Service Members Home Ownership Tax Act Of 2009

Floor Speech

SERVICE MEMBERS HOME OWNERSHIP TAX ACT OF 2009 -- (Senate - December 15, 2009)

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Mr. CRAPO. The Senator from Nevada is correct.

Before I toss the floor to the Senator from Texas who wants to make some comments, I point out that the point the Senator from Nevada made is statistically made by Joint Tax:

By 2019, at least 73 million American households--that is not 73 million Americans, that is 73 million American households-- earning below $200,000 are going to face these tax increases.

Mrs. HUTCHISON. If I may respond to the Senator from Idaho. I was thinking, when the Senator from Tennessee was talking, about the luxury taxes and how everyone thought that felt so good to have a tax against luxury boats. And who suffered? The workers. Then there was the catastrophic Medicare coverage which resulted in a tax on seniors who had that coverage. Seniors erupted, and that was repealed. Then that is followed on by what the Senator from Nevada talks about--the Cadillac plan, which is the high-end plan of coverage.

I thought, maybe Congress has learned something. Maybe the Democrats are on to something. They have listened to the history of all of these good-sounding taxes on rich people or people who buy expensive things. As the Senator from Nevada has pointed out, they have now learned they probably ought to go ahead and tax both ends instead of just the high end because in this bill, you have a tax on the high-end plans. You have a tax on employers who provide too much coverage. Oh, but we also tax the people who do not have any coverage. If it is too small, you get taxed, and if it is too big, you get taxed. It seems that maybe the Democrats learned the wrong lesson. It is not that you tax just the rich or the people who buy expensive things, it is that you tax both ends to make sure you get every little drop of taxpayer dollars.

I think we have shown on this floor from the endless hours of debate that everyone in America is going to be taxed because the taxes that take effect in 3 weeks' time under this bill, January of 2010--the major tax increase takes place, and that is the tax increase on prescription drugs; on insurance companies that are going to have to raise their premiums; the drug costs are going to go up; and medical equipment, which is essential for seniors, especially for everyone who needs some form of equipment, the equipment manufacturers are going to have a tax. Mr. President, $100 billion in new taxes starts next January, 3 weeks from now. Every person in America is going to pay taxes in the form of higher prices starting in 3 weeks.

The Senator from South Dakota and I are sponsoring legislation because the next question will be: Oh, my goodness, if we are going to be taxed in 3 weeks, surely we are going to have some sort of benefit offered in 3 weeks, some sort of low-cost health plan or option. Three weeks, surely. Oh, no, we are not going to have any of the plan that would offer options to people--not in 2010, not in 2011, no, not in 2012, not in 2013, but 2014.

So all these higher prices are going to start kicking in in January, and then we are going to have the Cadillac plan that the Senator from Nevada mentioned in 2013, all being paid before one supposed benefit would be available. If this is not a bait-and-switch, I have never seen one.

The Senator from South Dakota and I are going to offer the next amendment after the ones that are in the tranche right now to very simply say: Whatever the bill is in the end, there will be no taxes until there is a plan. Not one dime of taxes could take effect until there is actually some sort of plan available that would, hopefully, give some sort of benefit to people, which is what is being promised.

I ask the Senator from South Dakota if that is his understanding, that we would at least draw a line. Whereas Senator Crapo's motion, which I support and I know everyone on the floor talking this morning supports, is to say there will be no taxes to anyone who makes under $200,000. But even if there are taxes in the end, they will not take effect until there is some sort of plan available for people that is going to help Americans who do not have coverage and for whom we are not able to lower the cost, which is what the Republicans are trying to do. At least we would set that deadline.

I ask the Senator from South Dakota what he has been hearing about this bill.

Mr. THUNE. My colleague from Texas is exactly right. Her motion and the motion I am cosponsoring, which we hope to vote on next, will be a follow-on motion to the motion the Senator from Idaho is offering.

It seems a basic principle and a matter of fairness to the American people that if you are going to create public policy, that you do it in a way that treats people fairly and does not raise their taxes before a single dollar of the premium tax credits and the exchanges that are designed to create the new insurance product for people would take effect. That is what this bill does.

The motion of the Senator from Idaho commits all of the tax increases--and I will support that wholeheartedly, and I hope my colleagues in the Senate will do the same because these tax increases are the absolute worst thing we can do at a time when we have an economy in recession and we are asking small businesses to lead us out of the recession. Seventy percent of jobs in the country are created by small businesses. It is much higher in my State of South Dakota. These tax increases could not be more poorly timed in terms of getting the economy restarted and creating jobs for Americans and getting them back to work. Since most people get their insurance--at least currently--through their employer, one of the best things you can do to provide insurance is to put people back to work. This bill has the opposite effect. It is a job killer because of all of the tax increases. Every small business organization has said that. That is why it is so important we support the motion of the Senator from Idaho.

Senator Hutchison and I will also offer a motion--hopefully, we will get a vote on it later--that at least will delay the tax increases until such time as the benefits begin. It essentially aligns the revenue increases and the benefits so they are synchronized and you do not have this period of 10 years where you are taxing people for 10 but only delivering a benefit for 6. Again, I think that violates a basic principle of fairness most Americans should expect when it comes to their elected leaders making public policy which will have a profound impact on them and their lives. I certainly hope we get a vote on that motion, and I hope our colleagues will support it. To me, it is unconscionable that you would raise taxes by $72 billion, which is what this does, up until the year 2014 before the premium subsidies and the exchanges kick in which would deliver the benefits that are supposed to be delivered under this bill. The Senator from Texas and I look forward to getting a vote on that motion.

I hope we can win on the Crapo motion later today.

I appreciate my colleagues being here to point out how important it is that we have public policy that is fair and also that we not do things that are counter to job creation at a time when we are asking small businesses to get out there and create jobs and make investments.

Mr. BARRASSO. The Senator from Idaho had a picture of a woman making $50,000 and the health benefits that resulted. My concern is not just her taxes; my concern is also her job. It is also a fact that she would still have a job.

What I hear from the people of Wyoming is: Don't raise my taxes, don't cut my Medicare, don't make matters worse than they are right now in this economy where we have 10-percent unemployment.

Like the Senator from South Dakota, I am a member of the National Federation of Independent Business. I have been a member for years. They are telling us that as these taxes are raised and collected in 2010, 2011, 2012, 2013, in 2010 we are going to lose 400,000 jobs in America, and in 2011 another 400,000, and another 400,000 after that, and another 400,000, as the taxes continue to be collected. So we would be losing in this country 1.6 million jobs as a result of these increased taxes all Americans are going to have to pay.

I ask the Senator from Idaho, isn't it even more critical that we pass his motion in addition to the fact that we do not want these taxes? They are going to hurt our economy across the board.

Mr. CRAPO. The Senator from Wyoming is exactly right. It is the wrong thing to do when our economy needs to be strengthened and restarted, if you will, to apply a huge amount of new taxes.

Let's take the example we talked about earlier. This young lady, under the bill in the Senate right now, will not only see her health benefits go down, but the net value of her compensation package will go down. She will get a little extra wages in order to offset the reduction of her health care benefits, but those will be taxed and her net compensation package will go down.

The point here is this--and it is a little bit ironic that today the Democratic caucus is going to be meeting with the President at the White House in yet one more closed-door meeting where they are going to be trying to redraft the bill in order to get around some of the problems, which I hope they will let the American people see to debate before they try to vote on it again.

It is ironic, as Democrats come out of that caucus, if they do not support this motion, they will be violating two of the President's pledges. One, after meeting with him, they will be violating his pledge not to tax Americans who make less than $200,000--$250,000 for a family--as well as his pledge: If you like it, you can keep it.

This young lady, if she likes her package, cannot keep it. She will not have that option. Her $10,000 health care package will be reduced at least $2,000 to the minimum new government-designed acceptable policy and probably a little more than that. She will see a 20- to 30-percent reduction in her health care package against her will. I would be willing to bet she would prefer to keep the one she has now. Most Americans like the insurance they are getting through their employers.

Mr. ENSIGN. I would like to ask the Senator from Idaho a question. These are the nine taxes we know for sure that are being raised: 40 percent Cadillac plan, a separate insurance tax, an employer tax, a drug tax, a lab tax, a medical device tax, a failure to buy insurance tax, the cosmetic surgery tax, and the increased employee Medicare tax.

In our States, people think we will pass a sales tax, and the business will just pay the sales tax. I ask the Senator from Idaho, who actually pays the sales tax? Who have the Congressional Budget Office and the Joint Committee on Taxation, which are both nonpartisan, said are going to pay these taxes?

Mr. CRAPO. The Senator was there when the Joint Tax and CBO experts were asked this question. They squarely and directly said these taxes and fees will be passed on, virtually 100 percent, to consumers, which means two things. First, the ones that are taxes will just be taxes passed on to the consumer, as shown in the example of the young lady we looked at. The ones that are fees will simply be passed on in the form of higher costs for medical services or higher premiums, which is one of the reasons why, contrary to the assertions by the other side, this bill will drive up the cost of health care and will drive up the cost of premiums, not down.

Mr. ENSIGN. The last thing I would like to point out goes along with the Senator's chart. This is what the Joint Committee on Taxation has said: 84 percent of all the taxes being paid in this bill are being paid by those making less than $200,000 a year. If this is not a direct violation of the President's promise not to raise one dime of their taxes, I don't know what is. I don't understand how the President can sign this bill and keep to the promise he made during the campaign.

Mr. CRAPO. I agree with the Senator from Nevada. It is disturbing to see the responses. First, the response that this bill actually doesn't increase taxes; it cuts taxes. That flies right in the face of the reports and analysis by Joint Tax and CBO. I encourage everybody to read this bill. It is available on my Web site and on the Republican Web site and on the C-SPAN Web site. In addition, we will put up a reference to where you can find the bill to read it if you want to parse through it to determine who is telling the truth. The bottom line is, this bill increases taxes in the first 10 years by $493 billion. When you add fees to that, it is more like $700 billion. If you counted the first full 10 years of implementation, it is over $1 trillion of new taxes. The only response to that is to try to say that the subsidies for health insurance for those who are not able to purchase their own insurance are tax cuts, even though three-fourths of them go to those who are not, at this point, at a level where they are incurring a tax liability.

Mr. THUNE. My understanding is, those premium tax credits actually go to the taxpayer. When you say this is a tax cut for people, does it end up in the pockets of the average taxpayer?

Mr. CRAPO. The Senator from South Dakota is correct. In fact, this subsidy is not paid to the individual. It is paid directly to the insurance company. Of the one-quarter of people receiving this subsidy who do actually pay income taxes, their income taxes will, in fact, stay the same. They are not actually getting a tax cut. What they are getting is a subsidy for the purchase of insurance that is managed through the Tax Code but is paid directly to the insurance company.

Mr. THUNE. That is precisely why the arguments made by the other side that somehow this is a tax cut sort of defy what I think most Americans have come to expect when they get a tax cut; that is, that they get to keep more of what they earn. What we are talking about is a payment that will be made to an insurance company, a tax credit for premium subsidies that will go to an insurance company. There will be very few Americans, as a percentage of the total population, who will actually derive any sort of benefit. My understanding is, about 10 percent of all Americans will get some benefit from the premium subsidies that will go to the insurance company, not directly to the taxpayer; is that correct?

Mr. CRAPO. It is actually 7 percent.

Mr. THUNE. So we have a very small number of Americans who will derive a benefit. But you have a whole lot of Americans who will actually be paying the freight. The Senator mentioned earlier--I saw his chart--that 73 million Americans are going to end up with higher taxes as a result. Many of the premium tax credits, if you could give credit to the taxpayers receiving this, which you can't because it goes to the insurance company, but if you could, three-quarters of that will go to people who currently have no income tax liability. It seems as if the advertising on this is very inconsistent with reality and the facts. The fact is, most Americans will see taxes and premiums go up. Very few Americans are going to get some premium tax credit to help subsidize their premium cost, and that will go directly to the insurance company. I understand the Senator from Idaho and the Senator from Nevada are both members of the Finance Committee. They have been involved with this from the beginning. That is my understanding of this, which is hard to fathom how that constitutes a tax cut.

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