Schumer Floor Remarks on the GOP Tax PlanNovember 7, 2017
Washington, D.C. – U.S. Senator Chuck Schumer today delivered remarks on the Senate floor underscoring how the GOP tax plan will ultimately lead to a tax increase for the middle class. Below are his remarks:
Later this week, the House will begin marking up the Republican tax plan – record speed, no hearings, no real discussion - and unfortunately Senate Republicans are mimicking the House in trying to rush through their bill, as well. The Senate Republicans will likely unveil a plan of their own this week, though I don’t expect there to be that much of a difference between the two.
What has united Republican tax “reform” efforts so far this Congress has been a stubborn desire to reduce taxes paid by big corporations and the super-rich. That’s the core. The middle class ends up with the leftovers, and shockingly, millions in the middle class will actually see a tax increase. Not just a handful, but a large number.
I read in this morning’s New York Times that, according to their analysis, one-third of all middle-class families would pay more in taxes next year under the House bill, and by 2026, nearly half of all middle-class families would pay more in taxes. Almost half!
Here’s the newspaper article, this is the New York Times, and they defined median income, middle class, as households between $50,000 and $160,000. The backbone of America. Here is their headline: “Republican plan would raise taxes on millions of middle-class families.”
That’s the case, they did their analysis. And by the way, you say ‘well, that’s mainly in the coastal states.’ No. Even if it is not one-third, it is probably about 20% in the poorest of states. Large numbers of middle-class taxpayers in every state in this union – coastal, non-coastal, New York, California, but also Wyoming, Utah, Nebraska – would pay a significant tax increase.
Looking at the House bill, you can see why. The Republicans either reduce or eliminate several critical middle-class tax deductions. The elimination of the personal exemption for example, which lets families deduct roughly $4,150 for each person in the household, would be costly for families of three or more. If you have a lot of kids, this bill is bad for you. Tax-wise, if tax policy influences behavior, they are trying to discourage bigger families. What does that say? Ending the personal exemption makes the House Republican tax plan an anti-large-families bill.
In many cases, the new benefits provided to the middle-class are insufficient to fill the gap created by the loss of popular deductions, and worse, many of the benefits are temporary – expiring after several years. So while some in the middle class may get an initial tax break, a few years down the line that break will disappear and taxes will start going up.
As pointed out by David Kamin, a Professor of Tax Law at NYU – the Republicans have reduced the value of middle-class tax breaks significantly over time. To meet their desires to not increase the deficit by too much, although $1.5 trillion is a heck of a lot, instead of reducing the tax breaks on the biggest corporations or the very wealthiest, they reduce them on the middle class.
- In 5 years’ time, the $300/person family credit is gone.
- The Child Tax Credits, unlike the personal exemptions which they replace, loses value over time because they are not indexed, they do not increase with inflation.
- And the Republican’s use the same gimmicks to make the value of middle-class deductions, like the standard deduction, lose value over time.
So while some middle-class families may see a tax decrease in the very short run, a considerable number see a hidden tax increase a few years later. They’ve frontloaded the benefits to disguise a tax hike in the out years.
Look at this chart. Now our Republican colleagues picked the perfect family to benefit from their tax breaks, a middle-class family, when they proposed it. A family making $59,000 a year. Here it is. This is not a family that has medical expenses or kids in college - they lose those deductions - or a large mortgage, or from a state with high personal income and sales taxes. This is the plain, vanilla, hand-picked family chosen by the Republicans to highlight the benefits of their plan.
And it is true. In the first year, they get a break around $1,100. But over the years, they get an increase. So by 2027 even this hand-picked Republican family gets a tax increase.
The bottom-line: The Republican tax plan is like a ticking time bomb for many hardworking middle-class families. The Institute for Taxation and Economic Policy looked at the Republican plan and found that over 1 in 5 taxpayers earning between $56,000 and $150,000 – the heart of the middle class -- would see an average tax increase of $1,350 by 2027.
Working and middle-class families see a tax increase because the Republican plan reduces their benefits over time. Meanwhile, tax giveaways for the wealthiest Americans and huge corporations get better over time. The Estate Tax exemption goes up from $11 million to $22 million for a couple and then is permanently repealed after 2023. The corporate rate cut and pass-through cut also stay permanent – a boon to wealthy shareholders. Middle-class deductions and credits expire, deductions for corporations and the wealthiest estates are permanent or even get better.
As Mark Mazer, the director of the independent Tax Policy Center recently said, “You could create a plan that just cut taxes for middle-class people. That’s not what this is.” That is his quote.
And yet, that’s how Republicans are selling it.
A few days ago on Hugh Hewitt’s show, my friend the Majority Leader said that “at the end of the day, nobody in the middle class is going to get a tax increase” under the Republican bill. Again, Mitch McConnell: “nobody in the middle class is going to get a tax increase.”
If he was referring to the House bill, that’s a bald-faced lie and he ought to retract it. But to give him the benefit of the doubt, maybe he’s referring to the Senate tax bill still under construction. Let’s see. In the Republican bill, will nobody get a tax increase? We’ll have to wait and see. If past is prologue, I doubt it, because House leaders said no middle-class person would get an increase, and then their bill walloped the middle class. A third get an increase immediately, close to half get an increase over the next 10 years.
If the Senate bill follows the same path, promising universal, middle-class tax cuts but delivering smoke-and-mirrors and hidden tax increases, I predict that it will get clobbered in the court of public opinion as it would deserve.