RATE Coalition Statement on Senate Passage of the Tax Cuts and Jobs Act

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STATEMENT on Senate Tax Bill Passage

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BEFORE THE VOTE

CBO
preliminary estimate of deficit effect, 2018-2027: $1.448 trillion [PDF]

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The Concord Coalition
December 1, 2017
Media Contact: Steve Winn

Senate Tax Bill: Too Much Debt, Too Many Gimmicks 

WASHINGTON -- The Concord Coalition said today that the tax legislation considered by the Senate is based on flawed economics, reckless fiscal policy and blatant budget gimmickry. It would worsen the nation’s fiscal outlook and introduce new complexities in the tax code at a time when policymakers should be aiming to lower deficits and make the tax code more efficient.

“This is the wrong bill at the wrong time,” said Robert L. Bixby, Concord’s executive director. “Like its counterpart in the House, the Senate’s tax bill is based on the flawed premise that another trillion dollars or more of new debt is needed to spur higher economic growth.”

He added: “The economy does not need short-term stimulus from a major tax cut at this time. And over the long term, adding more debt to the already unsustainable path of current fiscal policies would act as a restraint on future growth. Revenue-neutral tax reform would not have this problem.”

Projections from the Joint Committee on Taxation confirmed Thursday that the bill does not come close to “paying for itself,” even assuming the tax cuts’ impact on economic growth. This is in line with the thinking of most mainstream economists and nonpartisan budget experts.

“In case there were any remaining doubts, the projections of the Joint Committee on Taxation confirm that this tax legislation will add to the federal debt, which is already quite high by historical standards and is expected to rise rapidly in the coming decade,” Bixby said. “Rather than addressing the nation’s difficult challenges, the tax legislation will make those challenges even harder to deal with.”

In addition, Concord reiterated its concerns about the Senate’s hasty process and the use of budgetary gimmicks to hide the size of the additional borrowing that the tax bill will require.  The bill has been rushed through so quickly that it is difficult if not impossible for lawmakers and the public to understand everything that is in it. That makes it even harder to see all the gimmicks that threaten even higher deficits.  

The House and Senate legislation both rely on various gimmicks to understate the fiscal damage they would do. For example, certain provisions would theoretically be phased out at some point, but some supporters of the bills have made clear that they will want those provisions to eventually be extended, adding hundreds of billions of dollars in costs.

“We need to make sure that tax reform improves long-term economic growth, raises enough revenue to prevent the debt from ballooning, and does not hide costs with gimmicks,” Bixby said. “The current plans fail all those tests.”

“The Senate and House bills have some significant differences that need to be reconciled,” Bixby said. “Lawmakers should use this opportunity to reconsider what’s being done and look for a more responsible approach to overhauling the tax code.”

A copy of this press release can be found here.       

The Concord Coalition is a nonpartisan, grassroots organization dedicated to fiscal responsibility. Since 1992, Concord has worked to educate the public about the causes and consequences of the federal deficit and debt, and to develop realistic solutions for sustainable budgets. For more fiscal news and analysis, visit concordcoalition.org and follow us on Twitter: @ConcordC

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WASHINGTON, D.C. – Senate Majority Leader Mitch McConnell (R-KY) and House Speaker Paul Ryan (R-WI) released the following statement on misleading Democrat claims that tax reform would lead to cuts in vital programs:

“Critics of tax reform are claiming the legislation would lead to massive, across-the-board spending cuts in vital programs—including a four 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.”

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Senate Minority Leader Chuck Schumer
November 30, 2017

Schumer Floor Remarks on the Republican Tax Bill

Washington, D.C. – U.S. Senator Chuck Schumer today spoke on the Senate floor regarding the secrecy behind the creation of the  Republican tax bill and the future consequences of the bill on the middle class. Below are his remarks which can also be viewed here:

Mr. President, later tonight or in the early hours of tomorrow morning, we will vote on the final passage of the Republican tax bill.

I would like to make two main points about the Republican tax bill in my speech this morning: first on process, and second, on the substance.

From the very beginning, the Republican tax bill has made a mockery, a mockery, of the legislative process.                           

Republican leaders disappeared behind closed doors and negotiated a framework for a tax bill, without a shred of Democratic input. Then Republican leaders wrote a bill, behind closed doors, without a shred of Democratic input. Republicans brought that bill through a markup in the Finance Committee, where it underwent the scrutiny of ONE – I repeat, ONE – expert witness. That’s it. Finance Committee Democrats offered sixty amendments to the bill but Republicans rejected every single one. Committee Republicans made it crystal clear they were not interested in bipartisanship.

Now that bill is before us on the floor. Even further, significant changes likely will be made by the Majority Leader today, he will get huge changes in a bill today and try to vote on it tonight… and this is tax, one of the most complicated issues before us. These changes and the way the Majority Leader is handling this make it impossible for any independent analyst to get a good look at the bill and how it would impact our country.

From the one-sidedness with which it was drafted to the reckless haste with which it was considered – the Republican tax bill has failed to go through anything, anything, resembling the normal legislative process.

Before the night is out, I hope all of my Republican friends ask themselves if this is the way they want history to remember how the first major tax bill was passed in over 30 years. I hope they ask themselves if this process has lived up to the fine traditions of this body, as they were eloquently described by my friends the Senators from Arizona – both senior and junior.

The American people are clamoring for us to work together. They believe our politics is broken. They think our politics is starved of common sense and compromise, and it is. The way this tax bill is being rammed through is exactly why the American people our politics is so broken.

Now let me address the substance of this bill.

Without exaggeration, I believe that if this bill passes, it will be remembered as one of the worst pieces of public policy in decades. A vote for passage will be a vote my Republican friends will regret.

At a time of immense inequality, the Republican tax bill makes life easier on the well-off and eventually makes life more difficult on working Americans, exacerbating one of the most pressing problems we face as a nation -- the yawning gap between the rich and everyone else.

Corporations enjoying record profits get a massive, permanent tax break while over 60% of the middle class will end up paying higher taxes because their benefits expire.

Healthcare premiums will go up 10%, and 13 million fewer Americans will end up having health insurance as a result of repealing the individual mandate.

The CBO said yesterday that even if we passed the Murray-Alexander bill into law, it would have little to no impact on either of those two things.

And when all is said and done, the tax bill will balloon the deficit by at least $1.5 trillion: adding to the debt burden borne by the next generation and diminishing our ability to support the military and invest in our schools, our roads, and in scientific research. Let me just repeat that: the increased deficits caused by this bill will cannibalize support from everything we know is essential to economic growth and a strong middle class, including support for our men and women in uniform.

Ultimately, this deficit-busting tax cut will endanger Social Security, Medicare, and Medicaid, as my friend the Republican Senator from Florida admitted yesterday (when he said higher deficits will mean “instituting changes to Social Security and Medicare for the future”). 

So a win today for the GOP would be a very temporary one. It would be enjoyed almost exclusively in the political media that measures who’s up today and down tomorrow but fails to grasp the bigger picture.

It won’t be a long-term win politically; recent polling has shown this tax bill is less popular than previous tax hikes. Let me say that again, recent polling has shown that this tax bill is less popular than previous tax hikes. But more importantly, it won’t be a win out in the country.  It won’t be a win for the 13 million middle-class families who pay higher taxes in 2019 or the 87 million middle-class families who pay higher taxes by 2027. It won’t be a win for the single mom in the suburbs, who, no longer able to deduct state and local taxes, will find it that much harder to send her daughter to college. It won’t be a win for the 13 million Americans who will go without health insurance and everyone else who will face 10 percent higher premiums next year.

These hardworking Americans have waited years for their Congress to pass legislation to make things just a little bit easier on them. They’ve watched an economy that for decades rewarded hard work and fair play turn against them, producing more wealth for the already wealthy, but less pay and less work for workers. For so many, this rigged economy that benefits too few and leaves too many behind is a source of frustration and anger and despair.

Donald Trump, in his campaign for the presidency, spoke to that anger. And yet, his tax bill, the Republican tax bill, is a betrayal of the working men and women who feel that anger and would make worse all of the problems that led to it in the first place.

We can do a better job on tax reform, but only if we work together. The way this Congress has careened from partisan bill to partisan bill, with no attempt even made at bipartisanship – has brought shame on this body and reinforced the skepticism that so many Americans have about our politics.

Today, my Republican friends have an opportunity to turn back from this partisan bill and this partisan process. If they do, I guarantee that they will find a Democratic Leader, Democratic Senate Caucus, and a Democratic party that’s eager to work with them on the kind of tax reform our country deserves.

We won’t sit in our corner and make unreasonable demands. As many of my colleagues know, there is a lot of sincere intent on this side of the aisle to do tax reform. I’ve worked with Sen. Hatch, I’ve worked with Sen. Portman, many others of my caucus have worked with Republicans on tax reform ideas for years. We can certainly put together a bill acceptable to both parties that reduces burdens on the middle class, makes our economy more competitive, creates jobs here at home, and do it in a deficit-neutral way.

This bill doesn’t do those things, but we can write a bill that does – together.

I say let’s give it a shot. If my Republican friends close the door on their partisan tax bill tonight, they will find an open door for bipartisan tax reform tomorrow.                       

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Americans Against Double Taxation
November 29, 2017

Coalition Letter To Senate: Maintain Full SALT Deduction

Dear Senator:

We, the undersigned organizations, urge you to maintain the full deduction for state and local taxes (SALT) as part of tax reform legislation. We ask you to support all amendments on the floor to fully restore SALT, if offered. Alternatively, if the full SALT deduction is not preserved in Senate’s tax reform legislation, then we must urge you to vote no on this legislation on final passage as the only means to preserve this longstanding federal policy vital to middle class taxpayers, home values, state and local governments, and the public services in our communities.

Below we outline a number of the concerns we have with the Senate’s proposal to eliminate the entire SALT deduction as part of tax reform. Importantly, none of these concerns would be addressed by restoring the property tax deduction with a $10,000 cap or any changes to the bill that partially eliminate SALT:

• It is fundamentally unfair to eliminate the SALT deduction in whole or part for middle class families while fully preserving this same deduction for corporate tax filers. This unprecedented and disparate treatment creates an unwarranted double standard, giving preference to companies organized to generate profit over individuals and families who make mandatory tax payments to support public services benefiting all citizens. Moreover, the fact that corporations get a significant tax cut under the Senate plan while up to 50% of individual and family filers will get a tax hike, according to the Tax Policy Center, makes this double standard even more troubling.
• Eliminating SALT would result in double taxation of individuals and families for the first time since the creation of the federal tax system.
• Moody’s, the National Association of Realtors, and the Homebuilders all have warned that changes in SALT and the standard deduction also could reduce home values by up to 10%. For many taxpayers, homes represent their largest investment.
• Elimination of SALT also could harm communities depending on state and local tax revenues to support infrastructure, public safety, public schools, and other vital public services that make them safe, enjoyable, and competitive. Moody’s has said eliminating SALT would be a “credit negative for the public finance sector by raising the effective cost of state and local taxes for many taxpayers and reducing disposable income.” Fitch similarly warned the partial elimination of SALT could adversely affect state and local finance decisions. These same concerns have been reported in media coverage quoting a diverse range of state and local officials in Pataskala, Ohio, Conroe, Texas, and San Diego, California, as well as public safety organizations like the Fraternal Order of Police and the National Association of Police Organizations.
• Polls show that voters strongly support retaining the SALT deduction and view the Senate bill with its double standard as benefiting the wealthy over the middle class. Quinnipiac reported that the elimination of SALT was the most unpopular provision among those tested in the tax reform plan, by almost 2-1, 59-30%. Recently, Hart research found support for SALT and opposition to the tax plan is consistent across many so-called “low tax” states, including Maine, Arizona, and Tennessee.
• Finally, adding the House capped property tax deduction to the Senate legislation provides little benefit. A recent analysis by the Institute on Taxation and Economic Policy (ITEP) found 71% of taxpayers who currently claim property tax deductions – and 80% of middle class taxpayers – will lose this deduction entirely under the property tax cap plan. In contrast, wealthy taxpayers would be the biggest winners from the House proposal, as only 13% of those itemizing today would lose their deduction. In short, the property tax deduction effectively would be taken away from nearly 29 million homeowners – almost exclusively in the middle class – under the House or Senate plans, even with the capped property tax deduction.

The deduction for state and local taxes was one of the six deductions allowed under the original tax code when it was enacted in 1913. The full or partial repeal of SALT would upset the carefully balanced fiscal federalism that has existed since the creation of the tax code and expose millions of middle class families to double taxation.

We urge you to preserve deductibility of state and local taxes as an essential, original and vital part of our nation’s tax code, and to oppose the Senate tax reform legislation if SALT is not fully restored.

Thank you.

Sincerely,

AASA, The School Superintendents Association

American Federation of State, County and Municipal Employees

American Federation of Teachers

Association of Educational Service Agencies

Association of School Business Officials, International

Government Finance Officers Association

Independent Sector

International Association of Fire Fighters

International City/County Management Association

National Association of Counties

National Association of Police Organizations

National Association of Realtors

National Council of Nonprofits

National Education Association

National League of Cities

National Rural Education Advocacy Consortium

National Rural Education Association

National School Boards Association

National Sheriffs’ Association

Service Employees International Union

The County of Los Angeles

U.S. Conference of Mayors

CC: U.S. Treasury Secretary Steven Mnuchin
U.S. Senate Majority Leader Mitch McConnell
U.S. Senate Minority Leader Chuck Schumer
U.S. House Speaker Paul Ryan
U.S. House Minority Leader Nancy Pelosi
U.S. House Ways and Means Committee Members
U.S. Senate Finance Committee Members
National Economic Council Chair Gary Cohn

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ACORE