Providing for Consideration of H.R. Restoring Tax Fairness for States and Localities Act
Floor Speech
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Mr. COLE. Mr. Speaker, I want to thank my good friend, the gentlewoman from California (Mrs. Torres) for yielding me the customary 30 minutes, and I yield myself such time as I may consume.
Mr. Speaker, this is our third rule debate in what has turned out to be a pretty eventful and memorable week. Unfortunately, today's debate is on a deeply partisan and misguided tax bill.
H.R. 5377 would temporarily remove the cap on the deduction for State and local income taxes, property taxes, and sales taxes. The bill also pays for this temporary tax break for a few by permanently increasing the top marginal tax rate.
What is worse, Mr. Speaker, the permanent tax increase isn't limited to individuals but applies to small businesses, as well.
Two years ago, Congress passed and President Trump signed into law the Tax Cuts and Jobs Act. This monumental legislation not only reformed the corporate tax code to make American business more competitive and simplified the personal tax code, but it also ensured that the vast majority of Americans are getting to keep more of their hard-earned money than they did 2 years ago. Between lower tax rates, the expanded standard deduction, the child tax credit, and changes to the alternative minimum tax, the benefit of the Tax Cuts and Jobs Act are numerous and reach far and wide across the Nation.
Today, the majority is seeking to undo some of that progress and is seeking to push a temporary tax break that will only benefit a few wealthy individuals in a few States. The State and local tax deduction, or SALT deduction, as it is called, primarily benefits only a select group of individuals, generally wealthy people in the top 20 percent of income, in a few high-tax States, who own expensive homes. H.R. 5377 would allow these individuals to temporarily claim an unlimited SALT deduction for only the years 2020 and 2021.
Mr. Speaker, the benefits of this bill will overwhelmingly go to those who are already wealthy. According to the Center on Budget and Policy Priorities, the top 1 percent of households would receive 56 percent of the benefit of repealing the SALT deduction cap. Let me repeat that: The top 1 percent get 56 percent of the benefits of repealing the SALT deduction cap. The top 5 percent of households will receive over 80 percent of the benefit. Again, let me repeat that: The top 5 percent of income earners in the country are going to get 80 percent of the benefit of this bill. Amazing. The bottom 80 percent of all households would receive precisely 4 percent of the benefit. Amazing.
What is worse, in the Tax Cuts and Jobs Act, we have already acted to offset the reduced SALT deduction by doubling the standard deduction. In the Tax Cuts and Jobs Act, we doubled the standard deduction from $12,000 to $24,000 for married couples, which offset an increase resulting from lowering the SALT deduction cap for a vast majority of taxpayers.
Before TCJA, 30 percent of all taxpayers itemized deductions and could potentially benefit from a SALT deduction. Today, just under 90 percent of all taxpayers take the standard deduction. This has made tax filing significantly easier. More importantly, for our purposes, it has meant that the vast majority of taxpayers who potentially could have benefited from a SALT deduction are already benefiting from the increased standard deduction.
In the Tax Cuts and Jobs Act, the drafters of the bill made sure that the benefits were spread across all taxpayers. Between doubling the standard deduction, doubling the child tax credit and making it partially refundable, and simplifying the tax code, there is hardly a taxpayer in America who did not see some benefit from the bill.
Here, unlike the Tax Cuts and Jobs Act, the benefits of H.R. 5377 will go only to a select group of people in a few key States, and it will overwhelmingly go to people who are already wealthy--already wealthy. Though the majority likes to claim that Republicans only want to cut taxes for the rich, it is ironic that the majority is now pushing a special tax break that literally benefits only the rich.
But the bill is worse than that, Mr. Speaker. To pay for this short- term tax break for a few, the bill also increases the top marginal tax rate for all taxpayers on a permanent basis. That is correct. The bill imposes a permanent tax hike on all Americans to give a short-term tax break for a wealthy few.
That type of tax change simply doesn't make any sense, Mr. Speaker. The tax code does need further reforms, no doubt about it. But those reforms should be those that increase the competitiveness of American business, simplify the tax code further to make it more comprehensible to taxpayers, and ensure further fairness for everyone. Giving a few select people in a few States a short-term and complicated tax break simply doesn't meet these goals.
Mr. Speaker, I urge opposition to the rule, and I reserve the balance of my time.
Mr. Speaker, I include in the Record a Statement of Administration Policy on this particular bill, noting that the President's advisers would advise him to veto this bill, were it to pass. Statement of Administration Policy H.R. 5377--Restoring Tax Fairness for States and Localities Act--Rep. Suozzi, D-NY, and 52 cosponsors
The Administration strongly opposes House passage of H.R. 5377, the Restoring Tax Fairness for States and Localities Act. This legislation would unfairly force all Federal taxpayers to subsidize a tax break for the wealthy, as well as excessive government spending by fiscally irresponsible States. H.R. 5377 would likely cause State and local governments to raise taxes, all while hindering the growth of small businesses and opportunities for workers.
The Tax Cuts and Jobs Act of 2017 (TCJA), which passed Congress without a single Democrat vote, is a signature achievement of the Trump Administration. This bill, which President Donald J. Trump signed into law on December 22, 2017, has spurred economic growth across the Nation by lowering individual tax rates, nearly doubling the standard deduction, simplifying the tax code, and closing special interest loopholes. Workers and middle-class Americans are reaping the benefits of the TCJA in the form of record low unemployment and substantially higher wages. H.R. 5377 would turn back the clock by adding a special interest provision back into the Federal tax code that unfairly requires middle- class Americans to subsidize fiscally irresponsible States and wealthy taxpayers. In doing so, H.R. 5377 would violate the principle that States should raise their own revenue rather than rely on tax subsidies from the Federal Government. The bill would also reduce incentives for States to be fiscally responsible.
Additionally, the provision in H.R. 5377 that would raise the top income tax rate from 37 percent to 39.6 percent would stifle economic growth by placing an undue burden on thousands of small businesses. Because it is unfair to middle-class taxpayers, encourages excessive spending by States, and would stunt economic growth, H.R. 5377 is poor tax policy that should not be enacted into law.
If H.R. 5377 were resented to the President his senior advisors would recommend that he veto the bill.
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Mr. COLE. Mr. Speaker, there is nobody I like better than my friend from New Jersey, quite frankly. We are very good friends. We have worked together on a lot of good things. But I have to tell you, on this one, we just disagree.
The middle class is going to benefit from this bill? Let me just go through the figures again. The top 1 percent of income earners in America get 56 percent of the benefits in this bill. The top 5 percent get 80 percent. The bottom 80 percent get 4 percent.
This is not a middle-class bill. This is not even an upper-middle- class bill. This is a bill for pretty wealthy people. Ninety-six percent of the benefits go to households that make more than $200,000 a year.
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Mr. COLE. No, I won't yield. I want to yield to another speaker in a moment. You are the one who raised the issue, so I am just going back to the numbers.
The numbers here are pretty clear. This is a targeted tax cut for wealthy people in a very few States. That is just the truth.
Those things are, I think, perfectly laudable parts of the bill.
Our main objection is simply that the main benefits of this are going to the top 1 percent and 5 percent of incomes, and that is just indisputable.
Mr. Speaker, if we defeat the previous question, I will offer an amendment to the rule to immediately bring up H.R. 750, a resolution that expresses the sense of the House that it is the duty of the Federal Government to protect and promote individual choice in health insurance for all American people and prevent any Medicare for All proposal that would outlaw private health plans such as the job-based coverage in Medicare Advantage plans.
Earlier this Congress, the House Rules Committee held the first-ever legislative hearing on the Democratic Medicare for All proposal. During that hearing, we heard promises about the Democrat-proposed, one-size- fits-all, government-run healthcare system. But we also heard about the realities of that plan: how it would require doubling income and corporate tax rates to implement, how it would lead to long waits for care, and how it would lead to 158 million Americans losing their current coverage.
That is all because Medicare for All, if implemented, would outlaw private healthcare coverage. This includes coverage offered through the popular Medicare Advantage program, which gives 22 million Americans healthcare.
Given that reality, it is wholly appropriate for the House to take this stand now. Protecting individual choice and protecting the private healthcare plans should be a priority for this House.
If we defeat the previous question, we will give every Member of the House an opportunity to say so together, with one voice.
Mr. Speaker, just to quickly respond to my friend, I would remind the gentleman that Republicans offered, in committee, an amendment which would have, frankly, given the SALT deduction to the bottom 90 percent of all Americans in exchange for continuing to charge it on the top 10 percent. I suspect that would cover the vast majority of the gentleman's constituents who might benefit.
I also remind everybody that the standard deduction was double, so, for most people, the average person actually came out ahead. It is only the very wealthy people who lost ground under this particular measure.
Mr. Speaker, nobody admires my friend from New York more than I do. We worked on a number of issues. But let's be real. Democrats are going to make the rich, I guess, in every State pay for the rich in your own State. That is just the fact.
Most of the benefit of this thing--56 percent of the benefits--goes to the top 1 percent of income earners. That is the fact. Eighty percent of it goes to the top 5 percent, and 94 percent goes to households that make over $200,000 a year. Those are just the numbers.
Now, some of this is used for worthy causes. I would agree with that. But a permanent tax increase for a temporary tax cut, frankly, just doesn't make a lot of sense, and that is what we are dealing with here.
So I would also suggest that my friends remember that the tax cut that they revile so much doubles the personal exemption for most people so that more than offsets for most people the SALT tax reduction that was reduced. It is not eliminated; it is still there.
Mr. Speaker, $10,000 a year is still a pretty good deduction to be able to take. If you make that much income that you can take a deduction that large, then you are probably doing pretty well.
So, again, I don't have any problem with people defending the interest of their States, that is a perfectly appropriate thing to do. I don't have any problem with people wanting to use money for good purposes. That is a perfectly appropriate thing to do. But let's be real about who is getting the benefit of this tax package, and it is very-high-income people.
In fact, I am going to oppose it.
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Mr. COLE. Mr. Speaker, I advise my friend I am prepared to close whenever she is. In the interim, I will reserve if she has more speakers.
Mr. Speaker, in closing, I oppose both the rule and the underlying measure. H.R. 5377 is a deeply misguided and partisan tax bill that sets up a temporary tax break for a privileged few and seeks to trade it for a permanent tax hike for the entire country.
The bill temporarily removes the cap on the State and local tax deduction, a benefit that will primarily go to wealthy taxpayers living in expensive homes in a few key States and localities. But to pay for this temporary boondoggle, the majority is adding a permanent hike at the top marginal tax rate. The benefits will go only to a few key privileged areas, but the costs are spread across the entire country.
It makes very little sense to me to trade a temporary tax break for a permanent tax increase, and it makes even less sense to me to ask the entire country to pay for it in perpetuity for a short-term tax break for a few areas with high State and local taxes.
Now, my friends have talked about the relative tax burden and who gives what and what States give what. As a former member of the Budget Committee, those numbers are, by the way, usually based on the discretionary portion of the budget. The reality is--I hate to say this, because we have a big problem in front of us that I don't think either party has confronted very well, certainly not mine, but I don't think my friends have either, and I don't think this administration has, and I don't think the last one did--every State in America is a debtor State if you start adding in Medicare, Medicaid, and those type of nondiscretionary expenditures.
So we have a big problem. It is really related to an aging population more than it is anything else, but the idea that some States are so- called donor States, I have to tell you, Mr. Speaker, nobody is a donor State in America. We are running nearly a $1 trillion deficit. That deficit comes almost primarily because we have simply not readjusted Medicare, Medicaid, and Social Security to pay for the benefits that are drawn out. I hope someday we will work on that.
I actually have a bipartisan bill, I used to carry it with Mr. Delaney--a very good friend and Presidential candidate from my good friends on the other side--that would go back and set up what we did in 1983. When Ronald Reagan and Tip O'Neill worked together, we had a Social Security Commission. We actually increased the revenue going into Social Security. I think that would have to be one of the long- term fixes, not simply cuts, reductions, and reforms. That is a debate for another day.
In closing, Mr. Speaker, American taxpayers, in my view, deserve better than what is in front of us here today. Rather than making the tax code more regressive and complicated, which this bill would do, we should further reform and simplify the tax code to make it easier for all taxpayers to understand. We should be making American businesses more competitive, and we should be taking steps so that American workers can keep more of their hard-earned earned income, something I know we all want to do.
In closing, again, just remember this: 56 percent of the benefits of this bill go to the top 1 percent of income earners. The top 5 percent get 80 percent, and the bottom 80 percent in terms of income get 4 percent. That should explain it all and why we should reject this bill.
So, Mr. Speaker, I urge my colleagues to vote ``no'' on the previous question, ``no'' on the rule, and I yield back the balance of my time.
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Mr. COLE. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
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Mr. COLE. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
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