
Medicare cuts are triggered under PAYGO, a goal I believe is
supported by members on both sides of the aisle. Thank you
for your attention to this critical issue.
Sincerely,
Susan M. Collins,
United States Senator.
____
U.S. Senate, Majority Leader,
Washington, DC, December 1, 2017.
Hon. Susan Collins,
Washington, DC.
Dear Senator Collins: Thank you for your letter expressing
concern about the across-the-board spending cuts. You will be
pleased to know that Speaker Paul Ryan and I issued the
following joint statement earlier today:
``Critics of tax reform are claiming the legislation would
lead to massive, across-the-board spending cuts in vital
programs--including a 4-percent reduction in Medicare--due to
the Pay-Go law enacted in 2010. This will not happen.
Congress has readily available methods to waive this law,
which has never been enforced since its enactment. There is
no reason to believe that Congress would not act again to
prevent a sequester, and we will work to ensure these
spending cuts are prevented.''
Again, thank you.
Sincerely,
Mitch McConnell,
Majority Leader.
The PRESIDING OFFICER. The Senator from Florida.
Mr. NELSON. Madam President, does the Senator from Maine need some
more time?
Ms. COLLINS. Madam President, I thank Senator Nelson. I say, through
the Chair, that is very gracious of the Senator. I have completed my
statement. Thank you.
[[Page S8061]]
The PRESIDING OFFICER. The Senator from Florida.
Mr. NELSON. Madam President, while the Senator from Maine is still
here, let me just say what a great Senator she is and what a pleasure
it is to do business in a bipartisan way, as the two of us have now
done for several years here in the Senate, including the legislation
the Senator from Maine just talked about.
I just want to say to the Senator from Maine that it is my hope,
regarding the statements that have been made to the Senator, that these
two pieces of legislation she referenced will be passed. I do believe
the majority leader, Senator McConnell, will honor that with regard to
the Senate. It is this Senator's concern that at the other end of the
hall, in the House of Representatives, they may not honor that. I
certainly hope the Senator feels like she has the statements of
commitment by the leadership in the House of Representatives that they
will do as Senator McConnell has indicated.
Madam President, I wish to talk about the tax bill. Needless to say,
you are going to hear a different version from me than my good friend
and the very distinguished Senator from Maine, because last Friday
night we got the conference agreement on the tax bill. You can wonder
why it was held until late Friday night, when nobody was paying
attention to the details of the bill.
What is becoming increasingly clear is that this tax bill is not for
ordinary folks. It is going to give a few nuggets to the middle class,
but that is to mask the true intent. The real purpose of the bill is to
give huge tax cuts to multinational corporations and to make it easier
for them to shift jobs overseas. That is the bottom line.
Right now, under current law, corporations that send jobs overseas
have to pay taxes on the money they bring back into the United States,
but now, what this new GOP tax bill says is that corporations that send
jobs overseas can bring that money back to United States tax-free. Once
this bill passes, companies will come under increasing pressure to take
advantage of the tax savings in the bill by sending their jobs overseas
to low-wage countries--particularly those jobs that can't already be
automated.
This is the exact opposite of what we should be doing. Instead of
passing this version of the tax bill that will inevitably send American
jobs overseas, we should be working on a bill that cuts taxes
permanently for hard-working middle-class families.
Supporters of the bill will argue that a lower corporate rate will
encourage companies to keep jobs here. They will argue that, rather
than going to a country with a higher corporate rate, America's
corporate rate will be lower. But that is ignoring the attraction that
companies have to send jobs overseas, because of cheaper wages and
lower environmental standards.
Take China. China has a corporate rate of 25 percent, except that
they make exceptions for certain companies at 15 percent. So the 21
percent in this tax bill for corporations on income earned in the
United States may still be higher than in China, and the pressure on
corporations is to take it to a country that has lower environmental
standards and lower wages.
I think our friends on the other side of the aisle know this is a
head fake. We are not fooled by this. We know what you are trying to do
with this bill. The more people learn about it, the worse it looks.
That is why they waited until Friday night to let the spotlight shine
on it--so that over the weekend people weren't paying a lot of
attention.
There is a reason why my friends on the other side of the aisle are
in such a rush to get this passed. It is because they want to get it
enacted before all of the new loopholes and sweetheart deals for the
special interests and the bottom line of encouraging jobs to go
overseas are discovered. And, starting right now, it is going to be
discovered.
It would be nice if our colleagues showed as much urgency for some of
the other things we should be doing in the Senate, such as providing
millions of kids with health insurance through the CHIP program or
helping folks recover from the massive hurricanes this year, including
the millions of people in Puerto Rico who are still without reliable
electricity or drinking water. What about the hundreds of thousands of
Dreamers in the United States who are here in a deportable status? That
is what we ought to be worrying about.
It has been over 3 months, going on 4 months, since Hurricanes Irma
and Maria devastated the Puerto Rican island. It has been months since
Harvey and Irma devastated farmers in Texas, Florida, and Puerto Rico.
While the Congress has passed two disaster supplemental funding
packages, neither of them has included any relief for Florida's
agricultural community. They are hanging on by a thread. They can
hardly make payroll. They are having to lay off people. They
desperately need our help, which I hope we are going to address in this
next disaster aid funding package.
Instead of spending all of our energy on cutting corporate taxes and
making it easier to send American jobs overseas, we should be focused
on reauthorizing the Children's Health Insurance Program, CHIP, so that
9 million children across the country, including nearly 400,000 in
Florida, can continue to have access to the health coverage they
desperately need. Or we should be negotiating permanent protections for
the Dreamers before they are kicked out of the only country they have
ever known. Unfortunately, the only thing this Republican-led Senate
seems to care about is helping out large multinational corporations.
The truth is, these multinational corporations are doing just fine.
We shouldn't be moving Heaven and Earth--adding $1.5 trillion to the
national debt or upending our Nation's healthcare system--just to make
it easier for them to send American jobs overseas. That is not right.
That is not fair. The American people deserve better.
I yield the floor.
The PRESIDING OFFICER (Mr. Moran). The Senator from Maryland.
Mr. CARDIN. Mr. President, first, I want to thank my friend Senator
Nelson for his comments from the floor in regard to the tax bill that
we will be voting on later this week. The experience I had this morning
underscores the issues that Senator Nelson has brought to the floor. I
had a meeting with the Greater Baltimore Committee. We had business
leaders, labor leaders; we had advocates from different segments of our
community; and we had graduate students there. They all expressed
concern about our voting this week on a tax bill that we first saw on
Friday evening--the latest version.
It is still fundamentally flawed, as Senator Nelson has pointed out.
I say that it is fundamentally flawed because it gives significant, big
tax cuts to corporations and high-income taxpayers and leaves middle-
income taxpayers footing the bill.
The conference report makes it worse because they lower the highest
tax rate from 39.6 percent to 37 percent--another advantage for high-
income taxpayers. In addition, the estate tax is doubled, which affects
0.2 percent of the wealthiest people in this country. Corporations not
only get the lower tax rates cut from 35 percent to 21 percent, but
they also get relief from the alternative minimum tax. To make matters
even worse, the tax relief for middle-income families is temporary,
whereas the tax relief for businesses is made permanent.
It is definitely a tax bill that is going to hurt middle-income
taxpayers. In my own State, independent analysis shows that 800,000
Marylanders will end up paying more in taxes. Guess who is going to
foot the bill, who is going to pay for the big deficit.
If you look at the corporate tax cut alone, that is somewhere close
to the $1.15 trillion we have been talking about, which is baked into
the bill to increase the national debt by $1.5 trillion. I think that
is unconscionable; I think it is unconscionable to say that we can
afford tax cuts when we already have these large deficits that are
going to make us borrow more money and make our economy more dependent.
The truth is, even the Republicans are telling us, even with dynamic
scoring, we are going to have a $1 trillion tax gap in the deficit. In
reality, the $1.5 trillion is conservative. When you look at the
individual tax relief, it is temporary; it expires. Some expire in 2
years.
Most of my Republican friends have said: Just extend it. If you
extend it,
[[Page S8062]]
there will be even a deeper hole in the deficit--closer to $2 trillion.
Who is going to pay for that? Middle-income families are going to pay
for it. They are not just being left out as far as tax relief is
concerned; they are being asked to foot the bill for the tax cuts for
corporations and high-income taxpayers.
In addition, it will affect other elements that middle-income
taxpayers depend upon. This is a direct attack on Medicaid and
Medicare. We see that. We saw that in the budget instructions, where we
had to cut Medicare and Medicaid. We see that in the pay-go rules. We
see that the next chapter of this tax reform bill will be, well, now we
have these deficits, and we have to pay for it. Who is going to be held
responsible for paying for it?
We know that it is going to affect our own budgets. I am now hearing
that we are going to take it out on our own Federal workforce, deny
them a pay raise for next year or have fewer Federal workers to carry
out their mission or make them pay more for benefits. We know that is
going to come. The argument is going to be that we have these large
deficits now, and we have to do this.
How are we going to respond to the issues Senator Nelson talked about
on disaster relief when we have these large deficits? We know that we
are going to be asking middle-income families not only to make a
sacrifice on the tax cut, not only to pay for the deficit created
directly by this but, also, in the future, to pay with cuts in
government spending.
In addition to that, we have 13 million Americans who will lose their
health coverage under this bill because of the elimination of the
individual mandate--13 million. That is going to affect 13 million
families. It is going to affect more than that. Guess what these
families do. They use emergency rooms rather than going to their family
doctors. They enter the healthcare system in a more expensive way. They
don't have the money to pay for the visits, and it becomes part of
uncompensated care. All of us pay higher premiums, and our healthcare
system becomes more expensive.
That has been one of the bright spots of the Affordable Care Act--
reducing the number of uninsured. Now we are going to be moving in the
opposite direction. The Affordable Care Act has worked. The Republicans
tried to dismantle it, and they couldn't succeed. The worst part is,
you are counting the loss of insurance of 13 million as a revenue gain
for the Treasury and then spending that money. That is unconscionable.
In Maryland, we have particular problems with this bill. Not only
will we see a problem for the Federal workforce--a large number who
live in Maryland--but also the State and local tax deductions. Maryland
has the largest number of taxpayers who take advantage of State and
local tax deductions on their Federal tax returns. In other words, you
don't have to pay a tax on a tax. That makes sense. It has been in our
Tax Code since its beginning because we recognize federalism, and it is
morally wrong to pay tax on tax.
Maryland has the most taxpayers who take advantage of State and local
tax deductions, close to 50 percent. The average for Maryland--this is
the average--is $12,900 that they deduct for State and local taxes.
Under the conference report, that is going to be limited to $10,000.
That means the average Maryland taxpayer will have to pay taxes on
$2,900 more, but think about all those who have a lot more in State and
local taxes who are going to be denied that help.
I was talking to some of our local government officials over the
weekend. They are going to be disadvantaged by it. It was an
interesting analysis. We don't think about what this bill is going to
do and all the consequences, but if you are in a State that has its own
itemized deductions, like Maryland--we have itemized deductions on our
State income tax return, and our standard deduction will be
significantly lower than the standard deduction under this conference
report.
You are going to have Marylanders who are not going to be able to
take their State deductions because you can't take State deductions
unless you use the Federal itemized deductions. It is estimated that
nationwide only 5 percent of the taxpayers will be using itemized
deductions. Guess what. If you don't use the itemized deduction at the
Federal level, you can't take the State itemized deductions. This is
going to have a direct impact on our State and local governments. Yet
that hasn't been considered.
Quite frankly, the consequences of this bill haven't been debated. We
haven't gone through public hearings because of the process that was
used--the partisan process, called reconciliation. We haven't seen
daylight. We haven't had a chance to know what the impact will be. What
impact will it have on property values? We now limit property tax
deductions, and we have a further limit on interest deductions on
mortgages. What impact does it have on property values? What impact
does the reduction of property values have on our economy, have on the
individual values for people who have loans on their homes? Are we
going to be creating a problem? We don't know because we haven't had
any hearings on it.
On Friday, I was with a group of nonprofits that do very valuable
work. They are worried about what impact this tax bill will have on
charitable giving. When only 5 percent of the taxpayers in this country
use itemized deductions, it means a great number of people who were
able to take advantage of charitable deductions on their tax returns no
longer will have that ability. Does that change their charitable
giving? If it changes their charitable giving pattern, what does it do
for nonprofits? If our nonprofits can't do that, there is additional
pressure on governmental services. Have we thought that out? I doubt we
know the consequences. Yet we are not prepared to have hearings on
this.
One of the major issues that has had very little discussion is the
passthrough. You have heard a lot about it. The reason for this is that
95 percent of American businesses don't use corporate tax returns. They
use passthroughs, S corporations, individual proprietorships,
partnerships, et cetera. This bill provides a lower tax rate for their
passthrough business income at 20 percent. Here is the problem. In an
effort to make sure that this isn't a way of getting around paying
taxes on salaries, there are certain guardrails that have been put into
this bill based upon a person's income, based upon the type of business
they are in, based upon the assets of the business, based upon the
amount of salaries that are paid in the business. And you are trying to
tell me that can't be manipulated in order to shelter income? We are
creating a whole new industry in sheltering income under this bill.
I have heard so many of my colleagues talk about the fact that we
don't want to outsource jobs. None of us want to outsource jobs. Having
competitive rates helps us in that regard, but moving toward a
territorial tax structure rewards companies for doing their business
offshore. Even if tax rates might be the same, they can use labor
costs, or some other costs, to outsource jobs.
Have we thought about that under a territorial tax? No. Do we know
what impact it will have? No. There are a lot of issues we don't fully
understand. We do know there are individual provisions put in here--for
example, drilling in the Arctic. That, to me, should not be part of
this bill. I worry about that being expanded to the Atlantic coast and
other areas. I think we all should be concerned about it.
The bottom line is this. When you do tax reform, you would hope you
would simplify the Tax Code and make it predictable. That is what I
hear the most: Let's simplify the Tax Code, and let's make it
predictable. Neither will be accomplished with this conference report.
With all these temporary tax provisions, you know that we are going to
have to deal with extenders. You are not going to be able to plan as to
whether this Tax Code will stand the test of time. If you think this is
simplification, try to figure out whether you are eligible for the
passthrough 20 percent on your business taxes. It is anything but
simple.
This bill fails in its principle test of helping middle-income
families, which it does not do. It is for corporations, big
corporations, and high-income people. It is fiscally irresponsible to
add to the debt. It makes our Tax Code more
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complicated and doesn't give us the predictability we need in the Tax
Code, and it should be rejected.
I yield the floor.
The PRESIDING OFFICER. The Senator from Ohio.