Restoring Tax Fairness for States and Localities Act
Floor Speech
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, pursuant to House Resolution 772, I call up the bill (H.R. 5377) to amend the Internal Revenue Code of 1986 to modify the limitation on deduction of State and local taxes, and for other purposes, and ask for its immediate consideration in the House.
The Clerk read the title of the bill.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, I rise in strong support of H.R. 5377, the Restoring Tax Fairness for States and Localities Act. This bill would temporarily repeal the SALT cap in order to restore fairness in our tax code and provide Congress time to develop more comprehensive tax reform.
The current cap on the State and local tax deduction reflects the sloppy and cynical nature of the 2017 Republican tax bill. This bill was hastily rammed through Congress in just 51 days without a hearing, without an opportunity to hear from State and local governments, and without an opportunity to hear from teachers or first responders.
Republicans decided from the beginning, from behind closed doors, to include a cap on SALT deductions in order to help finance their tax cuts for corporations and the rich.
In my home State, California, average SALT deductions are $20,448. A total of 6.5 million California families, or 35.6 percent of tax filers, claimed the deduction in 2017.
The double taxation of earnings people have already paid in State and local taxes inhibit State and local governments' ability to fund even the most vital of programs, including emergency services and public education.
H.R. 5377 fixes this problem by restoring the longstanding tax precedent that protects State and local governments' ability to raise revenue to fund these services. And this fix doesn't add a single dime to the deficit.
Furthermore, this bill provides tax relief to the middle-class public servants left behind by the Republican tax bill by doubling the out-of- pocket deduction for teachers, classroom expenses, and creating a new deduction for expenses for first responders. In 2017, 354,990 teachers in California claimed the educator expense deduction, and they will all get double under this bill.
The short-sightedness of the SALT cap had further consequences for middle-class taxpayers in high-tax States: Capping the SALT deduction diminished the incentive for middle-class taxpayers to claim tax benefits that encourage homeownership and charitable deductions. By limiting the SALT deduction and raising the standard deduction, fewer middle-class taxpayers benefit from taking the mortgage interest deduction and charitable giving deductions.
Homeownership is an important way for middle-class families to build wealth. Eliminating incentives for charitable giving undermines local charities that rely on donations from middle-class members of their communities.
I think my colleagues from both sides of the aisle can agree that these are the types of behavior we should be encouraging through our tax code. This bill reverses the Republicans' actions to undercut these middle-class benefits to finance tax cuts for the wealthiest Americans.
Finally, this bill isn't about cutting taxes for high earners. This bill is about tax fairness, ensuring that taxpayers are not double- taxed by being required to pay Federal income tax on earnings they pay in State and local taxes and appeals to the core tenets of our federalist system.
In the spirit of tax fairness, this bill is responsibly offset by restoring the top marginal rate back to 39.6 percent for the highest income bracket.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I just want to point out that the irony of my friend's testimony today, my friend from Texas' testimony, shouldn't be lost on any of us.
Remember, it was the Republicans that created this problem with their tax bill. They did a tax bill that benefited corporations and the wealthiest people in the country, and then to say that somehow they are protecting regular folks is really laughable.
That tax cut cost us, in the debt, $2.3 trillion.
Madam Speaker, I yield 1 minute to the gentlewoman from New Jersey (Ms. Sherrill).
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield 1 minute to the gentleman from New York (Mr. King), a great public servant and someone who has partnered with us on a number of important issues.
Mr. KING of New York. Madam Speaker, I thank the gentleman for yielding.
Madam Speaker, I stand in strong support of this legislation. I want to commend my colleague, Congressman Suozzi, for introducing it.
Madam Speaker, I am really disappointed in my Republican colleagues. They are raising a class warfare argument. They sound like the progressive left.
The fact is, one of the reasons why cities like New York and counties like Nassau and Suffolk have had to raise their property taxes is because for 50 years, we have been subsidizing other States.
Seventy percent to 80 percent of the money we send to the Federal Government comes back to us, the rest goes to other States. So during all these years when they have been able to develop using our money, we have had to raise local taxes, and now they are turning it into class warfare.
These aren't millionaires. The people in my district who are getting screwed by this are not millionaires. They are cops, they are firefighters, construction workers, the people who answered the call on 9/11.
What they are doing is undermining the middle class.
What is middle class in other States may be different from mine.
The reason we are high is because of the fact we have had to subsidize all the rest of them for all these years, sort of like when politicians come to New York to raise their money and then go back home and vote against us.
I will say that the strongest advocate for this--when this was first raised in 1986 in leading to the defeat of the attempt to take away SALT--was Donald Trump. He said the States that work the hardest would get hurt the most because of this.
Now, also let me just say--and I will end on this--that we have subsidized other States long enough. We are asking for fairness. It is wrong for conservatives to be talking about having a tax on a tax.
Madam Speaker, I urge passage of this bill to have some equity in the tax code.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I thank the gentleman for pointing out that our bill is paid for, unlike the TCJA, and the pay- for comes from the wealthiest earners.
Madam Speaker, I yield 1 minute to the gentleman from Connecticut (Mr. Larson), a great member of the Ways and Means Committee.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield 1 minute to the gentleman from Oregon (Mr. Blumenauer).
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield 1 minute to the gentleman from New Jersey (Mr. Pascrell), a leader and a very vocal advocate of this bill.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield 1 minute to the gentleman from Illinois (Mr. Danny K. Davis), a great member of our Ways and Means Committee.
Mr. DANNY K. DAVIS of Illinois. Madam Speaker, my congressional district is one of the most affected congressional districts in the Nation, ranking 38 among districts in highest average SALT deductions. Over 105,000 households benefited from SALT in my district in 2017, with an average benefit of $19,400. Then the Republican tax law increased taxes on millions of Illinoisans and tens of millions of Americans.
The SALT deduction is a bedrock part of the tax code since its inception. It has been around since the beginning of time.
If it ain't broke, don't fix it. We need to restore it and make sure that citizens get the benefit in their communities from their State government and then be able to use it as a part of their income tax.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield 1 minute to the gentleman from New York (Mr. Higgins), a treasured member of the Ways and Means Committee.
Mr. HIGGINS of New York. Madam Speaker, I thank the gentleman for yielding.
Madam Speaker, there are many issues with the Republican tax scheme, but the $10,000 State and local tax deduction cap is one of the most egregious. The SALT deduction has been a fixture of the United States tax code since the introduction of the Federal income tax in 1913 to acknowledge that State and local taxes are paid for services that the Federal Government does not provide.
When State and local governments lost part of that deduction, they were taxed twice, so this is an issue, which has been said many times in the committee, of tax fairness.
While this legislation was a team effort under the direction of Mike Thompson, head of the working group, the persistence of Members Bill Pascrell and Tom Suozzi, who made their persistence with clarity and insistence on fairness for their constituents, inspired all of us to fight to defend that same fairness for ours.
This is a good bill. I urge its support.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield 1 minute to the gentlewoman from California (Ms. Judy Chu), a great member of our Ways and Means Committee.
Ms. JUDY CHU of California. Madam Speaker, I rise in support of H.R. 5377, which will stop the double taxing of millions of Americans.
Restoring the ability of Americans to deduct their State and local taxes is about fairness. It is about fairness for the households in my California district, where the average SALT deduction was nearly $21,000, more than double the current $10,000 limit.
It is about fairness for the married teachers making $60,000 each, who now receive only half of the deduction of unmarried couples, effectively creating a marriage penalty.
It is about fairness for our local governments that struggle to provide important services such as education, public safety, and infrastructure.
And it is about fairness for our teachers and firefighters who get an additional deduction in this bill to help them afford work-related expenses.
The 2017 tax scam was unfair. The top 1 percent and corporations got a massive handout, while American families were left holding the bag.
A vote in support of this bill today begins to restore that fairness, and I urge my colleagues to support it.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield 1 minute to the gentleman from Illinois (Mr. Schneider), a great member of our Ways and Means Committee.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield 1 minute to the gentleman from New York (Mr. Suozzi), someone who has worked tirelessly on this. You couldn't get out of his line of sight. No matter how early I went to the gym, the gentleman would be waiting: ``We have got to do SALT.''
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield the gentleman from New York an additional 30 seconds.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, how much time do I have remaining?
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield 1 minute to the gentleman from Nevada (Mr. Horsford), a great member of our committee.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield 1 minute to the gentlewoman from California (Ms. Eshoo), a treasured member of the Ways and Means Committee.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield 1 minute to the gentleman from New York (Mr. Engel), the chairman of the Foreign Affairs Committee.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield 1 minute to gentleman from Illinois (Mr. Casten).
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield 1 minute to the gentleman from Minnesota (Mr. Phillips).
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield 1 minute to the gentlewoman from California (Ms. Porter).
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield the gentlewoman an additional 20 seconds.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I just want to remind the gentleman that, although I appreciate that he wants to get rid of the cap, you can't do it without paying for it. That is the same irresponsible behavior that the Republicans employed in their tax bill, and it cost us $2.3 trillion in our national debt.
Madam Speaker, I yield 1 minute to the gentleman from New Jersey (Mr. Gottheimer).
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield 1 minute to the gentlewoman from the State of Virginia (Ms. Wexton).
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield 1 minute to the gentlewoman from the District of Columbia (Ms. Norton).
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, may I inquire how much time I have remaining.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield 1 minute to the gentlewoman from New York (Mrs. Carolyn B. Maloney), the chair of the Committee on Oversight and Reform.
Mrs. CAROLYN B. MALONEY of New York. Madam Speaker, I thank my friend for yielding and for his great leadership.
Madam Speaker, there was a lot wrong with the 2017 Republican tax law. This week, we can fix part of it by repealing the cap on the State and local tax deduction, or SALT.
The SALT deduction allows taxpayers to deduct from their Federal taxes the State and local income property taxes they pay. Republicans capped the SALT deductions at $10,000, far, far less than many New Yorkers pay. It has caused a great deal of pain for many New Yorker families.
There is also a marriage penalty in the law. So if two people who each have $10,000 in SALT get married, their combined deduction goes from $20,000 to $10,000 when they tie the knot. That doesn't make sense.
The bill before us, H.R. 5377, introduced by my colleague, Tom Suozzi, addresses both of these issues. It lifts the cap for married couples to $20,000 in 2019. It eliminates the cap entirely for the following 2 years and pays for it by restoring the previous top marginal tax rate.
Madam Speaker, I urge my colleagues to support H.R. 5377.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, I point out that their provision is temporary as well, just not as temporary.
Madam Speaker, the National Association of Police Organizations in their letter to us wrote: ``Our members are not just first responders; they are also citizens of the communities in which they work.''
Madam Speaker, I include in the Record a letter from that organization. National Association of Police Organizations, Inc. Alexandria, Virginia, December 10, 2019. Hon. Richard Neal, Chairman, Committee on Ways and Means, House of Representatives, Washington, DC. Hon. Kevin Brady, Ranking Member, Committee on Ways and Means, House of Representatives, Washington, DC.
Dear Chairman Neal and Ranking Member Brady:
On behalf of the National Association of Police Organizations (NAPO), representing over 241,000 sworn law enforcement officers across the nation, I am writing to you to express our full support for the Restoring Tax Fairness for States and Localities Act.
Throughout this country, law enforcement officers go to work every day with one goal in mind: to keep their communities safe. In order to achieve this mission, they receive support from the communities they serve, as public safety budgets across the United States are largely drawn from state and local property, sales, and income taxes-- essential investments that give our first responders the tools they need to get the job done. The state and local tax (SALT) deduction has helped support these vital investments at the state and local level.
Our members are not just first responders; they are also citizens of the communities in which they work. The fact is that the capping of the SALT deduction is a significant tax increase for many suburban homeowners, including law enforcement officers. This puts them squarely in the range of middle-class taxpayers that the Tax Cuts and Jobs Act (Public Law No. 115-97) was supposed to help. Instead, with the SALT deduction capped at $10,000, many first responders are finding themselves on the wrong end of a tax hike. We support the two-year repeal of the cap and call on Congress to permanently repeal it, for homeowners, for our communities, and for the first responders who work every day to keep those communities safe.
Further, the Tax Cuts and Jobs Act hit law enforcement officers with another tax increase when it eliminated their ability to deduct work-related out-of-pockets expenses. Like many public servants, law enforcement officers serve our nation and our communities for modest wages and often have to pay for mandatory and necessary equipment and training out- of-pocket. These out-of-pocket costs are significant and a financial burden on officers. NAPO supports the inclusion of the Supporting America's First Responders Act, which would reinstate deductions for certain, significant work-related out-of-pocket expenses for first responders.
NAPO stands ready to support any efforts necessary to pass this legislation. Sincerely, William J. Johnson, CAE, Executive Director.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, the fact is that capping the SALT deduction is a significant tax increase for many suburban homeowners, including law enforcement officers. This puts them squarely in the range of middle-class taxpayers that the Tax Cuts and Jobs Act was supposed to help. Instead, with the SALT deduction cap at $10,000, many first responders are finding themselves on the wrong end of a tax hike.
We support the 2-year repeal of the cap and call on Congress to permanently repeal it for homeowners, for our communities, and for first responders who work every day to keep those communities safe.
Madam Speaker, I want to take a quick moment, as we head into this holiday season, to offer my appreciation to the Committee on Ways and Means tax staff. The Members who serve on the Committee on Ways and Means already know that they have the hardest working men and women on the Hill at their disposal. This bill would not have been possible without their commitment, policy expertise, dedication, and hard work.
I want to take a minute to thank my subcommittee staff director, Aruna Kalyanam; the lead staffer on the SALT deduction, Peg McGlinch; my senior counsel, Terri McField; as well as Scott La Rochelle, Arjun Ghosh, Lee Slater, and Andrew Grossman on the committee for their tremendous efforts. They do great work, and we should all be really glad that they are here. All Americans should be.
Madam Speaker, I urge all of my colleagues to support this bill, and I yield back the balance of my time.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, in the spirit of the holiday season, I accept the motion to recommit.
BREAK IN TRANSCRIPT
Mr. THOMPSON of California. Madam Speaker, pursuant to the instructions of the House in the motion to recommit, I report the bill, H.R. 5377, back to the House with an amendment.
BREAK IN TRANSCRIPT
Source