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Lipinski: GOP Tax Bill is Bad for the Middle Class and the Nation (November 16, 2017)

Congressman Dan Lipinski (IL-3) delivered the following remarks on the House floor last night during debate on H.R. 1, the Republican tax bill:

“A constant refrain I hear from my constituents is, ‘Stop raising my taxes!’  While federal taxes have not been going up on the middle class, other taxes have hit them hard and their take-home pay continues to suffer.  Clearly the middle class needs help, and real tax reform could help accomplish that.  It is far past time that we reform the tax code by making it simpler, closing loopholes, and lowering rates.  However, the current Republican-led tax bill is not the answer for the middle class.

“It didn’t have to be this way.  Throughout the year, I have heard from Republican lawmakers and from the White House about the benefits of creating a bipartisan tax reform plan.  As policy co-chair of the Blue Dog Coalition representing moderate Democrats, I coordinated the Coalition’s creation of key principles needed for a permanent, bipartisan tax reform bill.  Our reform principles called for the following:

1.      Tax reform must be passed through an open, bipartisan process and regular order.

2.      Tax reform must be credibly revenue neutral and should not use unrealistic economic-growth projections to offset the costs of tax reform or tax relief.

3.      American companies need a more competitive corporate tax rate and structure in order to maintain their ability to compete globally, and Congress must also account for the needs of small businesses when it comes to setting tax rates.

4.      Most importantly, the middle class must be the priority for tax relief.

5.      Congress should also use tax reform to address the funding challenges for the Highway Trust Fund.

“Taken together, I think most people would say this is a good set of principles.  But disappointingly, the GOP tax bill fails to meet these criteria.

“First, this bill is not bipartisan.  The Blue Dogs met with the Treasury Secretary and the Director of the National Economic Council, as well as the Committee Chairman.  We were told that they wanted this to be a bipartisan bill, but the bill was passed in committee less than a week after it was introduced and less than a day after final changes were made by the chairman.  The committee voted down every Democratic amendment on a party line vote, and now, one week later, this bill is being brought to the floor with no amendments allowed.  This is not bipartisan, and it’s tough to argue this is an open process of regular order. 

“But what about the contents of the bill?

“First, it is not revenue neutral.  We were told that this bill would be revenue neutral, using dynamic scoring when considering additional revenue that will be raised from increased economic growth because of the tax cuts.  Some dismiss dynamic scoring out of hand, but I believe that it can be legitimate.  But as we are about to vote on the bill, even the idea of having an official dynamic score of this bill before voting on it seems to have disappeared. 

“What we do know is that the non-partisan Joint Committee on Taxation says it will add nearly $1.5 trillion to our debt, which is currently $20 trillion and growing.  The one rough dynamic score that has been produced by the right-leaning Tax Foundation shows that this bill, as originally introduced, would still add over $1 trillion to our debt.  This new debt would not even be used to put the needs of middle-class Americans first. 

“The bulk of the benefits from the bill favor businesses and corporations rather than individual taxpayers.  The Tax Policy Center estimates that families would only get the benefit of about one-third of the tax cuts offered by the bill, with corporations and other businesses receiving twice as much.  This is because of the unbalanced way in which business tax rates are lowered, with relatively few cuts to corporate deductions. 

“The bill also eliminates numerous deductions that middle-class Americans use to make ends meet as they deal with growing expenses for healthcare, education, and childcare.  Of course, true tax reform can alter some of these provisions in order to simplify the tax code, but we must make sure that at the end of the day, middle-class families’ pocketbooks are not harmed by the changes we make.

“While many tout that this bill doubles the standard deduction, it is important to understand that it also eliminates personal exemptions.  This means that families with children or other dependents may be worse off. 

“There are other examples of deductions lost that will negatively impact middle-class families.  One is the medical expense deduction, which means that families with very high expenses, such as for long-term care or for extraordinary illnesses, will face higher tax bills.  The bill also makes student loan borrowers pay new taxes on the loan interest they pay. 

“One particularly contentious part of this bill is that it severely curtails the deduction individual taxpayers take for state and local taxes paid.  Supporters of this idea claim that this deduction is an unfair subsidy from the federal government to high tax cities and states.  My own state of Illinois, where taxpayers will get hit hard, already gets back only about 79 cents from the federal government for every dollar we contribute in taxes.  Limiting the state and local tax deduction means this discrepancy will only grow.

“Another particularly troubling aspect of this bill is that while it adds some new incentives to make it easier to raise children and support families, these incentives expire after five years.  Meanwhile, provisions that primarily benefit high-income taxpayers and corporations are made permanent.

“When analyzed as a whole, the non-partisan Tax Policy Center predicts that any tax relief some middle-class families might receive from this bill will disappear over time.  Yet families in the top 1% and even in the top 0.1% will see not only immediate relief, but even larger returns in the long run.

“Finally, this bill does nothing to address a major tax issue our nation faces, the fact that the Highway Trust Fund that pays for federal road and transit projects is taking more and more money every year out of general revenue.  Now is the time to fix this problem by instituting new user fees that go into the trust fund.  This would not only mean billions of dollars will no longer be taken out of income tax revenue to pay for roads, but it will also make it possible to finally start that infrastructure program that the President has been promising and America so desperately needs.

“Once again, the House is choosing to pursue a needlessly partisan, closed process for major legislation with wide-ranging impacts and enormous price tags.  There is room for bipartisan compromise on tax reform that benefits middle-class families and small businesses, while helping our companies compete on the global stage.  This current tax bill is not it.  I urge my colleagues to change course and pursue truly bipartisan reform so that we do well by the American families and businesses that need Congress to act on this critical issue.”