No Taxpayer Funding for Abortion and Abortion Insurance Full Disclosure

Floor Speech

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Mr. GRASSLEY. Mr. President, tax filing season is just around the corner. This has never been anyone's favorite time of the year, paying taxes, but the uncertainty created by the current partial government shutdown has understandably created a bit more angst than in a usual tax filing season.

The Treasury Department and IRS have been proactive in taking steps to minimize the burden of the shutdown on taxpayers. They recently announced that tax season will start as planned, on January 28. The IRS has confirmed that taxpayers can expect refunds to be sent out as usual should this shutdown drag on. Of course, this is the right conclusion, legally, and the right call for the taxpayers, as I had an opportunity to tell IRS Commissioner Rettig when we spoke recently.

Congress has explicitly provided for a permanent appropriation for the IRS to pay tax refunds. This makes common sense. A tax refund represents the taxpayer's money--not Congress's, not the government's but the taxpayers'--despite what some people in Congress seem to think; that this money belongs to the government. It should be returned then in a timely fashion and, thank God for their decision, that is going to be the case.

With around 75 percent of individuals receiving a tax refund on an annual basis, many have come to look to their refund to make important purchases, whether that is to replace an old water heater, make a downpayment on a reliable vehicle to get them to work, or just to make ends meet generally. It would be wrong for the government to impose undue financial strains on families across the country because Congress and the President can't get their act together.

As we continue to work through our differences, the least we can do is return to taxpayers their own money.

This tax season, of course, is a little different, not only because of the shutdown but also because it is the first tax filing season under the tax reforms and tax cuts enacted in the Tax Cuts and Jobs Act. A lot of work has gone on to get us here. Treasury and the IRS have been working diligently and swiftly to ensure taxpayers have the information they need. In a little over a year, they have put out 16 proposed regulations, 2 final regulations, 45 notices, 21 revenue procedures, and updated countless forms, publications, and other guidance--all of this geared toward implementing the law and addressing taxpayer questions.

Right out of the gate, Treasury and IRS went to work updating the annual withholding tables so taxpayers could immediately begin seeing the benefits of lower taxes in their paychecks. Of course, whether a taxpayer had less or more withheld from their paycheck is not the final word on whether one received a tax cut.

Also, due to changes in withholding, a smaller or larger refund than usual may not tell the whole story. I encourage taxpayers to compare their 2019 tax return with that of the previous year to see the difference. At the end of the day, the vast majority of taxpayers will see that less of their hard-earned money is going to the government.

A chief priority for the new withholding tables was, of course, accuracy. Extensive analysis was done to help taxpayers get the right amount withheld from their paycheck--not too much, not too little. However, as we all know, no withholding table will ever be perfect. Every taxpayer may be affected a little differently under the new law based on their personal circumstances. The IRS continues to consider whether future improvements to the withholding structure may be necessary, which I support and will be monitoring as chairman of the Finance Committee.

The IRS has also embarked on an extensive campaign to alert taxpayers to check and update their withholding. This included establishing an online withholding calculator to help taxpayers determine what, if any, adjustments to their withholding may be necessary.

That said, there are still going to be some taxpayers who may discover that they were underwithheld due to changes in the law and owe taxes at the end of the year. A subset of these taxpayers could be subject to a penalty for underpayment.

The ranking member of the Finance Committee, Senator Wyden, raised this concern in a letter to Commissioner Rettig on January 3, requesting that penalty relief be granted. I generally agree with the ranking member and have encouraged the IRS to be lenient on penalties, especially with this first time through a filing season under the new tax law. If a taxpayer has underwithheld as a result of the changes in the law, and not through the fault of their own, the IRS should consider what actions the Agency can take to provide penalty relief, but the issue of underwithholding due to the passage of tax reform should not be exaggerated. Yes, as the ranking member claims in his letter to the Commissioner, it is estimated that as many as 30 million taxpayers may have had taxes underwithheld from their paychecks, but what hasn't been said is that 30 million is actually only about a 3- percentage point increase from how many taxpayers would be underwithheld under the old law.

Moreover, just because a taxpayer was underwithheld during the year does not automatically mean they will be subject to a penalty tax. Safe harbors have long been in place to protect taxpayers whose withholding is slightly off from being penalized.

It is quite possible that some issues will arise this filing season that we did not anticipate and will need to be fixed as we go forward. We already identified a number of those issues, which I am hoping my Democratic colleagues will allow us to fix to further help as many more constituents as possible.

That doesn't detract from the fact that we have delivered real tax relief to middle-income families, small business owners, and the family farmer, nor does it undermine the fact that we modernized our outdated international tax system and improved America's business competitiveness in the global economy. Of course, that is going to benefit the American worker.

These efforts have contributed to a strong and growing economy. The unemployment rate is at a half century low. Wages are rising at the fastest rate in nearly a decade. Workers, employers, and small business owners are all more optimistic than ever.

Unfortunately, I hear increasing calls from the new House majority pledging to erase the progress made with the tax cuts and reforms that we enacted 13 months ago. At least one new Democratic Member has suggested bringing back top tax rates as high as 70 percent to pay for a wish list of far-left, Big Government programs. Such a confiscatory tax rate targeted at a relatively small number of wealthy taxpayers would barely make a dent in the cost of programs they wish to implement.

Policymakers across the globe abandoned such punitive tax rates over the past several decades for their negative effect on economic growth, investment, and incentives to work. While tax rates at 70 percent or higher may have been fairly common in the 1960s, today, not a single OECD country boasts such high rates. How soon people forget about the prolonged economic stagnation and high unemployment of the 1970s when we last had tax rates as high as 70 percent.

I am going to detract here to show a chart. How soon we forget that just raising tax rates doesn't automatically bring in more money. For the benefit of my colleagues and for the benefit of the public watching on C-SPAN, I should have had this blown up. I doubt it is going to do much good for me to just hold up a small sheet of paper.

This goes back to the year 1955, ending in 2017. The blue line shows the marginal tax rates over a period of about 60 years. You can see high tax rates in the 1960s, going down, up, generally down, generally down, staying pretty low in recent years. You can see that the red line is the amount of money that comes in from taxes, whether you have high tax rates or low tax rates, which kind of tells me that the taxpayers are a lot smarter than the Congress of the United States because when you talk about high marginal tax rates, they want you to believe more money is going to come in. They are probably going to take the position that if you lower tax rates, less money is going to come in. But you see, in the 1950s top rate was 90 percent. Can you imagine Americans being dumb enough to work hard to only keep 10 percent of their income? No. What you do is you change people's behavior. They decide, I am going to work only so much. Why should I work harder and give more money to the Federal Government? You see, higher tax rates don't do what a lot of people want you to believe they are going to do.

I would like to give a little history on this, because you kind of think that if we have lower marginal tax rates, and Republicans are the ones who want lower tax rates, that you would give Republicans a lot of credit for reducing these marginal tax rates. I can remember the work of Senator Bill Bradley of New Jersey--probably at least a moderate Democrat. He was probably as responsible as anybody in the 1980s for reducing these marginal tax rates, because Republicans didn't have guts enough to do it, and we might not be where we are right now. So it is not just Republican thinking that got these marginal tax rates down. It is not just Republican thinking that has kept this red line where it has been for 60 years, at approximately 16 to 20 percent of gross national product--the amount of the economy that is coming into the Federal Government.

I hope the talk of such confiscatory taxation truly is a talk of a few rogue Members and not representative of things to come. I wish to think there will be opportunities for us to work together in a bipartisan way.

I am firmly in the camp that the tax reform and tax cuts enacted by the last Congress represent important revisions to our tax laws, but I also understand that no major piece of legislation is entirely perfect. To the extent there is legitimate interest in improving tax laws, as chairman of the Finance Committee, I am going to be all ears.

When it comes to making modifications to tax reform, our first order of business should be focused on examining how the law affects individuals, families, and the businesses in our States that provide the jobs and benefits they rely on. When necessary, we should work together to take action and ensure that the law is fulfilling its potential. A key part of this discussion should be enacting technical corrections to the tax law--revisions to ensure that the bill does what Members thought it did when they voted on it. Some of these are related to just poor drafting, honest mistakes that were made.

I also hope that there will be plenty of opportunity to work on a bipartisan basis on tax issues involving everything from education, to renewable and alternative energy, to consumer-directed healthcare options.

However, I fear opportunities to work together could be put at risk should my colleagues become fixated on tearing apart tax reform, hiking taxes, and, of course, going after the President's tax returns.

I want to put my Democratic colleagues on notice that I have no intention of undoing structural changes implemented as part of the tax reform. This would include the lower tax rates and family benefits, such as the increased child tax credit and standard deductions.

I am also not interested in eliminating the cap on the deductibility of State and local taxes, backtracking on our move toward a more territorial tax system, or raising tax rates on passthrough business owners and farmers or corporations, all of which provide critical jobs and contribute to economic growth across the Nation.

For the first time in probably about 30 years, our businesses are competitive with the rest of the world. When we have a 35-percent tax rate--as we did for decades--on corporations, and the world average is about 23 percent, how can we expect American corporations to compete? We are now at 21 percent. It wasn't long after we went to 21 that we read about China maybe feeling they were uncompetitive and were going to have to lower their tax rates. Other countries are thinking about doing it as well. Just like with the Reagan tax cuts of the 1980s, the United States is plowing ahead, setting a standard for the rest of the world.

Lower tax rates, with businesses and individuals making decisions on where they earn their money, how much they are going to spend, and how much they are going to save, is a heck of a lot better than 535 Members of Congress making that decision. When we make decisions about stuff like this, they are political decisions. When most of the individual taxpayers and the corporations of America make decisions, it is strictly economic and does much more economic good.

Another one that I don't want to mess with is efforts to weaponize the authority of tax-writing committees to access tax returns for political purposes. Such an action would be unprecedented.

I am optimistic that we can continue to make progress helping Americans improve their lives by keeping more of their hard-earned wages, taking the chance of starting a new business or continuing to expand an existing one--in short, building an opportunity economy. I invite my colleagues to join me.

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