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As you look at the analysis. Our Macro Economic analysis, among the things is tries to assess is what happens to the incentives to invest both here and abroad. So the short answer would be yes. It seems to me that as this bill moves forward and that as we realize faster Economic Growth, it doesnt matter if youre a young person that maybe, you know, for the first time is going to see a lower standard of living in todays world compared to what their parents have. They have to have a growing competitive economy if theyre going to be successful to pay off Student Loans, where they can compete and have ample job opportunity. Or if youre a senior or baby boomer about to retire, youre an individual that wants to make sure your savings is protected as you get ready for retirement and have a competitive degreeing economy as well to making sure that our other government safety net programs are going to be strong and healthy and without a competitive growing economy we will not see those impacts. Its not just the Reform Efforts you put into hr 1 that give relief immediately, its about helping hard working taxpayers across the board athats so critical. Thank you. I yield back. Thank you, mr. Chairman. Im having a hard time believes that this is actually where we are today. Because America Needs real fax reform and this bill isnt real fax reform. Its pretty much a tax fee as co. Republicans have talked for years about the need to do a 1986 style tax reform and this doesnt even come close to the process, certainly not the process, because democrats have been shut out at every turn or even the substance of 1986 where there was an agreement by both sides that it would be revenue neutral. Im upset and im disappointed that were passing up an opportunity to work to do something good for the American People but to do it in a bipartisan way. Instead youve chosen to go it alone. In this nation, we agree some of our fundamental values are that everyone should earn their wealth, their status and their privilege. We dont believe in hoarding wealth and leaves the rest of the people to fight over the crumbs. Thats why im baffled that this bill contemplates how can they do more for the richest people in this country. Massive Corporate Tax cuts do not guarantee job growth or increased wages for middle income americans. The only thing that they guarantee are adding 2. 3 trillion to the deficit. Who winds up picking up the tab . Mi middle class americans. The American People are sick and tired of the same republican cut, cut, and cut proposals because under the Ryan Mcconnell tax plan the tax reduction would be cut for middle class families. The student Loan Interest deduction would be cut. State and local deductions would be cut for middle class families. We need a tax code that is simpler, that is fairer and that supports all americans. If the federal tax code is a reflection of our priorities in this country, this is a misguided plan at best and a really, really tremendous disaster at worst. Mr. Barthold, under the republican proposals, do estates that are valued at 5 million, are they required to pay the estate tax . Ms. Sanchez, under present law, theres a 5. 4 million exemption. Okay. Thats current law. Under this republican proposal, would 10 million estates be taxed . No. What about 1 billion estates . Would those be taxed under this republican plan . In years prior to 2024 the estate tax and the Generation Skipping tax would be in effect. But in the full ten year window, at the end of those five years, would 1 billion estate be taxed . I was getting to that point, ms. Sanchez. After 2023 the estate tax and the Generation Skipping tax are repealed. So after 2023 you can hand over a billion dollars in your estate tax free. Is that correct . Yes. And thats while at the same time that were reducing the estate tax in this republican plan and million airs and billionaires continue to see their tax burden get smaller and smaller. This fee as co of a tax plan phases out the fax credit that fileers and their spouses can claim so that what they pretend to give to the middle class they turn around and yank that away after five years. Isnt that correct, mr. Barthold . The taxpayer credit so at the same time they take away that middle class benefit that most middle class families would rely on, theyre reducing to zero the estate tax. Is that correct . Actually, the estate tax repeals the subsequent year. Im sorry, theres one year difference. But is it any wonder how theyre going to pay for allowing millionaires and billionaires to keep more of their money . Theyre going to take away the tax relief that republicans are so happy to tout that theyre providing to middle class families. Think about how many students, veterans, food insecure families and other hard working middle income americans we could provide for if we didnt eliminate the estate tax and if the very wealthy in this country, the wealthiest of the wealthy in this country had to pay their fair share of taxes. Thank you, mr. Chairman. I yield back the balance of my time. Ms. Jenkins, youre recognized. Thank you, mr. Chairman. I continue to be concerned about this inaccurate parallel that some of our friends on the other side of the aisle keep making between what were working on here in house ways and means committee, the tax cut and job creation act, and the tax law that was passed a few years ago back in my home state of kansas. Mr. Barthold, are you familiar with what was done at home in kansas . I wont claim to know it in great detail. I am familiar with some. Actually my colleagues on staff have done some Research Related to some of the changes there as part of our understanding of how people respond to tax changes. Then make you can help me set the record straight, because he just attempted to imply our coach we love in kansas would somehow be able to shelter his earnings from federal tax. At home in kansas they drove the pass through rate to zero and in our bill the pass through rate is 25 . In your opinion, are zero and 25 the same thing . No, zero and 25 are quite different. In fact, its almost like 25 times different, isnt it . Well, actually, that would be mathematically incorrect. Well, thats true. Its an infinite difference. Could you walk through how the federal tax law would treat our beloved ku coach if he put his earnings under the chairmans amendment, the nature of the substitute, as i highlighted in the walk through, its a maximum rate on pass through income of 25 . But that maximum rate does not apply to certain types of income that might be earned through passthrough enterprises. Among them were professional services and consulting and financial services. So for example, not to go into basketball coaches, but partners in a National Accounting firm, thats a pressure service. They would not be eligible the income of that accounting enterprise attributed to the partners would not be eligible for the 25 maximum rate. It will be subject to the rate structure of 12253539. 6 that i outlined. I believe that under the legislation the same would be true of your basketball coach. It will be true of a consulting engineer. Of an ari can tekt, turns, doctors. So in this situation he could pay zero state income tax at the federal level. The guardrails provide for 70 at the highest rate, which is 39. 6 or above. 30 at the 29 rate. But in this particular instance, it would all be deemed taxed at the higher rate, correct . It would all be consulting or professional services and it would be subject, if my understanding of the amount that the jay hawks coach is paid is that he would likely be in 39. 6 tax bracket as established under hr 1. Do you think that taxing at the federal level 39. 6 and taxing 0 at the kansas rate are the same . Clearly not. Clearly not. And then in kansas they did not close any of the loopholes to pay for the buydown in the rate to zero. Did we close any loopholes in our tax proposal . Well, its probably not wise for me to label things explicit loopholes, but as i outlined, there are a number of deductions and exclusions that hr 1 would repeal. Theres a number of many almost all of the business credits and Energy Credits are repealed or modified. Thank you for helping to clear that up. I think theres just a lot of really Bad Information out there and certainly the economy of a small state at home in the middle of the country is a whole lot different than the leader of the free world economy. So i think we need to be fair when reporting these parallels. I think this is a good piece of legislation. We need to get washington to make it perfectly clear we need a good tax code thats fair or simpler, closing these loopholes, ending bailouts and handouts. Get our economy healthy again. Get more jobs, higher wages, and a stronger economy. Thank you, mr. Chairman, and i yield back. Mr. Higgins, youre recognized to question mr. Barthold. Thank you, mr. Chairman. Are you familiar with the mnuchin rule . Youre referring to the secretary of the treasury . I am. Which rule . Well, the rule that he had established that there would be no net benefit to wealthy then yes, i am familiar with that statement. Does this budget that were discussing today meet the mnuchin rule test . I would say not as has been pointed out, it provides for net tax reductions in the first year up and down the income distribution. Well, the mnuchin rule as i understand it was that any tax rut would not benefit the wealthy. Under this bill the top 1 defined as if you make 730,000 or more, your after tax income will increase next year by 8. 5 . If you make 150,000 a year, our after tax income next year will increase by about 1 . So it seems to me that this is in direct violation of the mnuchin rule as established by the secretary of state. Thats why i believe that this tax plan is blatant fraud being perpetrated against middle america. Now, ive heard it said here and last week when they rolled this thing out that a family of four that makes 59,000 a year will experience a 1,200 tax cut a year. The elimination of income in sales taxes in new york is equal to 9 of taxable income meaning that if you make 100,000 a year, you lose 9,000 a year. If you make 50,000 a year, you lose 4,500. So if you reduce that loss by the amount that you gain in this family of four 59,000 scenario, your net loss in new york is 3,300 next year. If you make 50,000, if you make 100,000, your net loss is 7,800. That hits hard middle families. Even in the state of texas where 2. 5 of taxable income is attributed to this state and local tax elimination, you will lose considerably under this plan, again, if you make 100,000 a year, 2,500. Eliminating all together this glittering generality that has been hoisted upon us suggesting that this results in a tax cut. The problem here is that what really matters in terms of taxes is the net effect. So while there may be a cut, if you dont take into consideration the deductions or the elimination of those deductions, thats not an honest portrayal of what is going on here. This bill is said to cost 2. 4 trillion. I reject categorically what the Senate Approved and i view with credibility those analses that have said its almost 2. 5 trillion. This tax bill will produce according to goldman economists no good growth in the American Economy over the next five years. The reason why goldman is relevant here is both the secretary of the treasury, mr. Mnuchin and the National Economic adviser mr. Cohn are both from goldman. If you cant kwiconvince the organization from which you came of to confirm what youre saying, that is indicative to me of a bill that just doesnt balance out. No good growth. Record deficits. No new jobs created. This tax bill is a major liability to every tax paying american but for the top 1 . I yield back. Time is expired. Mr. Smith, jason smith is recognized for to question mr. Barthold. Thank you, mr. Chairman. I would like to followup on some of the comments you made prior. You is it correct you made the statement that roughly 29 of americans itemize currently under the current tax code . Mr. Smith, thats our projection for 2017 and 2018. So ive seen around 30 . Thats something i want to talk about. All of these deductions that the folks on the other side of the aisle have been talking about that theyre all upset that theyre gone, those deductions would only affect the 30 or the 29 that itemize, correct . Well, to be very precise on this, mr. Smith, remember that we do have some deductions that are permitted above the line. So lets say, like, medical expensing . The adoption . Medical expenses and itemized deductions. State and local income tax . State and local tax is itemized. So theres several. And so the 70 that dont itemize dont get to benefit from that. Under present law, thats under present law and present economics, thats correct. Under present law. So in my Congressional District 83 dont itemize. The medium income household in my Congressional District is 40,000. So 17 of the people itemize in my district. So does that mean that 83 of the people in my district that dont itemize dont benefit from those deductions of medical expense or adoption expense or some of the other expenses we just went over, state and local income tax . Under present law, thats correct, mr. Smith. Would you also say that these deductions, like state and local income tax, benefit the wealthy much more than they benefit the poor . Because the wealthy have tax brackets of 35 and 39. 6 , but the poor has tax brackets of 12 . The value of any deduction is equal to the amount of deduction times your effective marginal tax rate. So if youre in a higher tax bracket, the value of the deduction is greater than if youre in a lower tax bracket. So mr. Barthold, this is hilarious. The democrats and the folks on the other side of the aisle are arguing deductions that benefit the 1 the most than what benefit the middle class, which is my Congressional District, the hard working missouri and the folks back home that do not itemize. Would the standard deduction help the 83 in Southeast Missouri that do not itemize . Well, im sure that some of your constituents that dont itemize have no Tax Liability under present law, so the changes in standard deduction would not help them, but for those that have a positive Tax Liability, increasing the standard deduction would reduce their taxable income, would reduce their Tax Liability. Under this bill, the mortgage Interest Deduction is capped at 500,000. Is that correct . Under the chairmans proposal there, three reforms to the mortgage Interest Deduction reducing the present law cap of 1 million to 500,000 is one of them. The other two would deny the use of the mortgage Interest Deduction for anything other than your primary residence. In other words, no second homes. And it would deny the deduction for mortgage interest attributable to so any american that purchases a home for their primary residence thats under 500,000 have the mortgage Interest Deduction. The of indebtedness. The home might cost more. Exactly. I dont know Many Americans that are middle class that purchase a home for than 500,000 in Southeast Missouri. Whenever the Median Income is 40,000. So one other point. You said under this new proposal, under hr 1, the itemizers would be about 6 . Is that correct . Yes. Yes, sir. Our projections for next year under hr 1, about 6 of tax filing units would elect to itemize. Find it beneficial to itemize. So only 6 according to your projections would only be able to benefit from the deductions such as state and local income tax if it still existed or some of the others if they existed. The only the state and local next Tax Deduction would not exist under the proposal. It would only be the property tax. Lets say if it did exist, only 6 could use it. If it did exist, it would be a different calculation, sir, because the election of course the election to itemize depends upon add up the itemized deductions, compare that to the standard deductions. If we were to add in thank you, mr. Barthold. Youre recognized. Thank you. I would note in my home county the average price for a home, average price is 547,000 for a middle class home. The house i grew up in, three bedroom, one bathroom, is well over in excess of 650,000. It all depends what we describe as the middle class, i suppose. Mr. Barthold, thank you for being here. As this bill was written in the dark of night with no maybe during the dark of day, too, without any democratic input, i had similar questions. This bill includes a provision that would reduce inflation adjustment of the tax code for the brackets, the standard deduction and the parts of the Child Tax Credit by adopting an alternative measure of inflation called chain cpi. Is that correct . Yes, sir. And according to your estimates, this change would cause taxpayers to pay 128 billion in new taxes. Is that correct . If i may step back for just a moment and explain the table. The table and sort of our lingo sort of stacks provisions so we measure rate reductions and standard deductions and then we add back effects. So yes yes. The answer is yes. The simple point is that the adjustments will occur more slowly under the chain cpi. For the purpose of the question, the answer is yes, correct . A qualified yes. If the majority is successful in trying this alternative and controversial measure of inflation in the tax code, then i believe the next step of the majority might take is to apply that same rule to Social Security and veterans pensions. In other words, this bill is paving the way for a cut for Social Security and v. A. Benefits. Im not asking you to comment. Im making a statement. Chairman brady acknowledged in a recent interview on msnbc that indeed the republicans next target is socalled entitlements which would include social and v. A. Benefits. Adopting this lower measure of inflation would affect over 60 million individuals with the effects compounding every single year there after. A cut is particularly harmful to those who live the longest including elderly widows. Social securitys chief actuary estimated using this measure of inflation would reduce annual benefits by more than 1,000 a year for a typical 85yearold. Mr. Barthold, the text of this bill states 529s can now be used for tuition with enrollment at a secondary school. Is that correct . Thats correct. Thats partly a consequence of the elimination of the coverdale account and the roll ovover of that. Could a 529 be used to pay for school uniform, for instance . The statutory language says tuition and fees, so probably not. I think a uniform would, if its necessary for going to that school. But fees are required. Let me ask you this. In a private boarding school, required a class on horse jumping, could the 529 be used to pay for the horse and its lessons . I would think there could probably be a fee for part of the training. So the answer is yes, you think it could be. Could a 529 be used to transport a child to and from school . Generally no. Under the language, again, tuition and fees. Does not include transportation. Fees for education are not fees for transportation. So for bussing, for instance, they cannot use that. I would think not, sir. Okay. Let me ask you a question. If an individual attended a private school and had horse jumping lessons, could the instructor, their child, the instructors child, could that child of the instructor who graduates from college with Student Loans, can he or she deduct the interest they pay on the Student Loans . Under hr 1, the deduction for student Loan Interest is repealed. So the child of the instructor of the child in the private school whos being taught how to jump horses would get to use 529 to pay for the horse and for the jumping lessons. The child of the instructor cannot use the benefit anymore of deducting the cost of the of his or her Student Loans for college. In your example. I appreciate it. Yield back. Thank you. Youre recognized. Thank you, mr. Chairman. Mr. Barthold, youve been around this town for quite a period of time. Have you heard of the Tax Foundation . Yes. Im familiar with the Tax Foundation. I think theyre over 80 years old. So its an 80yearold. Would you consider the Tax Foundation to be an independent nonpartisan body . Its a 501 c 3 organization but i shouldnt label any organization characterized, but i know its tax exempt. Thank you for your articulation theyve been around for scores of years here in this town giving their professional opinion. I have heard it articulated that this bill does nothing. One gentleman seemed to claim nothing. Would 975,000 new jobs be an impact of a bill . Are you asking if thats the im asking if you think that would be a positive impact if you created 975,000 new jobs by virtue of legislation. Well, that would certainly be a positive impact on the economy. So if this foundation concluded that 975,000 jobs would created and if there would be 4. 4 increase on the wages for middle income earners, and they concluded that, would that be a positive outcome for american hard working american taxpayers . Of course, that would be a very positive outcome. And when they talk about distribution of income, which is articulated frequently here about it being somehow, if that same foundation determined that of the tax savings some 59 was going to go to those learning less than 200,000 as my friend the gentleman from new york, 200,000, very much middle class and below, but that would be a positive thing. Is that not accurate . Im sure the benefits would be very positive. That 73 of the tax relief, if you took away that which was generated by the business itself through the passthrough, 73 would go to those earning under 200,000. If i i dont want to stop talking about it in general terms. I went to the pen Machine Works in pennsylvania. A metal foshlgirging that conti to create opportunities for manufacturing here in the United States. Competes on a global level. And talked to the workers themselves. One of them being a person working, those who worked across the board, one working industrial engineering. If they had wages around 48,000 a year, this individual whos working, if last year he was at a 25 tax rate, what would happen with the new tax rates this year . I understand that would reduce to 12 this year. As we noted earlier, the rate points on the brackets are moved up for a joint return. The 25 bracket begins at taxable income of 90,000, 12 bracket covers everything between this is a single worker. Weve heard quite a bit about the married couple with two children who would benefit not only from the standard deduction but the Child Tax Credit. Im just trying to talk about the individual worker whos there plugging ahead at 48,000. It would surprise you if the Tax Foundation found out that he would be returned about 1,300 in his pocket . This is a hard working guy who would have money to invest back in himself. So if the foundation made that calculation, would you have any question reason to question the accuracy of that . Well, i havent tried to validate any particular example. Id be happy to get together with my colleagues and work through the example. But i have no reason to. Let me ask. That same company that i visited thats trying to compete against people from all over the world that struggles sometimes to be able to make the Capital Investment, the ability now for them to be able to make up front Capital Investment at the very beginning beyond the past 500,000 if that same machine that the owner was explaining to me, 1. 4 million, would he be able to write that off this year . Under the legislation before you, hed be able to write that influence either under section 1 as a section 179 investment or if the taxpayer were making more substantial Capital Investments during the year, similar tangible property generally kw generally qualifies for the 100 of bonus expensing. I thank you. So the answer i ask those questions because i point to the real impact on real hardworking everyday american taxpayers, the Manufacturing Business in my district and the way people will genuinely benefit from this legislation. I thank you for your discussion with me on that, chairman. I yield back. Youre recognized. Thank you. Mr. Barthold, id like to start my line of questioning, i think that we have already talked about the effect of hr 1 on individuals on businesses. Id like to turn to how the this bill will affect local communities and municipalities if we can. So many of us represent distressed communities. Oftentimes the code, the tax code allows certain credits that will encourage investments even in distres and low income areas. As a former or recovering bond lawyer, i can attest to the fact that through tax exempt bonds weve built hospitals and schools and roads and bridges. I think you know where im going. But historically low income communities experience a lack of investment as evidenced by the vacant commercial properties,out dated manufacturing facilities and inadequate access to education and health care services. The new Market Tax Credit Program aims to break the cycle of disinvestment by attracting the private investment necessary to reinvigorate those local communities. In hr 1, does the bill do anything to this very Popular Program . And if so, what is the cost or revenue savings that would be generated by eliminating it . The legislation before you repeals of the new market tax credits, but it was scheduled to expire 2019. So on page 4 of our revenue table, under the current expiration date, repeal of the determination of the tax credit would increase receipts by 1. 7 billion over the budget period. And it would also yield 37 billion worth of savings or Something Like that by eliminating it . Our table is only the effect on federal receipts. The new market tax credits and historic tax credits and other really important opportunities for local communities to be able to build public to fund public projects is critically important. I guess my other question to you is what would happen to Popular Programs such as the historic tax credit . What would happen under this hr 1. The legislation would also repeal the rehabilitation tax credit. What about the empowerment zones . That. That would also be terminated. You know, would it surprise you, mr. Barthold all existing benefits under both the new market tax credit and any credits being claimed under the rehab credit, any empowerment zone credits are grandfathered. Its only the repeal its new. So thank you for that distinction. So all of the current benefits that one community has received by having these new market tax credits and historic tax credits, but future projects would be hindered by such a bill. It shouldnt prize you that in the state of alabama Childrens Hospital birmingham would not have been built if it had not been for advanced refunding of the bill of the bonds. They were able to finance it in 2009 when we were going through a really tough economic time and advanced refunding allowed them in 2015 to refinance those bonds at much lower interest rate, therefore saving Childrens Hospitals a lot of money. What would happen to advance refunding of bonds under this bill . The ability to advance refund bonds is repealed. Bonds can always be currently refunded, but the advance refunding would be so that Childrens Hospital of birmingham would not have been able, if this fwas currently th law would not be able to refinance at a lower interest rate, therefore costing the hospital more. Is that correct . Its not completely precise because they could refinance but do you take into account derivative effects of refunding and these bond exemptions . It sounds to me that your able only looks at the cost of not doing the refunding or not having the new tax credit and not the derivative benefits of having tax exempt bonds and all the public works, good public works that they do. When we undertake the macro km Economic Analysis we try to take into effect the effects that are built into the economics. You take into effect the derivative . The ladys time has expired. Just to note, tax exempt Municipal Bonds remain in hr 1. Thank you, mr. Chairman. My dear friend and colleague from new jersey had made some statements during his time that i want i just couldnt help but ask that he would yield because i have a particular situation of what i would like to be able to share. He made comments that if these tax policies went into place, particularly in new jersey, that these policies would affect peoples decisions on leaving new jersey. And it brought to mind a particular situation that two weeks ago i had an opportunity to be at a Birthday Party for a dear friend of mine that turned 80 years old. He had some friend there is that had moved from new jersey receiptl recently. They made comments about what a big raise they got in their expendable income, disposable income because of the lack of taxes that theyre paying in tennessee related to what they were paying in new jersey. As a matter of fact, they particularly spoke about the fact that their property tax, and they bought a huge farm, beautiful farm, were about 75 less than what they were paying on a small house in new jersey. And i thought that was really interesting because i want to ask some questions of you, mr. Barthold, about people making decisions when they have disposable income or they receive more income than what they traditionally receive. So in this particular plan that we have, and i want to use the state of new jersey that indicates that about 30 of the people are itemizers, so that means that 68 of the people do not itemize and would not have an opportunity to have an effect of the itemizations, but they have an average Median Income for a four person household 90,000 and they would receive about 2,100 under this plan. So when someone then gets that kind of a tax break in their income, just by human nature, what would people normally do with having that kind of additional income within their household . Ms. Black, they would spend some and save some. And to go the next step, thats part of the analysis that we would undertake as part of our Macro Economic analysis. If theres changes in disposable income, what effect might that have on the overall economy. What effect does that have . Well, increase in demand for consumption goods can increase business profitability. It can lead to increased employment. So at the end of the day, according to your analysis, what will happen here is the economy will actually begin to grow. I shouldnt prejudge an analysis that i havent done yet, because there can also be offsetting factors from the totality of the legislation, but in terms of the particular aspect that you identified, if households have more after tax income, they spend some, they save some, both of which can have positive effects on the economy. At the end of the day, the truth of the matter is if you have more money in your pocket, you spend more. That means another good or services than established and that means that all of us do better as a result of that. That really is what our tax code reform is about. It is about helping those especially in the middle income to have more money in their pocket so they can make the choices of what they will do with their money. But it also means that as they grow and the income grows, it means that we will be able to find a way to eventually start to get our spending in control and being able to balance our budget. So at the end of the day, everybody benefits by this. But particularly in our plan it is the middle income earners that will benefit by this plan. So thank you, mr. Chairman. I yeel back tield back the bala time. Youre recognized. Thank you, mr. Chair. Thank you, mr. Barthold for being with us. A few questions. Will a teacher in my district who buys pens, pencils, paper for his students be able to deduct these costs from his tax returns under this plan . Hr 1 would repeal the above the line deduction for teacher expenses. Will a corporation that buys pens, pencils and papers for its workers be able to deduct those costs from its tax returns under this plan . The general deduction for ordinary and necessary business expenses by any business entity is not changed. So they would. Yes. Will a firefighter in my district be able to deduct the state and local sales taxes that she pays from her tax returns under this plan . As noted previously, the itemized deduction for the election of either state or local income taxes would be repeal under hr 1. Will a corporation be able to deduct sales taxes on business purchases under this plan . Sales taxes incurred as part of the production of income would remain deductible. So they would. Will a homeowner in my district be able to deduct more than 10,000 in property taxes . Real estate taxes under hr 1 would be capped at 10,000. Itemized deductions. Okay. Will a corporation be able to deduct more than 10,000 in property taxes under the plan . Again, under the same rule i was describing as ordinary and necessary business expenses, the taxes attributable to earning income would be deductible, so the short answer is yes. Okay. And if a worker in my district had to move because his employer is forcing him to relocate his family or potentially lose his job, can he deduct his moving expenses under this plan . That above the line deduction is also repealed. He would not be able to. Correct. If a company, a corporation decides to close its facilities in my district, fire its workers and move its operation to china, say, can it deduct associated moving expenses under this plan or to state it another way can a corporation under this plan deduct outsources expenses incurred in relocating a u. S. Business outside of the United States . Outside the United States or within the United States, those would be deductible expenses. So would you say that this legislation treats corporations and individuals in the same terms of who gets to keep deductions and who doesnt . I would personally not phrase the question that way. I think thats more something that is appropriate for the members to debate. Clearly theres a difference in terms of the impact weve had on individuals and policy changes there, but not similar changes on businesses. But the i wont say distinction, but the precision i was trying to draw was that expenses attributable to earning income remain generally deductible under the plan. The itemized deductions relating to a person as a household are what the expenses that they have to pay just to get by. I also want to mention we were talking about jobs. There were a record six million open jobs nationally according to the department of labor statistics this summer. So what are we doing in this legislation to help make sure that people have the skills to get that job . My colleagues keep talking about additional jobs. We have six million open jobs in manufacturing, construction, education, and health, retail across the country, and is it true that businesses, for example, their ability to pay for tuition, theres a change in tax policy under this plan for their employees . The exclusion from income for employees from education provided by their employer is e repealed. And if filling those jobs through investments that we made in skills training, would that have an impact on our overall economy . And would you look at that if you looked at a dynamic score about whether we were actually filling jobs . Well, as ive tried to explain when we do our Macro Economic analysis, we try and look at the economic incentives to supply labor, to hire labor, to does thank you, mr. Chair, yield back. Thank you mr. Chairman, i think its important for us to get back and kind of focus on, theres been so much discussion of the benefits of the bill, the whole goal here is, and theres been a number of entities that have substantiated the statistics that we have been quoting here all morning. This bill cuts taxes, it creates jobs, energizes this economy, and results in higher wages and more money in the average workers paycheck. I mean thats the goal here. And we can focus on all of the separate items that were removing from the tax code and say theyre not getting this and theyre not getting that and theyre not getting this and that. But the overall big picture is, across this country, at every income level we see tax relief, jobs being created on the corporate side. And again, if you want to raise minimum wage, this is one of the ways to do it. And trade would be another way mr. Chairman to help our economy grow. But i want to go back to something that one of our colleagues said about an hour ago in this conversation. This is regarding our enhanced standard deduction. We know that does a lot for families, but thats not all that were doing here in this bill obviously. The expanded Child Tax Credit, the personal credits and the lower rates that are hitting now at higher brackets. All combine to cut taxes for families. And i wonder if you could just comment on how all of those aspects i just mentioned, Child Tax Credits, personal credits, higher rates working at higher standards, how does all that Work Together to lower taxes for americans. In terms of the individual income tax, the significant moving pieces that you have identified, you redefined the tax brackets and as i have noted, you generally move up the entry points for the higher rates so that provides a general tax benefit absent any other changes, an increase in the standard deduction as a stand alone measure, also creates a larger zero tax bracket. So that would benefit all taxpayers. The expansion of the child credit would generally aid all families with children up to, and you expand the phaseout, you increase the phaseout point in hr1. One factor in the calculation of any particular example. You might be looking at is the repeal of the personal exemptions, so theres a tradeoff of all of the things i identified, i think you would generally see as providing a tax benefit, the repeal of personal exemptions would be a negative, would be a negative. So its a balancing act and in most situations, i think in the case you were describing, in a number of the examples that some of the members have described, theres clear tax benefit. But there are some there would be some winners and losers, but those are the main moving pieces on the individual side. Bottom line is, lower taxes . On net as we have on the individual . As we have calculated and reported, net tax reductions. More jobs, bigger paychecks. Higher wages. The last thing, just an observation, i was here when obamacare was being defebated o this committee. What obamacare was doing was taking away Health Care Choices and raising taxes. And what bewere doing here tod is cutting taxes and giving people a choice to do what they want to do with their own money. I yield back. Thank you. Mr. Bartold, im looking at section 2 of thisone provision specifically states that unborn children can be named as beneficiaries for certain College Savings accounts and goes on to define unborn child. Mr. Bartold, if parents want to save money for their childs future education expenses, can they put the money in their own name and transfer the money to their child once their chir is born . Yes, you can. I found the only place where the term unborn child appears in the entirety of the statute, in the 2014 laws relating to crime, and emergency medical procedures for pregnant women. So does the term unborn child occur anywhere in the tax code . Not currently in the tax code. What happens if the woman has already opened the account of her 529 of her unborn child and she subsequently miscarried . Would she be committing fraud if she miscarried and did not notify the irs . To step back just a moment, under present law, 529 plans are creatu creatures of the state and they are governed by state rules and how the states establish the plans subject to kind of federal overlay. So under present law, if theres a death, the treatment of a plan where a beneficiary has died may vary state to state, but its provided for. To answer your question, it would be up to the state. I understand. I would like to enter into the record two articles. I conclude from these articles that the insertion of this language has nothing to do with College Savings accounts. Instead, this is an attempt by antiabortion advocates to redefine personhood, but in the tax code. In fact a spokesperson said that the language is a small inclement in the mow mmentum th were building to make sure that every child is welcomed and protected under the law. The march for life group went even further stating that the proposed plan is a huge leap forward towards repealing an antiquated tax code and that we expand the tax code to include unborn children as well. If this kind of dangerous language starts appears in other places in federal law, it could have far reaching implications on womens health, but ultimately the inclusion of this language is yet another republican attempt to block a womans congressional right to abortion, but this time in the guise of changing our tax code. On another note, mr. Bartold, this state and local income taxes paid on employees wages correct . Yes, it does. But isnt it true that the bill allows for pass through entities to deduct state and local income taxes for the portion thats attributable to their business . Yes, for income thats attributable to the business income. So a private Equity Partner could receive a federal dete deduction for the state and local income tax paid, but a janitor at that same private equity firm may not receive a deduction for the state and local income taxes that he pays . I believe is that under the legislation, i would that would be incorrect in that example, ms. Chu because the financial services, which would be the private equity firm would be precluded from maximum rate of pass through and that income is fleet e treated as ordinary, and i think under the legislation still would not be deductible. But pass through gets to deduct their state and local income taxes correct . Attributable to the business income. That is what i am talking about. This is the height of hypocrisy to not allow individuals to deduct their state and local income taxes but allow pass through businesses to do the same thing. Thank you, mr. Chairman, i wanted to weigh in on my friends on the other side of the aisle, we talked about this idea of def s deficits, the next 10 years, 2. 3 trilli trillion. Everyone has a reason for running for congress. My reason was deficit spenting, if you look at the last ten years, its 10 trillion, when i got here, it was 8. 7 trillion we were running a deficit. 8. 7 trillion in debt, we have accumulated over 10 trillion. Its not all your fault. We can all take some responsibility, but thats the reality, we have accumulated 10 trillion, and it was such an issue in terms of the stimulus, we have had a 10 trillion stimulus. And my point for just saying that, and theres plenty of blame going around, we have only balanced the budget five times since the clinton years, so theres plenty of blame to go around. My point is, we need to find a way to grow this economy. Do you know what the growth rate for america was average per year the last 10 years . Im sorry, mr. Buchanan, i would have to look it up. I dont know off the top. I think its 1. 5 , never got to be 2, its the slowest gr growing economy. In business, you either grow or you die. And thats part of the reason why so many people, their paychecks, they havent gotten a pay raise in 10 years because their economy hasnt grown. If we grow this economy 1 with this tax plan in the next ten years what that means in terms of Economic Growth . 1 a year for the next ten years, how much is that . I believe the Congressional Budget Office growth projection is approximately 1. 9 , 2 . So you would be talking an annual growth rate of gdp of 1 . So what would that mean. On an 8 trillion economy, thats 180 billion additional income tax per year, which compounds across the decade. Well, i looked at it, it was 2. 8 trillion. Ill give you that math. You might be right on that. It was 2. 8 trillion the next 10 years for 1 growth, and thats what we clearly need to do, because what weve kbeen doing hasnt worked. The reason why in my mind so many people are coming to florida is two things, one, it boils down, and ive been a guy whos been in business for 40 years, people are coming to florida in droves, 1,000 people net a day, why . A lot of our Business People who are looking to get in business are relocating their business to florida and part of it is one leadership, theyre open for business, but the second thing is they have a low tax state. Theyre always looks for ways they can lower taxes but theyve got the budget there because they do have the growth. Thats what i need every single day from the midwest or the northeast are moving there simply because of the taxation different. Thats why this bill is so important going forward. I want to 20u67 quicktouch quic individual rate. In 2019, the middle class gets a tax cut, is that what you said . I said our table that we provided in your report said in 2019, all income categories are receiving a net tax cut. In terms of Small Businesses, what does expensing do . How much is that going to help the Small Business guy, that most of them make 100,000 or less, maybe 90 of them, i used to chair the florida chamber. But if someone buys a piece of equipment for 100,000, they can write it off that year, thats got to be a gigantic opportunity for them to grow their business and create jobs, wouldnt you agree . Yes, sir. And ill just clarify on this 179 point on which i think youre alluding, the expensing 1 100,000 worth of equipment. We have to turbocharge the economy. We have got to get america back in the business of business. Thank you mr. Chairman. Thank you, mr. Buchanan, ms. Noam, youre recognized. Thank you mr. Bartold for being here. Ive been listening today, and i feel a little bit bad for you, i know its strange, isnt it . A lot of people have raised their voices at you and made political speeches when really your role here today is to answer questions about the legislative text in front of us. And so i appreciate you being here and doing that for us, because we want to make the best decision for families, and the best decision for america. So that we can grow our economy, which basically means when you grow the economy, you raise wages, you get more jobs in the county, you have more people who have options. So when was the last time you had a markup on a bill of this size that was doing tax reform of this size . I mean you have been in your position for how long . Ive been the chief of staff since 2009. Have you had a bill of this size doing tax reform since youve been in your position . Well, actually the american reinvestment recovery act was substantial, but this would be larger. This would be larger . It has much more reforms, im guessing to the tax code than that did. Many more changes to the tax base and rates and the like. It was interesting for me to here one of my colleagues saying this bill was written in the dark of night, because i remember a dozen formal hearings on tax reform that have attended in this hearing. And not having input and i have been in several meetings that were bipartisan, so i am surprised by those comments. Chairman, your time is up. Thank you. Thank you. I wanted to ask you for some clarification on the Child Tax Credit. Because i have spent a lot of time working on several p provisions, the death tax, the tax credit for Small Business and the Child Tax Credit. So i wanted you to tell me the demographics for people that would benefit from raising the Child Tax Credit, we raise it 16 for each child, and we also sad credits for the adult taxpayer and the spouse. What are the demographics of those families that would benefit from that Child Tax Credit of 1,600 that that credit is today. The Child Tax Credit is expanded in its max max tud from 1,000 to 1,600. It so for these people that can claim the full benefit of the present Child Tax Credit, the credit value is increased 600 per child. The legislatation before you also raises the phaseout points of the Child Tax Credit. To 2 230,000 for joint filer 115 for sickngle filers. So that means you have an expansi expansion. Mr. Chairman, i think you have to raise the mike volume. I think you can pull it closer, thank you. Im sorry, members. I was explaining that the legislation also increases the phaseout, the beginning of the phaseout range of the Child Tax Credit, for example under present law, joint filers 110,000, so everybody call would now get the child credit, and the expanded child credit. So that would be the profile of the families that for those who claim the child presently, 600 increase. And 230,000 of adjusted gross income, it would be essentially an all new benefit of 1,600 per child. How would this affect families that have three or more kids. Those numbers times three and four and more. So the benefit grows . Its per child. Okay. All right. I appreciate that and i appreciation that clarity to the benefits and the focus on strong families. We want to be able to provide strong futures for their family as well. And a lot of thought and bipartisan feedback has been put into this proposal, so i thank you for answering those questions. Mr. Chairman, im so excited to be here to work on nuinitiatg our tax reform plan, the tax cuts and jobs act. And, you know, the title means a lot. Because it focuses on two things, tax cuts. Two often i think we snow cufoc much on just where the tax cuts are going. Thats not my primary goal, my primary goal is to restore our country as a land of opportunity, i think we two that through growth. Mr. Bartold, your distribution analysis, correct me if im wrong, doesnt it say that for 2019 and 2021, that every income category receives a tax cut, is that correct . Thats correct, mr. Rice. And then in 2023 and 2025, because of the expiration of some provisions, theres a small increase and then it comes back down in 2027, is that correct . Thats correct, mr. Rice. And to back that up and i know you cant confirm this, but last week, the Washington Post in response to positions taken by some of the senators, democrat senators said that every income quintile in the United States would receive a tax cut under this plan, and that in fact, 93. 5 of the ta taxpayers in this country would receive a tax cut. Then you throw on to that the Tax Foundation which lost says every income quintile would receive a tax cut. So we have pretty good reference material, pretty good agreement across the political spectrum if you count the Washington Post, that every income quintile will receive a tax cut. Getting beyond that, in my opinion, thats really not the most important thing, the most important thing to me is growth, because thats how i think you restore american studeopportuni. Mr. Bartold, you probably dont have the numbers in front of you, but would it surprise to you know that in 1986, we did a Tax Reform Act, which at that time was competitive in the world. But since then we have stood by while other countries have made their tax codes more executive. And in 1990, in inflation adjusted dollars, the middle class made 54,000 a year. Would that surprise you, mr. Barthold . I was a practicing young tax lawyer at that time. I joined the staff the year after the 86 act, sir. So would it surprise you that the middle class was making 54,000 a year in 1990 . Your 54,000 in 22 years since we went back, there has not been a substantial growth in median Family Income in the last two decades. Soi so i would be surprised. I would like to check it. Thats my point exactly, the middle class hasnt had a raise since 1990, for goodness sake, and mr. Barthold would it surprise you that according to the Census Bureau in 1990, the middle class made up 47 of the population, or excuse me 37 , im sorry, 47 and today it makes up 43 . Would that surprise you, mr. Barthold . Mr. Rice, im actually confused about the statistic that you just cited. This is according to the Census Bureau. It says in 1990, the middle class made up 47 of the population, now it is 44 of the population. Im looking for growth and im looking for opportunity. This tax plan, i know you the tax joint committee on taxation hasnt done their growth projections, but with rate reductions and with full expensing, do you expect this would encourage growth, mr. Barts cbar barthold . As i mentioned earlier, there are things that would be pro growth and theres other considerations to consider. The Tax Foundation says it will increase gdp by. 4 , and i have seen estimates as far as 5 . Thank you, mr. Chairman, as im juggling all these coffee cups. Mr. Barthold, just a handful of quick things, i just want to make sure im getting my head around and then i thought it would be appropriate to share sort of a personal fixation, as your modeling, at this point, if our tax reform legislation were to become law today as the house side has it written, you see only 6 of americans having to itemize anymore . That would be our projection for next year, thats correct. So 94 of americans would be just using the standardized deductions . Thats correct, sir. Have you ever taken a quick look to see, would that actually change Tax Compliance because of it becoming so dramatically simpler for so many more people . Actually compliance is part of all of our estimates. So some of the changes would be where there has been recorded noncompliance has been in reporting of charitable deductions for example, sometimes and other miscellaneous itemized deductions, so there would clearly be some compliance gains in those areas. Its interesting as you start to do your growth moddi inelmods interesting that we may gain more compliance over here. Our conventional estimate tries to account for compliance gains. Mr. Barthold, in your modeling, will you also take a look at payroll taxes . Tax foundation in their model, i guess that was published on friday, had almost 300 billion dlr additional payroll taxes. We analyze payroll taxes in terms of this analysis, in terms of on budget and off budget effectses. I assume that the only sis self employment income are generally subject to payroll tax, self employment tax and thats what theyre reporting. Likewise, we would report increases in labor income as part of our analysis. Would you agree that some of that will be also very sensitive to expansion of the economy, a dynamic sorcore . If the labor mashlrket increases, you would is the effects you just mentioned. On the modeling you have done in the past on the static side, did you use cbos gdp calculator, because i think the cbo is saying the next 10 years they expect 1. 89 gdp growth per year . All of our estimates start by making comparison to the cbo macroeconomic baseline. We dont use any sort of cbo calculator of im sorry, baseline would have been in terms of what we have presented to you over the past couple of days, its how would things change relative to that baseline before trying to assess, does growth change, does growth rate change, does emploine employment change, does investment change. But none of those are figured yet . Thats correct. Look, and this is less a question, its probably closer more to a statement. Many of us have an absolute fixation sand a great fear of the debt bubble, the tigentitlet crisis thats just on the horiz horizon, theres a couple of models that blow up in ten years, some are longer, some are even less. The fact is were going to spend about 50 trillion over the next decade. Change in economic expansion, change in Economic Growth, getting from 1. 9 growth to 3 , and have an expansion of 2. 8 trillion in the size of the economy, this is absolutely crucial, if you love your brothers and sisters, if you care about people moving into retirement, if you care about people being able to save, if you care about people being able to finance and help have some resources for their kids education, were in incredible trouble if we keep this status quo. Part of this debate becomes defending the status quo or defending reform. Im excited that this day is here, we can talk about tax reform and job creation, but is something thats just important that i hear about from folks from our district, is the education for the workforce. Families face a maze when they look at these education tax insei incenti incentives. Isnt it true that there are 15 different tax incentives related to education . Yes, it is. Do you know, do families tend to use one of those or do they tend to use it in combination . Some of those incentives under present law are to save for future expenses, some are incentives to pay for packs expenses and some are concurrent with expenses. So its reasonable that many tax spayers may use multiple provisions. So if a parent wanted to figure out what incentives were right to them, they might turn to publication 970, are you familiar with how many pages that little document contains . No, i am not. Youre not privy to that information . I could look it up so i do not know. Its 9 7 pages, if youre a parptd, you shouldnt have to sit down and read 97 pages of legals. Can you explain the streamlining of the education tax benefits in h. R. 1 in the new provisions . As i noted in the overview, under present law, having the American Opportunity tax credit and the lifetime learning tax credit, and its also currently expired, but there has been over the last few years a tuition Tax Deduction. These are all for current outlays for education. H. R. 1 would repeal the lifetime learning tax credit, it repeals, or keeps repealed the deduction for tuition and would say that for current expenses there is just the American Opportunity tax credit. It would expand the American Opportunity tax credit to pick up some of the purpose of the lifetime learning credit, which was i allowed taxpayers to claim benefits related to tuition expenses for more than four years. The expansion is to provide a fifth year of higher education. So theres a trade off there, but those three kind of con soep sents thesent consents there are collapsed into one. As far as savings incentives, the coverdell account ask basically a reveal with balances into the 529 programs, so h. R. 1 would keep the 529 program, elive nature the cover dell program, to the extent there is overloop the overlap there, it would improve the educational savingings bond. We would just repeal that out right. I appreciate that. And i am going to assume that irs publication 970 gets much shorter and i i would thank you for the delineation of the tax credits that are rolling in making it easier for families to claim an enhanced benefit to begin with. Thank you for your insight and i yeeltd ba yield back. My unanimous consent to correct the record. Youre recognized. Mr. Chairman, thats very kind of you. Mr. Chairman, my good friend from tennessee, ms. Black who i have a great deal of respect for, i hope she doesnt adhere to secretary of the treasury mnuchins concept of whos a donor and whos another kind of state. Her state of tennessee gets 1. 38 back from the United States government for every dollar of taxes sent down there. In new jersey, we get 72 cents at most. 42 of new jerseys state who are the donor states, who really counts. I am tired of hearing anybody saying were being sub sid subsidized by these states. Is there a unanimous consent . The unanimous concept is to correct the record. Correct the record. Does anybody wish to strike the last word . Mr. Chairman, you apparently took exception to the use of the word maybe for the architecture that we have developed in terms of proposing this tax cut. So i what thought i might do, if we cant agree on the term maybe, maybe we can agree on the term maybe not. So im going to give you a chance on the other side to say, were going to built a safety net if in fact this doesnt happen. So i am arguing that the problem we have endemic in our economy has to do with demography, it has to do with globalization, it has to do with skill set. 18,000 manufacturing jobs in new england alone that go unanswered and another substantial part of the problem today, the opiod epidemic, which some argue keeps up to 2 Million People sidelined. If its maybe or its maybe not. Heres what im suggesting. Im proposing that we would allow the secretary of the treasury his amendment too examine whether or not the deduction for real estate taxes that are proposed in this legislation. If it were determined by the secretary, that the present average home values nationally in each state and the district of columbia, and the 10 largest metropolitan areas have over two years declined by 10 or more, the provisions would become null in the next year. So its what we would have called the cold gated invisible shield. Im saying that growth is speculative, based on some of the proposals, including the argument over the years that tax cuts pay for themselves and im additionally arguing that in 2001, 2003 and with repatriation, there was little if any Economic Growth to justify that expenditure. In addition what im arguing is perhaps based upon the vision that has been offered and has been calculated in the proposal thats before us today, maybe the wisdom would dictate that 9 11 would not have occurred, or that two wars would not have occurred now that we 16 years later are still in afghanistan, or perhaps adding on to that the additional argument that we have the worst recession since the great depression. This guarantee has been offered by the majority, that this plan in front of us is going to get us north of 3 of growth, im saying you use the caveat, ill u use the caveat maybe not. Are you yielding or are you jupds eve just becausing . If you want to succeed to my wish and say its passed. I respectfully decline, youre yielding back. We have heard from a majority today the term middle class, i think more than any other term. And this bill is parading as a middle class tax cut. But the taxes dramatically rain on that parade. And i want to go through them and im glad mr. Bartholt youre still here. For 2027, it shows an increase in taxation, 20,000 to 3 30,000. For those 30 to 40, it shows only 3 million. For those a million and above its 36 trillion. Do i read that correct lycorrec . Yes, mr. Levin. In your amt, the distribution chart, it shows for 2018, with the repeal, that there would be 31 billion saved for 4. 6 returns and almost all of that is 200,000 income annually and above, correct . Mr. Levin, i think youre referring to some analysis that i have provided to you that the rest of the committee dont have before them. You said the amt. I dont have a copy of the analys analysis. By the way, the president falls within that category. Pass throughs, you havent been able yet to give us a distribution table, but we have discussed this before. And as which discussed it, when you look at the distribution table a9 from this document called overall view of the federal tax system, it shows that if you look at schedule c and e and almost all of the pass through money is in those schedules, right . Mr. Levin is looking at the document jcx 1717. And table a9 in that document provided a distribution by our income categories of where age income falls and where Dividend Income i have just limited time. I would ask this be put in the record. Happy to make sheure that al the members have a copy of that. And almost all the pass through money would be reported in schedule 3 and e, right . Yes, thats where pass through income is shown. It. And it shows schedule c and e together have over 5 500 billio in schedule c and e. So the notion that the pass through goes for Small Business is wrong. The it state tax repeal, 119 billion and that includes other changes, but i think most of it is in the repeal of the estate tax and i think it would be helpful if use could give us that. So thats why i said that i thought that the speakers statement that i read deserved a rating of four pinocchios, and i think the same is true of the president. Who said we will cut taxes for middle class families. This is a major, major tax cut. The tax cuts overwhelmingly go to the very wealthy, and you have compared to that very small cuts for everybody else. And they talk about special interest. The main special interest in this bill are the very wealthy. Mr. Reed mr. Chairman. If i in reference to the documents that mr. Levin referenced. I have delivered to every member of the Committee Later this afternoon, some analysis of the alternative minimum tax that he was referencing and the chart he was talking about income reported on schedules c and e. And it would help to go to the media too. I move to strike the last word. My good friend mr. Higgins of new york, who truly is a good friend, and i truly mean that mr. Higgins, there was some confusion when i heard his questioning of you, and what i wanted to clarify, and i hear this quite a bit when im traveling around my district and it deals with the state and local tax dezuduction and the ls of that deduction in new york. Deductions are different than credits, deductions are if you lose the income tax ded deduction of 9,000, that doesnt mean you get a dollar for dollar reduction in your Tax Liability of 9,000, isnt that correct . Thats correct, mr. Reed, the value of a deduction, is generally the amount of the deduction times the marginal tax rate of the tax bracket that youre in. And one of the reasons why i had voe indicated for a compromise on the state and local Tax Deduction policy is that the policies are what we consider progressive taxes, you pay your property taxes, regardless of your income, if youre a single parent, if youre a senior on a fixed income, whatever that property tax bill is, you pay that full property tax bill, correct . The property Tax Liability does not vary with income. Correct. So when you lose the income Tax Deduction as part of your state and local Tax Deduction, generally income taxes at the state level are very progressive, ie, the more you make, the more taxes you pay. So therefore isnt it a correct assumption that the income taxes at the state level are highly progressive so therefore the higher income folks lose the benefit of that deduction of that deduction vrersus lower income taxpayers, correct . Itemizers tend to be in the top half of the income tax distribution to begin with. State income taxes tend to be progressive in different degrees, different states, so higher income individuals in any one state typically pay more than lower income individuals. I appreciate that clarification, and that was one of the concerns i raised as we went through this process, and i respect the chairman for entertaining a compromise on the state and local Tax Deduction, because when we look at tz property taxes they are progressive, they hit those Single Parents and those seniors in a harsh way, compared to the income taxes. I think taking that type of a approach is a reasonable approach and i think the chairman for that consideration. With that i yield back. Mr. Lewis . Thank you mr. Chairman, i move to strike the last word. Its hard to put my feelings into words today. You see i was elected in congress of november of 1986, only a month after the Tax Reform Act became law. It was tax reform, not tax cut. Is members of this committee inspired our entire class and we took our oath on the house floor 30 years ago. It set the gold standard, a bar to which we all aspired. Elected by the people, they work with the people and they fought for the people. Back then the Committee Members took their time, they worked across the aisle and across the dome. They inspired many of us to fight for an appointment in the ways and means. The only Standing Committee in the house. Everybody here today knows that thats an insult to their legacy. This bill is a shame and a disgrace to the spirit and history of this committee and the constitutional duties and responsibilities of the United States congress. First and foremost, this tax cut legislation does not make the tax code any simpler or any fairer. Constitutional republicans passed a tax bill of this size so late in the year, it would be a nightmare for the irs to implement a tax payers to understand this bill, this code by january. Second this bill is a slap in the face to real people, you are giving trillions in tax breaks to millionaires and billionaires. This is not right. It is not fair. It is not just. How can we punish teachers who are just trying to buy supplies for their classroom . How can you target the sick, the elderly and the disabled . How can you target immigrant children in a way thats just plain mean and heartless. Most importantly how can you bury your head in the sand when there are grave issues in this country. Like transportation financing, student dead, wbt, war funding, affordable housing. The spotlight will move on. Every Single Person in this room knows what will happen from the shadows. Even the this creative math can not hide this deal. This bill robs poor peter to pay paul. Away from cameras, Congressional Republicans will start to cut their the record should be clear, this is not about tax reform, either tax cut for the superrich, this bill turns a blind eye to the middle class and a deaf ear to working families. Members of this committee must be honest to the people we represent and serve this bill will pick a few winners, as our children, grandchildren are gone. Look aroundre surroundsurround ed by portraits of those who put finances before politics. They designed visionary politics like medicare, Social Security and the gi bill. We walk in the footsteps of those who sought to create a better world for future generations. How can we look ourselves in our eye to know that this bill is our gift to our children and grandchildren. In the coming years, there may be small wins, but the damage to our budget and our future is done. Mr. Chairman, i say this to all due respect, this spiceful, irresponsible tx cut is not worth the paper on which it is written. Throw this bill out, let us come together to work for the American People, we can do better, we should do better, let us do what we were elected to do, to serve americans, not just a select few. I yield back. Thank you mr. Chairman, well, today, we reach the holy grail of the republican party. It exists to provide more tax breaks to the few, to benefit the privileged and its been amazing at the price thats already been paid to get to this point, because theres no wrong doing in which donald trump can engage, no insult, no attack on our Justice System or our law enforcement, no endangerment of our security that will cause many of our republican colleagues to say enough, or to speak out about that wrong doing because theyre convinced that donald trump is the Golden Ticket to getting their holy grail. Today, the odds look pretty good in their favor of actually forcing through trillions of dollars of additional debt, and providing tax changes that mainly benefit the few and the multinational corporations. But i would remind my colleagues of our experience on health care. That when it appeared that millions would lose their coverage, americans united and spoke up and said no, this will do so much harm to my community, to my family, to my neighbors, that we just cant have it. And im convinced that it was not just the courageous votes of john mccain and Susan Collins and others who said we will not accept this. And we can already see at this time as a prelude to this committee approving this measure, we can begin to see the effects of the American People paying attention to the fine points of this legislation have already been made. Remember a couple of months ago, this bill was going to make us pay 20 more for everything we inportded. The border adjustment tax, but because americans demanded that that go, its out of the bill. Only a few days ago, it appeared that our Retirement Security would be significantly jeopardized for removing incentives for retirement. But because the American People have spoken out were beginning to see that change. And the same is true, though it has not been as complete with regard to property taxes, of having to pay a tax on top of a tax, at least there has been a change there. So i would say today that if the American People continue to study the impact of this bill and speak out this great harm can be prevented. And i am so pleased that our colleague brought that big stack of books down there. Eight big volumes of all the complexities and the tax laws that exist. What he failed to point out, is that in the period since Newt Gingrich was sworn in as the republican speaker of the house, a period or a couple of decades in which democrats have had the presidency and the congress for exactly two years. That almost 40 of those books were enacted by republicans, by republican controlled congresses, enacting loopholes after another. And today they tell us that after putting in those loopholes and expanding that tax code, they tell us they know how to simplify it. The multinational corporations are not going to be filing their taxes with a postcard. Under this bill, they have an incentive to build their warehouses abroad. Theyre going to go where this bill insent vises them to send their factories, and were going to see the outsourcing of jobs to other countries. This bill is basically a job killer s. Its based on the idea that if you trickle down from the top. Goldmansachs talking about how trivial the increases will be under this bill. It is essential that we not outsource more american jobs, that we not burden this generation and future generations with more and more debt as this does. At the beginning of this enterprise, the chairman, back at the beginning of the year, they said they would have a fully paid for tax bill. It is not fully paid for and today we reach for a mythical 4 growth that it will generate. Why not 40 , or 400 , those numbers are as unrealistic as 4 , and they are not supported by anything other than propaganda and wishes for the future. I yield back. Mr. Kelly, youre recognized. Thank you chairman, and thank all of our members for being here today. I think we all get confused when we talk about these bills. I did retail for 45 years, so i actually get to talk to hard working American People every day. When i sit down and talk to them across the desk i cant remember the last time somebody told me, you know what . Im going to take advantage soft a tax credit today, but you know what they do tell me . I just got a raise, i can actually afford to buy a new car or a new truck. Im really feeling good about it. The economy is getting back on track sand i have amount of optimism for the future. And when we come in here, we try to lower their optimism, we try to tamp it down and sigh dont get too excited about it, this is not the right way to go. This is not me talking, this is the tax found digs, im having trouble knowing how a bill is that will create a million new american jobs is a problem, and 40,000 of those in pennsylvania. The bill would increase wages by 23 . A bill that will grow gdp by 3. 9 , almost 4 , in an anemic recovery, when we said if 1. 3 o the fireworks. My gosh. Listen. The United States is currently number 23 on the list. If you want to start a new business, i dont think many people look at this and say, you know what . I think ill take a shot at that 23rd country. I think thats where i want to go because thats where i have the best opportunity. So with the American People have watched this go on and on, this circus, this war between the parties and they start to think about it. I got to tell you, you know who they blame, both parties . Not republicans, not democrats, both parties. And they say to themselves, why is it in a country thats been blessed for so long with so much, why is it that we cant agree on making our lives easier. Why cant we agree that more take home pay is great for Everyday Americans . Why is it that we say, if youre in the corporate world, were going to make it tough for you to stay here. Were going to overregulate you and overtax you and criticize you for leaving the United States. Its not that theyre unpatriotic, theyre just not stupid. They look at whats going on here and theres a lot of optimism. My friends, i got to tell you, dont believe me. Go back to your calendar to november the 8th last year and you see when this thing started to accelerate. After eight years of stagnation. The American People looked and said, you know what . What an incredible day for america. Well take off again. Thats actually happened. Look at the peoples pension. Look how the stock market has soared. This is all because of optimism. And the only thing that can stop that from happening right now is the way we handle this tax reform. If we tell them, no, no, no, you poor stupid people, you dont get it. Were not going to go along with any of this stuff, its a republican bill and then we say, you know what . Theres some democrat amendments that we got to take a look at. We got to stop going back and forth and whats best for our party and do whats best for our people. I would love i want to go back in my 48 years on the floor and somebody tell me the only reason im buying a new car or truck today is because of a tax credit that i didnt have before. Think about what were saying and think about how its heard in the american public. Forget the charts, the graphs. Forget all the different things. Features and benefits thatd value to hard working american taxpayers. Thats the key. Thats the key. It doesnt matter who wins the debate in here. I dont want to make you look bad and sometimes you dont want to make me look bad. I want to make america look great, not just great for a time being but great forever. If we cant get back to who we are as a nation so blessed with assets that nobody else in the world has and says the biggest Thing Holding us back right now is the fact that were so divided politically, what a sin . What a sin . It falls on our laps right now. Our generation. My dad was one of the greatest generation. They went off and fought a war to save us. Lets stop fighting wars and start doing things together that make sense for the American People. Mr. Chairman, thank you very much for doing this. I cant believe it took three decades to wake up and smell the coffee. Thank you. Thank you, mr. Kelly. Mr. Thompson youre recognized to strike the last word. Thank you, mr. Chairman. I just want to reiterate a point that i made earlier and that is the tremendous amount that this bill will add to our debt. 2. 3 trillion. My friend from pennsylvania made light of the debt issue earlier and suggested that maybe some of us have am nearbia, debt am kneesia in not remembering how the debt grew. I dont have any amnesia about this. I know what happened when we had the last round of unpaid for tax cuts. They didnt pay for themselves. They ended up increasing our debt. I remember when we had unpaid for wars, that increased our debt. I remember when we had unpaid for Prescription Drug legislation that increased our debt. And i remember what we had to do in order to get out of the worse recession that weve ever experienced, we had to borrow money to do that. Had we not done it, some of us on this dais wouldnt have the businesses that we brag about having. Had we not stepped in and saved some american businesses, it would have been a lot worse than it was. So no, we dont have any debt amnesia. Ive worked on this debt issue for a long time. As a matter of fact, i carried the amendment on the floor to do the pay go where if you pass a bill, you have to pay for that bill. And what when the democrats had the house, we put that in the rules. One of the first things the republicans did when they took over the house was they took out the pay go rule as it pertains to what else but tax cuts. And when you do a tax cut, youre spending money. It costs money. If you dont have the pay go, what happens . It increases the debt. So no, we dont have we dont have amnesia, we need to make sure we keep our finger on the pulse of this debt. We need to make sure we do everything we can to reduce it because serve the cost the cost of service that debt hits our constituents in the pocket book. It hits them in their quality of life. It undermines their education, their health care, their Infrastructure Investments and Everything Everything else and this bill increases that debt by 2. 3 trillion. 2. 3 trillion. And i also ask, mr. Chairman, why in the world would you have written into the this bill a provision that takes away the casually loss benefits that people who lose their property in a disaster would be able to take advantage of . And youre the guys that wrote it. We were not included. We were not asked to participate. The Majority Party wrote this bill and wherever you do it, the darkness, wherever, but it wasnt any place where we were. The closest we came was when we were invited with some of you to go to the white house and we were told that this is going to be the greatest tax bill ever. And that and no provisions. We were told they wanted to work with us to help do this. They dont want to work with us. The next day they rolled out a tax bill in indiana without a single democrat providing any input. The most substantive discussion that we had from the president is when he informed us that puerto rico was an island in the middle of an ocean and that the ocean was big. We didnt talk about any specifics about tax policy. We did not write this bill. We want to participate in tax reform. But this isnt tax reform. This is this is a big tax cut for the wealthiest among us and sadly, middle class people take a hit. Just like the middle class people in my district who lost their homes in this fire, who arent going to be able to take advantage of the casualty loss provisions. Why in the world would we do that to hard working middle class americans. You certainly found time to ride in antiabortion language but you have to take out take out language that gives folks with uninsured losses a little bit of hope . Thats the right message to send to a community thats just gone through a terrible disaster and i think you know that because some of you represent districts that just went through terrible disasters. Hurricanes in the Southern States and you wrote in legislation that protects them. You grandfathered them in but remember, everybody heres going to have a disaster at some point and these guys took out the language that helps them. The gentlemans time has expired. Strike the last word. We hear the rhetoric and the rhetoric continues to be an effort to try to characterize this as some kind of a saave to the rich. When i go back again, not to the rhetoric but to the facts, to the facts and heres what the facts are as the Tax Policy Center has laid them out. When you factor in the percentage of the plan that would be based on businesses, the passthru corporations, a whopping 75 in the taxes paid are going to those people that are under 200,000 or less. So let me say what middle class is, i dont know what it is in some places but right here and these are the facts the purest definition of middle class household encompassions those earning between 48 and 86,000. I think thats a fairly good calculation. Including wages and other income according to the tasks policy Centers Analysis of the republican tax proposal under the plan those households would save an average of 660 a year. So theyre going to save 660 a year. Now you might have a broader definition of what middle class is. I think i could say that in my own district where hard working taxpayers as my friend in new york have maybe a higher housing cost and other things, so they characterize the middle class there from 86,000 to 149,000. Of that group, an. Would save 1,100 annually. So i think the real difference here is, what my friends on the other side of the aisle want to do is they want to tell you how theyre going to spend your as opposed to you being that middle class person between 48,149,000. Thats what theyre characterizing as middle class. You get a chance to determine how you want to spend that extra 1,100 each year. So the characterization is just flatout a misrepresentation to the American People about what is being accomplished with this plan. The focus to take it so that same worker that i talked about earlier at the penn Machine Works whos struggling with his family will be able to determine what he wants to do with that 660 at the end of the year thats going to be in his pocket. Not in the pocket of my friends who are going to tell you how theyre going to spend it. Maybe well have some shovel ready projects. Remember how good that did for us . I think the facts speak for themselves. Mr. Chairman, i yield back. Thank you, mr. Larson youre recognized. Strike the last word. I thank my good friend from pennsylvania for talking about the need to have the facts. It would have been great to have the facts here. It would have been great if we had one witness, one expert and instead were going to go back and forth for arguments but i would for the record like to submit from the department of Revenue Services in the state of connecticut, the facts about the impact, even though the bill, and i understand mr. Brady, may i ask you a question, are you going to be submitting an amendment later on . Excuse me. Thats my intention. Will it correct the bill further . We will continue to improve this bill. Will it remove the correct correct the state and local tax the gentleman can remove the amendment when its offered. Like i said, we dont have that information and we havent beenll

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