[Congressional Record Volume 164, Number 152 (Wednesday, September 12, 2018)]
[Senate]
[Pages S6122-S6124]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
Nomination of Charles P. Rettig
Mr. MENENDEZ. Mr. President, I rise today to oppose President Trump's
nominee for Commissioner of the IRS, Mr. Charles Rettig. Now more than
ever, the American people need government officials who are willing to
stand up and speak truth to power. Unfortunately, Mr. Rettig failed to
convince me that he is up for that part of the job.
During his time before the Senate Finance Committee, on which I
serve, Mr. Rettig gave me no indication that he would protect New
Jerseyans facing the threat of double taxation under the tax bill
passed by this Congress and signed into law by President Trump late
last year, nor did Mr. Rettig express any respect for the rights of
States to administer their own constitutionally upheld charitable
contribution tax credit programs. Instead, Mr. Rettig left me all but
certain that he would be a rubberstamp for this administration's
politically motivated tax policies and would allow a backdoor tax
increase on countless middle-class families. At a time when we need
independence and impartiality at the IRS, that is absolutely
unacceptable.
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As we speak, the Treasury Department and the IRS are trying to make
sense of the deficit-exploding corporate tax cuts rushed through
Congress by the Republican majority last December--tax cuts that,
according to the Congressional Budget Office, will drive us toward
trillion-dollar annual deficits by 2020 and by undermining the
Affordable Care Act, eventually will strip 13 million Americans of
their healthcare coverage.
As the IRS attempts to implement these misguided policies,
corporations are pulling every string to rig the Tax Code in their
favor. Apparently, it wasn't enough for them to get a massive trillion-
dollar tax windfall from President Trump. So now they are amassing
armies of accountants and legions of lobbyists to get even more out of
the IRS. That is why drug companies are rushing to reclassify their
cash stocked overseas as assets so they can pay a fraction of what they
would otherwise owe. That is why oil companies are drilling into the
law to find new loopholes in the way we tax foreign profits. CEOs want
no stone left unturned, no loophole left unopened.
But there is one group that is not getting any special access or
sweetheart deals, and that is middle-class families like those in my
home State of New Jersey. I have said before and I will say again that
the Trump tax bill was one giant hit job on New Jersey's middle class
and that of States similarly situated.
You would think that with $1.5 trillion in tax cuts, Republicans
could have cut taxes for everyone. Yet, under the Trump tax plan, 40
percent of New Jersey taxpayers will either face an average tax
increase of $2,100 or get no tax cut at all. That is because
Republicans gutted the State and local tax deduction, which 1.8 million
homeowners across my State alone depend on to avoid being taxed twice
on the same money. These people aren't high rollers. They weren't born
into multimillion dollar trust funds. They are middle-class families
who work hard for everything they have.
As you can see, 83 percent of New Jerseyans who deduct their property
taxes make under $200,000 a year. Nationwide, half of all taxpayers who
claim these deductions make under $100,000. In New Jersey, the average
deduction totals about $18,000 per filer--far above the arbitrary cap
imposed by Donald Trump and his corporate-sponsored Republican
Congress. It means the average New Jersey taxpayer who itemizes their
returns could lose $8,000 in deductions this year alone.
Even the President's own top economic adviser agrees. Larry Kudlow
made this quote before he was Director of the National Economic
Council, which means the quote is really clear and unvarnished in its
truthfulness. He said:
When you end the state and local deduction, because rates
are still relatively high, you are going to hurt a lot of
different people. So the internal logic was not good and this
is not a true tax-reform bill.
Only in Washington could Republicans borrow $2 trillion from China to
cut taxes for big corporations and still need to hike taxes on New
Jersey families and families like New Jersey families in other States
in order to pay for it. That is exactly what Republicans did by capping
the State and local tax deduction and hitting our middle class with an
even higher property tax burden.
But we New Jerseyans aren't known for being pushovers. That is why,
last December, several mayors across our State allowed homeowners to
prepay their 2018 property taxes before Trump's harmful policies took
effect in January. That is why, back in May, I proudly joined Governor
Phil Murphy as he signed a new law to shield homeowners from higher
property tax burdens.
Under this program, homeowners who contribute to a State-approved
charity may receive a property tax credit worth up to 85 percent of
those donations. In this regard, New Jersey didn't reinvent the wheel
with this new law. It was modeled after existing tax credit programs on
the books for at least 32 other States. All of those here in red offer
tax credits to residents who contribute to certain charities.
In our case, we are not shielding families from higher property tax
bills but making sure New Jersey has the resources needed to keep cops
on the beat, firefighters on the job, and New Jersey schools on the
cutting edge.
The IRS has consistently respected these programs. Back in 2011, the
Chief Counsel of the IRS released an advisory memo clarifying that
State tax credits do not--I repeat--do not prohibit taxpayers from
writing off the full value of their charitable donations from their
Federal taxes. In other words, getting a tax credit doesn't mean you
made more money, and thus you shouldn't be taxed more as a result. That
is what is happening across the land in all of these 32 States.
It is not just the IRS that upheld these programs. This issue has
gone before the U.S. Supreme Court, and the Supreme Court ruled that
these tax credits are not considered things of value but rather amount
to ``the government declin[ing] to impose a tax.''
So let's review. The IRS never had a problem with the 32 other States
who had charitable deduction tax credit programs on the books--never.
The IRS never had a problem; that is, until New Jersey and States like
New Jersey decided to create one--until New Jersey and similar States
decided to create one. As soon as New Jersey and other States
established this perfectly legal tax credit program, the IRS suddenly
decided to reverse course. All of a sudden, they are willing to go to
court over this and challenge a well-established precedent.
Apparently, the Trump administration is so intent on sticking it to
New Jersey and States like New Jersey that they are willing to
jeopardize all of these programs in all of these States--all of them,
all of them.
Let me give a few examples of these programs that will be endangered
if Mr. Rettig fails to stand up for the rights of States. In Alabama,
there is a program that offers families a 100-percent tax credit for
contributing to private school scholarship funds. In Missouri, there
are several very worthy programs that offer tax credits for
contributions--one for shelters for domestic abuse survivors, another
for donations for campuses focused on the STEM fields. There are tax
credits for donating to State colleges in Indiana, water conservation
in Colorado, and public road construction in Arkansas. There are
similar programs in Missouri, Kansas, and Georgia.
I could go on and on, but here is the bottom line: At least 30 State
tax credit programs are now in jeopardy because the Trump
administration changed the rules in the middle of the game--changed
their previous counsel's decision, changed course from what the Supreme
Court said.
I have heard a lot of lip service from my colleagues about States'
rights over the years. They are all about States' rights--until it
comes to States like New Jersey and their rights.
Some say that President Trump and the Republican Congress capped the
property tax deduction because they have it out for so-called blue
States. But at the end of the day, the States most affected by this
foolish policy aren't red States or blue States; they are America's
blue-chip States, America's innovation States, America's economic
powerhouse States.
New Jersey didn't become an economic powerhouse by accident. Our
success wasn't born overnight. It is the result of the priorities we
set and the investments we make.
Take it from Kathryn, a constituent of mine from New Jersey. She
wrote to me after she saw what happened with the tax bill:
My husband and I pay nearly $13,000 a year in property
taxes to the town of Oradell. For this, we receive excellent
services and have reputable public schools. I pay taxes to
the state of NJ which support our infrastructure, other
cities, and necessary programs.
I am fine paying what I already pay. That being said, I
feel very strongly that it is unacceptable to be taxed on
taxes that I already pay.
Kathryn is right. She is right. It is no coincidence that New Jersey
claims more in State and local tax deductions than other States in the
Nation and also has some of the best schools in the Nation. We pay for
them. Yet, with the Trump tax scam, Republicans want us to pay for them
twice.
The Federal income tax system has historically allowed taxpayers to
deduct the taxes they pay at the local level. This is one of the
longest standing deductions in the Nation's history--to deduct from
their Federal returns--and for good reasons. States
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that invest in education, infrastructure, and opportunity for all have
higher per capita incomes, enjoy more prosperity, and rely less on
Federal handouts. These are the types of investments that make New
Jersey a great place to live, work, and raise a family.
You don't have to take my word for it. Earlier this year, Save the
Children named New Jersey the No. 1 place in America to raise a child.
I want it to stay that way.
In New Jersey, we invest in public schools because we know that they
prepare students to compete in high-paying fields like biotechnology,
sustainable agriculture, and medicine. In New Jersey, we invest in
public health and law enforcement because we know we are all better off
when our streets are safe and our families are healthy. In New Jersey,
we invest in mass transit and infrastructure because we know it
connects workers with opportunities to climb the income ladder.
We do these things for a reason. New Jersey is stronger when we open
the doors of opportunity for as many people as possible. We see it
here: State investments, better education, higher wages, a stronger
middle class, top three States by SALT deduction. They also do
incredibly well in educational achievement and income. There is a clear
correlation.
But the Republican Congress has put these job-creating, economy-
growing, opportunity-expanding investments in the crosshairs by gutting
the property tax deduction. In the process, they are threatening the
validity of legitimate programs operating in 30 other States.
The Federal Tax Code has always worked to ensure that Americans don't
pay taxes twice on their hard-earned money; that was until Donald Trump
came along. Then Republicans abandoned their so-called fiscal
conservatism, and together they passed a tax scam that subjects
hundreds of thousands of New Jerseyans, and many more in other States,
to double taxation.
For as long as I can remember, I have heard my Republican colleagues
preach about protecting, not punishing, success. But the Republican tax
law is a tax on New Jersey's success, slamming hundreds of thousands of
families with higher property tax burdens, not in a few years, not in a
decade--no, right now--now. It is not fair, and it is not right. It is
wrong to force New Jersey families to pay more just so that big
corporations and wealthy CEOs can pay less.
In the end, I can't in good conscience support this nominee. He will
not protect New Jersey's middle class--and those in other States like
it--from higher property tax bills. He will not respect perfectly legal
State-based programs like those 32 other States that offer tax credits
in return for contributions to nonprofits that do critical work in
their communities. He will be nothing more than a Republican
rubberstamp for President Trump's politically motivated tax policies.
The last thing we need is an IRS that is politically weaponized.
Whether you want to take a stand against double taxation or you don't
agree with the Trump administration's politically motivated assault on
the rights of States to set their own tax policies, I hope Republicans
and Democrats alike will join me in voting down this nomination.
Taxpayers in New Jersey and across the Nation deserve better than tax
policies that knock the knees out from underneath them and an IRS
Commissioner who kicks them while they are down.
I yield the floor.
The PRESIDING OFFICER. The Senator from Mississippi.
Mr. WICKER. Mr. President, I intend to address the Senate on the
topic of Bosnia and Herzegovina, but I want to observe that the
distinguished leader may be coming in just a moment for a unanimous
consent request. If he does, I will be happy to yield during the middle
of my remarks so he can take care of that item of business.