Transcripts For CSPAN3 Senate Republican Tax Reform Plan 20171115

Meeting will come to order. Today we will consider we will continue our consideration of the chairmans mark for the tax cuts and jobs act. Last night, as promised, we delivered to members a modification that we will incorporate into the mark this morning. After that, we will walk through the modification and members will get an opportunity to discuss and ask questions about the modification. Once that process is complete, the mark as modified will be open for amendment. Before we take these next steps, i would like to make a few initial comments, however. I want to thank my fellow committee members. We were able to include a number of their amendments in the modification and the mark, and well be i think the mark will be better for it. From the out set of this process, producing this legislation has been a group effort, as i have been joined and more than ably assisted by the majority members of the committee. I want to thank them and their staffs for the hours, days, and weeks of hard work that have gone into this process. By producing this modification, we have taken another big step forward for tax reform. So once again, thank all of you for your hard work. Now lets talk about some of the highlights in the modification. Ill note that wheel we made some important modifications to the mark with this modphic, these are not sea changes. The core of the mark remains the same, meaning that complaints that yesterdays walk through was a waste of time are misplaced. One significant modification of the initial mark, which will benefit American Families, is a greater expansion of the Child Tax Credit. Bringing it to 2,000 per child and raises the income tax on the credit to allow more middleclass families to claim it. In addition, we will lower individual tax rates even further than in the original mark. The 22. 5 rate will drop to 22 . The 25 bracket will drop to 24 . And the 32. 5 bracket will drop to 32 . While they may seem like small changes, these modest rate reductions belong with the additional expansion of the Child Tax Credit will let us channel even more tax relief to the middle class. The modification also streamlines passthrough provisions, insuring more Small Businesses, the engines of job creation for our economy, have greater access to the benefits. We also raised the cap on the exemption for the w2 wage limitation up to 500,000 for married couples. 250,000 for all others. And the modification expands the availability of the 17. 4 deduction to serve as passthrough businesses for taxpayers with taxable incomes up to the new exemption level for the w2 wage limitation. On top of that, the modification improves the new International Tax system we set out in the original mark, and it insures that the new 20 Corporate Tax rate will be permanent. Even under the restrictions of the byrd rule. Well talk more specifically about these measures as we walk through the modification. Finally, the modification reduces the penalty under the socalled individual mandate tax down to zero. Yesterday, this was the source of some consternation among our democratic colleagues. They were apparently shocked to learn that republicans oppose the individual mandate. I expect well hear a lot about this today. We hear claims that the inclusion of the individual mandate tax relief is some kind of process foul and we have somehow expanded the scope of the market by including it in the modification. But as was reiterated several times yesterday, the individual mandate is a tax. The relevant statute is the Internal Revenue code. The mandate is enforced by the Internal Revenue service. Were all familiar with the old saying, if it looks like a duck, swims like a duck, and quacks like a duck, its probably a duck. I think we can all agree that the individual mandate is a tax. After all, the Supreme Court would have nullified the mandate had they not reached that very conclusion. So the mandate really only exists today because it is a tax. In other words, we havent expanded anything by including individual mandate relief in the modification. And by no objective or reasonable estimation does the inclusion of mandate relief require the inclusion of every federal Health Program under the committees jurisdiction as some of my friends argued yesterday. Nor does it necessitate the presence of a Congressional Budget Office representative at the table, another demand we have heard in the last 18 hours. These demands are absurd. The inclusion of the tax in a tax markup is not a sufficient justification for dramatically altering the way this committee operates. We will stick to the tax code for this markup. That means the joint committee on taxation will assist with the scorekeeping. And will be at the table. If that means and it means that if my colleagues want to raise Health Care Matters from the Internal Revenue code, their amendments will be germane. Any amendments that go beyond the tax code will not be germane. Let me say this, if my colleagues believe we need to discuss our Broader Health care system, and come up with solutions, i agree with them. We absolutely should get to work on fixing what ails our federal Health Programs. But were not going to do so in the context of a tax markup. By the way, the individual mandate isnt just any tax. Its a terribly regressive tax that imposes harsh burdens on low and middleincome taxpayers. According to the irs, roughly 80 of americans who have paid the individual mandate tax in 2015 made less than 50,000 a year. Zeroing out the mandate will raise 318 billion over ten years, money we use in our mark to actually lower taxes for the middle class. Some colleagues have spent a great deal of time over the last couple days lamenting the possibility of tax hikes on the middle class, yet today, i expect that well hear the same colleagues argue that this tax, which once again overwhelmingly burdens low to middleincome taxpayers, is an absolute necessity and without it our Health Care System will descend into oblivion. Just to maintain some perspective, nothing in our bill would keep eligible individuals from receiving premium tax credits to pay for coverage. Nothing would require those who are eligible for medicaid to opt out of receiving free health care. And of course, it wouldnt tell those who are offered insurance from their employers to refuse it. Also, lets keep in mind that the mandate has been a pretty ineffective tool. It hasnt prevented premiums from skyrocketing. Nor has it kept insurers from leaving markets. So in the end, keeping the individual mandate tax in place means retaining the status quo, which is not working too well. Zeroing it out means we have a chance to provide greater tax relief to middleclass families through both reduced penalties and lower overall rates. Ultimately, im more than willing to defend the decision to end the individual mandate taxes as well as a decision to include it in the modification. Its the recogniight thing to d. Far more people would be better off as a result. I think the original chairmans mark provided an exceptional path forward on tax reform, both in terms of middleclass tax relief and economic growth, but today, i have to say that the modification is a significant improvement. It addresses problems noted by members on both sides, and it will give americans bigger paychecks, more opportunities, and a more prosperous economy. At least in my view. I look forward to another lively discussion here today. Of course, it will be lively, but before i turn to senator wyden for his opening remarks, i want to make clear that i plan to keep things orderly today. I will make sure that members are recognized so we all get a chance to speak and ask questions. But i will not abide the disorder and hostility we witnessed yesterday. Yesterday afternoon, i should mention. I dont begrudge anyone who expresses a passionate viewpoint, i just ask that members of the committee be respectful of one another. So lets turn to senator wyden for his comments at this time. Thank you very much, mr. Chairman. Its now day three of this tax debate, and this bill seems to get worse by the hour. It started off as a tax hike on nearly 14 million americans to pay for multitrillion dollar handouts to multinational corporations and new loopholes for tax scammers and cheats. Then the news broke that these corporate handouts are going to force billions of dollars in cuts to medicare, and Republican Leaders said that entitlements are next after the Congress Works on taxes. Which means further cuts to medicare, cuts to medicaid, and cuts to social security. Now, lets cut to early yesterday afternoon. The republicans apparently couldnt get through lunch without hatching another plot to go after Americans Health care. Apparently, some time between the salad course and the entree, it was decided that permanent Corporate Tax cuts should be paid for in part by kicking 13 million americans off their health care and raising premiums for millions more. And lets not kid around. This is not just another garden variety attack on the Affordable Care act. This is repeal of that law. And one of the first things thats going to go will be air tight loopholefree protection for the millions of americans who now have protection when they have a preexisting condition. So that brings us to today. When the American People are going to learn that last night, there was another change so that individuals are only getting temporary tax cuts out of the republican bill, but the multinational corporations are getting permanent cuts. What a double standard that is. We saw it yesterday. Its gotten worse. For the multinational corporations, their handouts are set in stone, written in ink, locked in place with the key thrown away. But not for the middle class. The treasury secretary even said that the administration was going to draw a line in the sand. A line in the sand . We would sure like to see it, as our colleagues have said here, to protect the middle class. What theyre going to do is protect the multinationals with permanent breaks. No lines in the sand when it comes to permanently protecting middleclass families. In fact, for middleclass families, the deal looks worse and worse. It used to be a promise of a tax cut. Putting real cash back into the pockets of the middle class. Now, its a roll of the dice. Families are going to have to hope theyre not going to be among the millions whose taxes go up. So bottom line, my colleagues on the other side have now shown their hand. The corporate handouts are permanent. The family breaks arent. In fact, they dont even make it a full decade. To pay for the handouts to multinational corporations, millions of americans are going to lose their health care. Millions will see their premiums skyrocket, millions are going to get hit with a tax hike. That is what is on offer as of now. Mr. Chairman, i want to close with a request, if i might. At the 11th hour last night, the chairman released a new mark that includes repeal of the critical provision of the Affordable Care act. To understand the impact of that provision, it would have been appropriate and customary to have the Congressional Budget Office here u to answer questi. Despite a request from the minority to invite the Congressional Budget Office, apparently, you have refused. As a result, during the course of this critically important issue, committee wont have the experts here who can explain what the bill means for the Health Coverage for millions of americans and premiums for millions more. It appears on the basis of our analysis that health care is going to be cut more than 300 billion. And we ought to have the Congressional Budget Office here to tell us what harm this would do to various americans who would be so directly affected. So mr. Chairman, before we actually formally start, i would like to ask once more that you invite the Congressional Budget Office here to tell us when 300 billion is being cut in health care, who actually is being harmed. So on behalf of the minority, i make that quest at this time. Well, this is, as you know, a tax markup. Jct is here. I already said that. And in my opening remarks, so lets move on. Mr. Chairman. I want to move on. Mr. Chairman, parliamentary inquiry. I would like to ask mr. Barthold, because he is with the joint committee on taxation, do you have the ability, mr. Barthold, to do what the Congressional Budget Office does and talk about who would actually be harmed by those 300 billion in cuts in health care . Do you have that ability . Senator wyden, a lot of most of the analysis of the Affordable Care act was done jointly with the Congressional Budget Office and my colleagues on staff. So we do not have expertise in all areas. But i do have some information related to it, and as you and some other members had asked yesterday, were working on providing an updated distributional analysis of the chairmans mark as modified. I dont know if thats sufficient information to satisfy do you have let me be in control of this committee, not you. Im getting a little tired of being interrupted all the time and you calling on people and so forth. I love you personally, but were going to run this thing like it should be run. Jct can certainly talk about the tax implications, which is what is being done here. And they have every right to talk about them. They have every bit of knowledge to talk about them. And thats what were going to do. So lets not try to change that decision by the chair. Mr. Chairman, continuing my parliamentary inquiry, well wrap it up with this. Okay. Mr. Barthold, do you have the expertise the Congressional Budget Office has to tell us who would be harmed in terms of premiums and coverage . Let me interrupt again . This is a tax. It is a 300 billion spending cut. Senator, let me i try not to interrupt you. I hope you dont interrupt me all day. This is a tax that affects 58 of americans under 50,000. So like i said, i want to move on. We have mr. Barthold here as an expert. I want to get the best we can out of him. Can you answer the questions . Could he answer the question, mr. Chairman . When you have an opportunity to ask questions, yeah, he can answer. Let me move on. I dont want to get into some big hassle here this morning. Mr. Chairman, this is not like you. No, it isnt. The ranking but its not like you either. The Ranking Member has asked a simple question. He ought todc6 be able to have answer. Youre not thats not your nature. Hell have plenty of time to have an answer. Theres nothing stopping him from doing that at the appropriate time. I just want to move ahead. Its not your nature to cut off discussion. Youre a gentleman. I am. Its not your nature to cut off a legitimate question. Well, id like to proceed. And soon as im through, the Ranking Member can ask any questions he wants to. But ill relent. Go ahead and ask the question. Again, the question is for mr. Barthold, do you have the expertise the Congressional Budget Office has to describe given our projection this is a 300 billion cut in Health Care Spending, to tell us who is going to be harmed in terms of premium hikes and loss ofsurance . Thats the question. Do you have the expertise the Congressional Budget Office has . Senator wyden, in jcx57, we have provided the estimate of the tax effects of the change being discussed and as you reported, its approximately a 300 billion change over the budget period. As i noted, my colleagues and i are working to provide an updated distributional analysis of the entire chairmans mark, which will include to the best of our ability those effects. As to your more general question about the joint committees level of expertise in terms of National Coverage and Insurance Premiums, no, that is more generally the work of the Congressional Budget Office. Thank you. All right, now let me proceed then. Once again, the committee has before it the chairmans mark of the tax cuts and jobs act, which under the rules is subject to a chairmans modification, which every one of you have received. The modification is Hereby Incorporated into the mark. The next order of business is to walk through the modification and to once again answer any members questions as is our usual practice with tax legislation. The chief of staff of the joint committee on taxation, tom barthold, is joining us here today. Now, mr. Barthold, could you describe the modification, and well have you do that right off the bat. Thank you, chairman hatch, and members of the committee. You have before you two joint committee documents, jcx56 and jcx57. They provide a description of the modifications that the chairman has made to his original mark. And jcx57 is an updated revenue analysis of the mark as modified. Ill try and just get a highlevel overview of what i think the members will find significant or notable changes provided by the modification, a couple of which were touched on by the chairman in his opening remarks. With respect to individual income taxes, it would the modification would increase the Child Tax Credit from 1,650 in the original mark to 2,000. It would modify the rate brackets that were in the original mark of 22. 5 , 25 , and 32. 5 to be 22 , 24 , and 32 . It would also change the break points. Makes a modification with respect to the special deduction for income earned by passthrough entities. Theres a general rule that the amount of the 17. 4 deduction is limited to 50 of w2 wages. That rule in the original mark did not apply to Sole Proprietorships in the modification, that rule applies across all business entity all passthrough entity forms but has a broad exception such that it does not apply to any business entity form in which the taxpayer has a taxable income of less than 500,000, if married, 250,000 otherwise. It also expands the denial of the benefit to the provision of professional service entities, expanding the income limitation that we discussed somewhat yesterday to also equal 500,000 limit, exemption beneath 500,000. The modification to the mark would generally sunset all the provisions of the individual title, would sunset the individual repeal of the individual alternative minimum tax, would sunset the doubling of the exemption under the estate and gift taxes for taxable years beginning after 2025. As just noted, the modification would set to zero effective in 2019 the penalty rate under the individual mandate. Another modification of note in the business area is it permits an election for Farmer Enterprises to elect out of the interest limitation thats generally applicable to all business entities. It would also make modifications to the business title by providing that research and experimentation expenses be amortized over a 60month period. It would provide that meals provided at the convenience of the employer which in the mark are only 50 deductible as a business expense would be no longer deductible as a business expense. Both those provisions would apply after taxable years after 2025. It would change the limitation on net operating losses, which provides that only 90 of the loss may only be claimed against 90 of current year taxable income for taxable years after 2023. It would change that 90 amount to 80 . In the cross border area, the global intangible low tax income and the foreign direct intangible income effective tax rates would both be increased. The base erosion antiabuse tax rate would also be increased. Those three changes would also be effective for taxable years after 2025. Perhaps there are a number of other more modest provisions, but perhaps two of note are two temporary provisions, one of which would create a new employer credit for the provision of paid family and medical leave. Thats a temporary provision of two years. Another temporary provision is a restructuring of federal alcoholic beverage taxes, a twoyear provision that generally provides for lower rates of tax for small producers of these beverages and i know the members are interested in questions so ill conclude my walkthrough there and happy to answer any questions that the members might have. Well, thank you, mr. Barthold. Joining tom at the table once again are ms. Jennifer acuna from the finance Committee Majority staff and ms. Sarah schaefer, mr. Adam caruso, and mr. Ryan abraham and mr. Drew crouch from the minority staff. In addition, we have mr. Tom west, the tax legislative counsel from the treasury. With us today. All are present to answer questions of any member of this committee. Members have any questions that members have about the modification, that is. Im sure there are a number of matters my colleagues would like to discuss at this point, and thats customary. However, i do want to note that members had several hours yesterday to ask questions about the original mark, and through the latter part of the day, they chose to forego those opportunities. Therefore, i hope that members will focus most of their attention today on the modification and less on the provisions of the mark that havent changed. Furthermore, i hope that members will focus their questions and discussion on the subject at hand, which once again, is tax reform. Health care matters are fine for discussion as long as they relate to the tax code. But if we continually end up in the weeds on Health Care Policy with little or no connection to our subject for today, i may have to cut this part of our proceedings short. With that, i will begin recognizing members for the purpose of asking questions about the modification and the appropriate order under the rules of the committee. Thank you, mr. Chairman. Mr. Chairman, again, you know of my affection for you. Vice versa. As one of the least well kept secrets around. But again, i have to take exception. This is a very different bill now, colleagues. We were talking about temporary tax cuts yesterday. They were permanent. Permanent tax cuts. We didnt have the same double standard. We had certainly problems. We didnt have the same double standard that we have now. Where theres a much harsher standard for middleclass families and for corporations. This is a very different bill. Colleagues, in that regard, this tax bill is now officially a health care bill. An enormously Important Health care bill with consequences for millions and millions of americans. 13 million americans no longer have Health Coverage. Millions pay higher premiums in what is essentially a hidden republican tax increase on families. Those arent the only consequences as i touched on in my opening statement. If youre listening to this debate or youre watching this debate, its important to know that were not going to have the same air tight airtight looph protection against discrimination over preexisting conditions. That protection is now on the ropes. Thats because for americans with preexisting conditions people who actually need regular Health Coverage, this republican plan is a recipe for unaffordable cost. If you cant afford the health care you need, the Consumer Protections dont do you a whole lot of good. So mr. Barthold, first question for you. Is it accurate to say that increases in premiums would be due largely to individuals with lower medical costs excuse me a second, senator, could i ask the clock to start running so that we all know we each have five minutes for this. We agree. Okay. Mr. Barthold is it accurate to say that increases in premium would be due largely to individuals with lower medical costs, healthier, and younger folks leaving the market . Mr. Wyden, again im not an Insurance Market expert. I can tell you that the analysis that my colleagues worked on with the Congressional Budget Office relates really to average premium effects from people leaving the market due to adverse selection. I dont have information at this time regarding the distribution of those, but the Congressional Budget Office and my colleagues would be projecting that average premiums would increase approximately 10 with the penalty being set at zero. Ms. Warrenoff, i think we just heard again that tom barthold, who is an extraordinary professional, i said that repeatedly, doesnt have the same expertise as the congressional bumming office has with respect to premiums and coverage. Tell us, if you would, what are the consequences in terms of the affordability of care for people who need it when the healthier and younger people flee the Insurance Markets. Thank you snaemplt as mr. Barthold mentioned the Congressional Budget Office estimated that about each year, premiums would be about 10 higher than they would under current law because healthier and younger people leave the market raising costs for everybody else. And this will price certain people out of the market. People will have to make tough choices whether they can afford care. And this will fall disproportionately on people with preexisting conditions because they may not be able to make that choice. They require health care more than others. In effect, the affordability issue that i focused on and my colleagues have focused on arologically be hard under this proposal for those with preexisting conditions . Absolutely. Okay. Mr. Barthold, a question with respect to the majority trading, these tax cuts for the multinationals for health care. My understanding is that you cut the corporate rate by 1 , and that costs 100 billion over ten years. So can you confirm that repealing this provision would be used to cut the corporate rate by only about 3 and up crease the number of uninsured americans by 13 million . Senator wyden, a number of people have used the 100 billion per point as a rough rule of thumb. As you can see from our analysis in jcx 57 we estimate that the 15point reduction it costs approximately 1. 3 trillion. So it will be less than 100 billion per point. But there is a lot of interaction. Now, with respect to premium class families, premium increases are the same thing as tax increases. Mr. Barthold, repealing the Affordable Care act coverage requirement is estimated by the Congressional Budget Office to raise premiums by 10 or over 1,000 for an unsubsidized middle income family who wants the security of health care coverage. If you have to pay more than an extra 1,000 for Health Coverage, isnt the impact on middle class Family Budgets just the same as a more than 1,000 tax increase . Senator wyden, in terms of aftertax income to spend on other items, paying more for Health Insurance or paying more in taxes would have the same effect. Okay. The bottom line, again, colleagues, for that middle class family, is with either higher premiums or a tax increase, the family has less money. That middle class family has less money to spend on other needs. So the net effect of what happened essentially yesterday during lunch is there was a judgment that the multinationals were going to do better. They were going to get permanent relief, and the middle class would just have to figure out how to eat a lot of additional higher premiums, which are the same thing as a higher as a greater tax increase on the middle class. Thank you. Ert. Your time is up. Im going to be tough on time today because we have got a lot of thing to go back and forth on. And it is a not meant to stop anybody from being able to ask what they would like. Senator grassley . Yeah. Im going to reserve my time. Im going to i do have i just misinformed you. I said i didnt have a question. I want to ask mr. Barthold to describe how the modification to the 17. 4 business deduction will help provide more tax relief to smaller businesses. Senator grassley, the chairmans mark, before the modification, as noted, had a limitation of the benefit of the 17. 4 deduction to 50 of w2 wages. And what the modification does that would be significant in a number of businesses is that have modest pay rolls, by eliminating that limitation in the case of owners whose taxable income is less than 500,000 in the case of joint return owners, it would mean that there would be they would receive a bigger benefit from the deduck. It would not be limited by the fact that their payroll is modest. So that would be one example of the expansion. Thank you. Mr. Chairman id reich like to reserve by 37 40. All right. Senator stabenow . Thank you mr. Chairman. This is a very concerning disappointing day because this is a committee that usually works together on bipartisan basis. What we have in front of us now is really a onetwo punch to middle class families and to many, many americans. And so we already knew that republicans wanted to raise taxes on middle class families. But now its taking away their health care, too, to pay for big trickle down tax giveaways. Have never worked. Supply side economics has never actually gotten money in the pockets of working people or grown the economy. Its just always grows the debt every single time its been tried. So it is a terrible policy and its just the wrong thing to do. I want to start, again, ms. Warnoff, according to cbo, how many people will lose their insurance the first year this takes effect . The cbo said that in 20194 Million People will lose their insurance shoo 4 million team people. And how many people will lose their insurance over the next ten years . 13 million. 13 million and how much will premiums go up for those who dont lose their insurance entirely. The cbo has said about 10 each year. Just to make it clear, what that means is that people who will no longer have insurance have insurance will once again start going to the emergency room, not paying and then everybody else pays for that. Because when folks walk in its called uncompensated care. Not being able to pay their bills. They dont have insurance. Everybody else sees their insurance rates go up. So everybody else is going to see increases because of this policy. So by trying to use a back door approach to repealing the Affordable Care act, this bill would cause 13 Million People to lose their Health Insurance and premium to go up 10 a year. Each year. You are saying. Each year. According to the cbo, again, little different numbers, we would see cuts in Health Care Spending by 426 billion. The joint Tax Commission has said 318. Either way its a lot of money. Its hundreds of billions of dollars in cuts. We knew, based on jcts nonpartisan analysis from the bill yesterday that raised taxes on 14 Million People immediately increasing that amount to 21 Million People paying more for their taxes, getting a tax increase. But in this modified version we actually see everyones taxes go up because all of the individual tax cuts will expire in a few years. Mr. Barthold, the tax cuts, the provisions that help middle class families expire when . Senator save know as i noted the individual tax provisions of the mark as modified expire four years after 2025. Okay. So the provisions that help people be able to put more money in their porkt as they are seeing Health Care Costs go up and other taxes go up for them, those go away in order to continue this notion of the big supplyside tax giveaways that explode the definite simpson. But there is a sneaky provision known as the change cpi that does not go away which as long term effect slowly raises everybodys taxes. Because the help for middle class families will end, but the growth that fuels the change cpi continues. Im wondering if someone might speak to this. Because we know how severe the impact of these changes can be on middle class families. I know we dont yet have a full analysis. But i think in the interest of time im actually not going to ask. I will just make the statement. We can talk later. Chain cpi is bad in this context for families. And let me conclude by saying one outside Economist Says that 57 of taxpayers end up worse off under this modification than they were under the bill we had yesterday. For households are incomes between 50,000 and 75,000, he says 80 end up worse off than they would have been yesterday. This is going in the wrong direction, mr. Chairman. I am deeply concerned. I wish we would put it aside and do what this committee knows how to do, which is Work Together on a bipartisan basis and get this right. Thank you senator. Your time is up. Senator enzi . Mr. Chairman, i reserve my time for later. Okay. Then lets see. Well allow you to reserve your time. Senator cardin . Thank you mr. Chairman. You bet. Mr. Barthold, he want to continue with senator stab nows points. As i understand it the Congressional Budget Office tells us about 13 Million People will lose their Health Coverage as a result of eliminating the required coverage . Thats what they are reporting for the last year in the budget period, 2027. And that the premium increases in the individual marketplace would go up about 10 . Relative to baseline projected premiums, yes, sir. I want to talk about the impact on that. Because, yes, we are talking about the tax code. There will be the direct extra cost to those in the individual marketplace, many of whom of course have no employer to help pay for that cost. And therefore, it is as senator wyden has pointed out could be as high as 1,000 up crease for famili increase for families which is pretty dramatic as to whether they can afford their coverage. Clearly if they have preexisting conditions or if they are high risk they will have to do it. But if they are healthy, more likely stay out of the market place. But then as senator stab now said they will end up in the Emergency Rooms because of injuries or accidents, et cetera, and uncompensated care will increase, which increases the costs for everyone else. So have you done any analysis as to what the cost will be for employers, the increased cost of health care, because of the Cost Shifting or the deduct b89 of health costs because of the Cost Shifting to those who now have to pay more for their health care because of uncompensated care . Senator cardin, thats part of the overall analysis that the Congressional Budget Office and my joint Committee Colleagues undertake. Part of what is reflected in the estimate that we provided reflects people who have employerprovided coverage, premium changes, whats deductible at the business side, whats excluded under the individual income tax. So thats part of the totality of the analysis. So of assumed so the short answer is yes we have tried to analyze that. One of the issues we hear from businesses frequently is the cost of health care. So to a certain degree we have or by eliminating the mandate we have increased the costs of companies in paying for their health care for their employees . It changes compensation and decisions about the mix of compensation. And thats part of the analysis, sir. And as far as the individual premiums increases, that also could have some impact on the tax code because of the costs of the Health Insurance premiums . Exactly, sir. I want to talk a lib about your cost estimates, and which it did now on the temporary provisions on the individual side. Because throughout the years, the net added to the deficit has been somewhere between 200 billion to about 150 billion pretty consistently over this period of time except miraculously for 26 and 27 it drops very dramatically because of the i assume because of the temporary nature of the individual tax relief n. Fact you show an increase in 2027 of 30 billion of revenue, if im reading this correct, the net totals . In 2027, we show a net of effect of 75 a positive 75 billion for the for section one of revenue. I just looked the total amount of 30 billion to understand the numbers that you are using. There a reason why we couldnt have taken and made the business tax provisions temporary and the individual ones permanent to show the priority of this bill is for individual tax relief for middle income families . Well, senator cardin, i dont think thats a question for me. No, it is for you. Because i want to know whether the revenue numbers dshz as i understand it part of this is being done because of byrd rule problems on revenues in the out years. Evidently, this bill did increase the deficit much more than 1. 5 trillion moving forward, and therefore they had to make some decisions because of the byrd rule dealing without your deficits. My question is could we have satisfied the byrd rule by making the priority middle income families and keeping that relief in place . Senator if you are asking if could we look at different options, we certainly could. There could be options provision by provision or for you know whole titles or section. What we have analyzed but the out year costs were the reasons why individuals have lost the predictability of their tax relief moving forward. And in fact if we extend that the deficit is going to be much larger. On the individual on the individual title, thats correct, sir. Thank you mr. Chairman. Due to the archean budget rules the individual side of the tax reform legislation will sunset at the end of the tenyear window. The mark is consistent with the rules under the budget act. However, if once the bill is on the floor, my democratic colleagues want to offer an amendment to waive the budget act to make the individual rates permanent they likely wont get much resistance from the republican side. So i think we should at least notify that. Our next is senator [ inaudible ] i would echo what you just said. We can make the individual side permanent. Al it takes is a few democrats to vote with us to do that. Mr. Barthold, i asked you a couple of questions yesterday about the distribution tables. We dont have at least i havent seen the updated or the current ones as a result of the changes that were made yesterday. But my assumption is that increasing the per Child Tax Credit from what the mark had at 1,650 up to 2,000 per child and lowering the rates from the rates from 32. 5 to 32, from 25 to 24, and 22. 5 to 22 would distribute in a way the middle income family or the cohorts that we talk about in the middle of that distribution table would probably likely benefit the most from that. Is that a correct assumption . Thats fair intuition, senator. As you recall, the Child Tax Credit is income limited. So all the benefit i crews to individuals in households below that limit. The tax bracket changes themselves, any benefit there can also flow up to every bralkt buff. But most of the immediately affected taxpayers and a large amount of the dollars would be in the incomes defined by those brackets, which is the brackets below 35 . Right. So that, again, would be delivering the majority, the lions share of the assistance that would come from the chairmans modified mark to those income cohorts, those families in the middle of the income scale. And i asked the question yesterday as well about how the distribution table looks in terms of people on the high end. And i looked at, from the distribution tables we had yesterday, those taxpayers that make more than 1 million a year under the proposal, the burden that they would have would be not less, but actually slightly more than the tax burden that they currently have today under present law. My assumption is with the chairmans modified mark thats unlikely to change . My colleagues are working on that on sis now. But i think your intuition is probably correct, sir. All right. So the argument being made by our democrat colleagues that this is somehow going to disproportionately benefit high income earners, the rich so to speak would not be accurate if you look at tax burden, relative tax burden before, under present, and under the proposal that we are looking at here. Just, again, an observation based on some of what i would say are the false inaccurate assertions being made by our colleagues on the democrat side. So the can you i dont know if you would have this or not, but the mandate tax, im told, affects about 6. 5 million taxpayers in 2015. That was the number that i had. Senator thune i will have to check that. I dont have that statistic. Ill see if my colleagues can provide it to me. Okay. If im wrong, you can krgt me. But if its 6. 5 million taxpayers that are affected by the mandate tax, what was pointed out by our colleague from South Carolina, senator scott, yesterday, was that the people bearing the cost of that tax are low income earners and that in fact 80 of the people who pay the mandate tax make less than 50,000 a year, and a third of those who pay the tax make less than 25,000 a year. So if im correct, what we are doing here is we are cutting taxes for low income earners who are being hit hardest by the mandate tax, and then providing additional tax relief through an expanded per Child Tax Credit and lower rates in the middle of the income tax structure so that middle income families are going to benefit the most. They benefitted the most under the previous iteration of this bill. But with these changes now, thats going to be thats going to be ramped up. Is there any reaction to that . I dont have you dont. Anything specific. I assume i think thats a fair statement based on what the distribution tables are going to look like after these changes are made. It seems to me at least what is happening here with the modified chairmans mark is plowing more tax relief into those middle income ranges that will benefit hard working middle income families in this country. And it seems to me at least that we are getting rid of a tax that disproportionately hit hardest low income earners in this country. That seems to me to be what the effect of the chairmans amendment has done, and i think its perfectly consistent with what we set out to achieve in this bill, and that is to deliver tax relief to hard working middle income americans. Chairman my time has expired. Your time is expired. Senator brown well turn to you. Thanks chairman. Ill glad to hear my colleagues on the other side of the aisle with their new found concern for actually doing something for middle class tax relief even though the best way to cut tax force the middle class is to actually cut taxes for the middle class and they dont seem to want to be in that position because of their interest in the tax cuts for the rich. According to the Congressional Budget Office the provision slipped into the bill last night to dismantle the Affordable Care act act would kick 13 million americans off their Health Insurance. 13 million americans. We all have Health Insurance provided by the federal by taxpayers, thank you. But its okay to kick 13 million off of their Health Insurance and to cause premiums to raise by 10 . The cbo says that taking away the subsidies that help americans buy Health Insurance will save 338 billion. My question for you is what is that 338 billion going to pay for in this bill . Ert. I think its difficult to say senator i think its difficult to attribute that to any particular item. Arguably, it pays to cover up other deficits in the bill. Okay. So increased okay. Got it. So whats the largest cost in this bill, the majority of money spent in this bill is for tax cuts for corporations, right . As we understand it, yes. So you have go to figure that some of that 338 billion is going to go to mar tax cuts for corporations. I would stand to reason that the 300 billion thats being taken away from American Families to help them pay for Health Insurance is being used to pay for tax cuts to big companies. As we learned yesterday these are some of the very same multinational corporations that are rewarded in this bill, in this tax bill they get tax breaks to shut down protection in mansfield ohio and cincinnati, ohio, to move overseas, set up production, and sell back to the United States. So that the beneficiaries of this provision on the 338 billion are again going to be the same corporations that are going to be rewarded for sending american jobs overseas. We know that according to the cbo this bill again because of the provisions senator by end has spoken so well about, the provisions that were slipped in last light to unravel the Affordable Care act, a bunch of us with taxpayer insurance willing to take insurance away from up to 13 million americans, having nothing to do with tax reform. We now know this bill will cause, according to cbo will cause Health Insurance premiums to go up 10 . For a lot of families thats a lot of money. Whats the average tax cut for a tax filar earning between 40 and 60,000 a year . Well, its about 630, according to numbers from the institute for taxation and economic thats all tax filers, correct . Its all tax filers and thats a net figure. That also includes those households that see tax increases. That means the average tax cut for a family of four in akron, ohio or Youngstown Ohio earning 60,000 a year, the average tax cut would be 630, correct . Yes. And for tax filers earning a little bit less, 24 to 30,000 what is their expected tax cut under this bill . About 340. This is from the i tap analysis. That would include an individual filing alone earning 35,000 a year they would get 350 . Correct. Heres the problem. According to the committee, a 35yearold in ohio he wering 37,000 a year would see their Health Insurance increase by 395 a year. They get 340 in tax cuts but paying 395 more for Health Insurance they are 55 in the hole. What they did last night by inserting this health care repeal, not only are they costing 13 million americans their Health Insurance, those that keep insurance are seeing their costs totally wipe away their generally not very generous compared to what corporations breaks they are getting. You said a family of four earning 60,000 a year would get 630. Et cetera a estimated they would pay an additional 1431 a year for Health Insurance. So they are 800 in the whole. If you want to cut tax force the middle class, mr. Chairman, why dont you cut tax force the middle class. One more thing. A gun of us were invited to meet with gary cohen, the chief economic viedor for the president about a week ago. And the president from 7,000 miles away in asia called in in the middle of this meeting. One of the thing the president said after complimenting himself on fine trip, how highly ranked rated his trip was, and what a good job he was doing. And we all nodded. Then the president said, you know, my economist, and this is a question for ms. Crossoff. My accountants told me senator bennett was at this meeting. My accountant told me there is not anything in this bill this would be bad for my personal situation and there is just not anything in this bill for rich guys like me. And then the president said thats why we put the estate tax repeal in this bill because there is nothing else in this bill for rich guys like me. Is that true. Your time is expired. I just want the question answer. I know dont like that question. Ms. Crossoff is that true that there was nothing in the bill for rich guys except the estate tax repeal. Its our understanding that the majority the money spent is on those above 200,000. And the president s is probably in that category. Just we dont know because we have never seen his tax returns. We do know what he is making right now. Senator your time has expired imt. Imgoing to have to be tough on the expiration of time because i want both sides to have a right to question. I think a question i think has to be asked at this point. Do you agree with the statistics just identified in tax reduction force various income classes . Mr. Chairman, we prepared the distribution analysis that you have seen, and there is Supplemental Information in a a number of the members talked about yesterday in terms of number of taxpayers that have increases or decreases in tax. 100 to 500, and greater than 500. I cant elevator guy calculations done by outside organizations without knowing facts about the example that they create. Isaacson. Mr. Chairman, i would be able to let senator scott replace me in the order and then i will replace him later on. Okay. Senator scott. Thank you mr. Chairman. Ms. Akuna, i have a question for you. Im happy that we are having a conversation about what the definition of a tax cut is for the middle class. From my perspective, the importance of this question cannot be overemphasized because everyone that i talked to in South Carolina are not they are not concerned about someone elses taxes. They want to know how this tax reform conversation impacts them where they live. We can make jokes about other peoples taxes and get a lot of press over that. But for the hard working families in South Carolina, one of the important questions we should answer is why do we want to continue an individual mandate that is a tax and using that tax to punish, punish hard working folks who live paycheck to paycheck . I dont have an answer. The question i have is what does it mean to deliver real tax cuts to real people in real places where they live . Well, if you are living in a single parent household with an average income according to tax returns between 36,000 and 40,000, our tax bill delivers about a 55 cut in taxes. That translated for those of us who live on the wrong side of the potomac is a real tax cut. What does it mean for the typical American Family who makes around 73,000 . Well, a tax cut means 40 of what you used to pay you can now use to buy school supplies, to have a dinner out, or to simply help you meet your ends. Because the challenge in todays real world are real folks strapped without a pay increase in a decade looking at washington and wondering, where are they in this conversation . Why do we spend so much time demonizing one side over the other when in fact no one cares which side you are on . What they really care about is how can they take care of their families. Thats our objective here. And we are doing the good work of the people. Let me ask my question. Im getting ready to ask a question, mr. Chairman. I have got two minutes left, sir. Wasnt his turn to ask questions, either. Mr. Chairman just, and i appreciate what you are trying to let me finish my comment. I have heard a lot i want you to be able to ask your question. Thank you sir ill do it right now. But in the order of my colleagues. You had the opportunity to say you didnt want me to aspeak but you allowed me to speak. I want to get back to the order of the speakers. Thank you very much. I appreciate your unanimous consent allowing me to speak earlier. Ill finish. Ms. Akuna, as we look at the impact on those hard working families that i just described in great detail for the express purpose of us not having a demonization of either side. Democrats have a passion for people. Republicans have a passion for people. Our tax reform actually delivers as i spoke specifically about classes of folks in our society who benefit from tax reform. By increasing the standard deduction, do we not help simplify a taxpayers ability to no longer have to worry about t itemization but to be able to do their taxes simpler by using the increased standard deduction . Yes. We do. Its significant simp simpleification. Households, instead of spending hours doing taxes for americans who have so little time in their schedules, they will be able to spend more time with their families because we have simplified a complex, complicated tax code. Thank you. Thank you senator, i didnt realize that senator isaacson had yielded to you his time. I apologize for interrupting you at all. Thank you, mr. Chair than. Ill take another 45 seconds if you dont mind. Go ahead. Your questions were very appropriate, i thought. Lets turn to senator bennett. Thank you mr. Chairman, and thank you for holding this markup, which i think is another mindless exercise by the United States senate perpetrated on the American People. While we sit here today, the chinese are Building Infrastructure all over their country. They are Building Infrastructure all over their region. Stitching together a Global Economic power house with which our children are going to have to compete in the 21st century. Since 1980 we have cut our spending on domestic Discretionary Spending which includes our roads and brimming bias 35 as a percentage of our gdp. We have cut military spending over the time period of time by 35 as a consequence of our gdp. We are today as we sit here collecting 18 of our gdp in revenue, and we are spending 21 . How irresponsible . And for my colleague yesterday to assert that i wasnt saying the same thing when president obama was president was untrue. I was. When bill clinton left the presidency, he left behind a 5 trillion projected surplus. This committee cut taxes. Cut taxes again. And then we fought two wars that we didnt pay for. So we may have a passion, as senator scott said, for families in this country. But we dont seem to demonstrate one for the next generation of americans. And we are to the doing it with this bill. Which will not allow us to make those investments in infrastructure which our country needs us to do to compete, and to lift middle class wages again in the United States of america. This bill gives up on our country. And we should be doing in in a bipartisan way so that we can make medicare sustainable, so that weve got the revenue that we need to perform functions of our government so that its a balanced plan that makes sense. And this is an unbalanced plan which is senseless. We are giving our children the shortened of the stick in two very profound ways. One is we are saying to them, you know what, were not going the make the expenditures on you that our parents and grandparents made on us. We dont think you are worth what our parents and grandparents thought we were worth. And were not going to charge ourselves the same thing that our parents and grandparents were willing to pay to give you that benefit. And just to make it even more profoundly unfair than that, were going to say, were not going to pay those bills. Were not going to pay that debt. You have to pay that debt. Were going to live in the house, but you have to pay mortgage. Thats what were telling the next generation of americans. And were saying nothing, nothing in this bill to the 22 of American Children in the 21st century who are living in poverty in the United States. We are silent about that. And the bill has actually gotten worse, if you look at what theyve done to the Child Tax Credit. The complete lack of refundability that says to poor children in america, you are invisible to us. In a way that the children of members of the United States senate are not invisible to us. In my remaining minute ms. Akuna i would like to ask you about the Congressional Budget Office letter yesterday that said that this deficitbusting tax bill thats been offered would require statutory pay go to go into effect triggering automatic cuts totaling 136 billion this year. That includes an automatic cut to medicare of about 25 billion. So ms. Akuna, will the revised mark undo the automatic medicare cuts . Yes or no . Senator bennett, im happy to respond to tax policy questions with respect to the chairmans modified mark. Tax policy questions. So is there anybody who is going to tell the American People whether they are going to face a 25 billion cut in medicare between now and the time we cast a vote today on this committee . Senator, there wont be any medicare if we keep spending like you guys want to do. Lets get down the talking about the particular subject we are talking about. Thats completely incorrect, mr. Chairman. No, it isnt correct. I have sat here for 40 years and ive watched my democratic colleagues spend and spend and spend and spend without asking where is the money going to come from. Let me say again, mr. Chairman. I have had enough of that to last me the rhett of my life. Mr. Chairman. And then they blame us. When president clinton left the white house, there was a 5 trillion projected surplus. It was the first republican kong in over 40 years. There was good bipartisan work done there. Yeah, the first Republican Congress in 40 years. When president obama arrived, he inherited a 1. 5 trillion deficit. When he left, that was 585 trillion. Guess who caused the spending. And now it is 666 billion, and we are about to blow a huge hole in it. And its not Michael Bennett a democrat saying that. Its the cbo thats saying that. Its all the independent analysis thats saying that. Thank you mr. Chairman. All right senator. I understand your position. And i appreciate your position. Senator casey is next. Mr. Chairman thank you very much, i want to start with mr. Bart hold on a question that i think a lot of us are wondering about today. Im holding the modified mark here. Page 10. At the top where it begins the section on repealing the individual mandate. Heres my question have you had the opportunity to analyze this section of the chairmans modified mark . Senator casey, yes. I mean thats its included in our revenue analysis in jcx 57. And how long will it take to you conduct a full analysis, full analysis of the provision and its impact on Health Insurance coverage and premiums . Some of that analysis has already been provided based on joint work with the Congressional Budget Office that was commented on earlier today in some of the questions. Reported that the Congressional Budget Office projects that on average, because of adverse selection, premiums will increase by 10 above what they would be under baseline projectio projections. That by the year 2020, there would be approximately 13 million households or individuals rather uninsured compared to baseline projections. And in the first couple of years that would be more like 4 million uninsured compared to baseline projections. And so that analysis has been done. But you have not the revenue analysis has been done. And as i reported earlier, my colleagues are working on updating the distributional analysis that we routinely provide for the entire mark as modified. I want to make it clear, though. The distribution analysis would be part of the process that would yield a full analysis; is that correct . We provide that information at the request of members to help them analyze the policy proposals and we are at work on that, sir. I note that for the record that the full analysis is not done yet. Late yesterday after we had a limited debate here about this new provision on the individual mandate, i described what is happening here in total in terms of the bill, what this bill means to real people as a thief in the night. And why do i say that . Heres why i say it. We have had an experiment the entire year about two ways, and only two, to debate and make progress on fixing our Health Care System. This is what has happened this year. We started the year and spent months well into the summer and even beyond the summer having a fight about repeal of the Affordable Care act. Won side wanted to decimate medicaid in my judgment, and we fought like hell against that. It ended up being that there was a stalemate. That was one way to do it. A big fight about the aca. And that fight continues. The second way to do it is to do it in a bipartisan way, the way that we did it in the help committee when Lamar Alexander and patty murray led an effort to attempt to pass a bipartisan bill that would stabilize the individual market which is where most of the problems are and to do it in a way that is bipartisan. That is still before the senate. There is only two ways to do this. The one way one side tried to do it in a real estate peel and way we decided to try to do it together in a bipartisan fashion. I think we should focus on Bipartisan Solutions for health care. Then comes the cbo, saying, as you just noted, mr. Barthold, repealing the individual mandate, would result in 13 Million People losing coverage. Senator mcconnell, the majority leader, said yesterday, this would create, quote, the opportunity to make permanent the Corporate Tax rate cut. And then of course cbo also tells us premiums go up by 10 per year in the next ten years. Then we hear from joint committee on taxation that says that, quote, millions of low income and middle income people face a tax increase. So we have to ask what will happen in the context of both tax increases and coverage loss . Whether or not when joint committee on taxation tells us 13. 8 Million People will see a tax increase as a result of the bill in 2019. So we have to ask a question how many will lose coverage, and, and have their tacks increased as a result of this bill . That should be a question we are asking. How many will get the double hit of a tax increase and coverage loss . Thats one question we should be asking. We should also be asking, what is the impact of this bill on children . What happens to children . Either children who might lose coverage but lets say they dont lose coverage. Lets say their parents lose coverage because of the repeal of the individual mandate. What the hell happens to a child in that instance . No one is asking that question. No one is asking the question of why the rush . Why does this have to be a drive by in the middle of the night rushing by the repeal of the individual mandate which is so critical to diversifying the risk pool. Why would we russia tax reform bill through this process . So when i say this bill is a thief in the night i mean it. Thats exactly what it is. Ripping health care from people at the same time you are jacking up their taxes. Senator your time is up. Gladly yield. Okay. Thank you. Okay. Our next next person is i think claire is next, senator mccaskell. Yeah. Thank you mr. Chairman. I just want to say to my colleagues if you have got bob casey that fired up, that ought to tell you something about the path we are going down. Mr. Chairman before my time starts could i have a parliamentary inquiry about the changes that you made at 10 30 last night . Go ahead im sorry. Could i make a parliamentary inquiry before my time begins about the changes that were made at 10 30 last night. Sure. Is there a summary anywhere . I mean we have got a 100 page document on the table but surely someone on the majority side has a list, an abbreviated list of every change you made at 10 30 last night. I know there is changes to passthrough, to Child Tax Credit, i know there is changes to the bracket. I dont know what other changes asking us to read 100 page document between 10 30 last night and 10 00 this night in addition to trying to ferret out the differences between what we had gotten and what we are talking about today. It is a challenge, mr. Chairman im not trying to whine. I understand. I dont think my request is that unreasonable, do you . Its the way we work around here. No question about that. No. Thats not the way we work around here. Thats not true. I know the history of this committee. This is not the way this committee works. And you are trying to ram a boat in the next 24 hours. Im talking about the senate as a hole. Yeah but not this committee mr. Chairman not the way you have run this committee. And i dont understand what pressures you guys are under. What is making you do this to us . I dont get it. My questions the Ranking Member mr. Chairman, again, this doesnt come off senator mccaskells time. I think that she has boiled this process down to a fundamental question about what this committee is all about. She is asking for a summary, a document that explains the changes that were made very late last night. And we are going to continue with our questions, but i want to work with you because we have got to have this. This is fundamental to the kind of fairness that this storied committee has been all about. So senator mccaskell, the time is yours. So if this were eliminating a tax, im assuming that there would be a negative impact on revenue to the government. Correct . The we are referring to the mandate . Right. There is multiple components to the analysis. Eliminating the mandate in and of itself would mean there are not penalties paid in that are currently being paid in. All this talk about eliminating this tax, lets boil down what this tax represents. This tax represents 43 billion. And i would get into more details if the cbo were here. But basically we are talking about 43 billion in taxes or penalties for people who dont buy insurance. And then there is 44 billion because we are going to have to spend more money on dish payments to hospitals. So thats the negative. That eliminating the mandate requires. So how come you have got 318 billion to spend out of this . Senator if you are getting rid of a tax, how does, miraculously, 320 billion show up for you to bible to spend on corporations . I will tell you why. Because you are eliminating 185 billion in payments of subsidies to people who are getting insurance. And by the way, i believe, if cbo were here and im sure you would probably agree, the jct would agree that no one, no individual is entitled to an aca subsidy that makes more than 50,000 a year. So let me see if i get this straight. Y; you are saving people ostensibly, your argument is, making less than 50,000 a year you are saving them 43 billion. And then you are turning around with the other hand, and you are cutting 185 billion from those same people. Wait. Im not done. Then you are cutting, i believe, and you can correct me if im wrong, 179 billion from medicaid. Now, im pretty sure those people dont make 50,000 a year. So in order to save these poor people 43 billion, you are cutting 364 billion to the same people. Senator if you would yield for a second. There are no cuts to medicaid in this bill. I beg your pardon. This is the cbo score, mr. Chairman. Im reading right off of the cbo score. 179 billion in reduced medicaid subsidies. Well, there are no cuts. Beg your pardon. Thats where the money coming from. Where do you think the 320 billion is coming from, is there a fairy thats dropping it on the summit . The money you are spending is coming out of medicaid and subsidies to people who make less than 50,000. So you are trying to shop this baby like you are giving a 43 billion saving to people who make 50,000 a year. C just so you know, cbo said that thats people who are leaving medicaid. And what they estimate is going to happen. There is nobody cutting medicare. You arespending 318 billion to make tax cuts for corporations permanent. That money is coming from the very people you say you are saving by eliminating 43 billion in tax penalties. Now, im from missouri and im just telling you, i was not a great student in math. But i will tell you, this is not a good deal for people who make less than 50,000 a year. And on top of that, all the middle class people that are actually taking personal responsibility and buying Health Insurance because heres the thing, all these people that lose that arent going to go get their insurance now, do you know whats going to happen . They are going to get sick. They are going to get a cancer diagnosis. And who in fact is going to pay that bill . When they dont have insurance anymore, who is going to pay the bill . Ill tell you who is going to pay the bill . The poor people, the middle class families are going to pay the bill with a higher Insurance Premium because the hospitals cant absorb all this uninsured care. We are not going to turn people away from the hospital when they show up with a cancer diagnosis and no insurance. So its not like these people arent going to get sick anymore. This is such a scam. So dont trot out here righteous indignation that you are helping the poor people with doing away with this tax penalty because you are taking you are giving them a little bit of benefit over here, but they are not going to have Health Insurance and the people who have it are going to pay more. And you are taking money out of the medicate program and the subsidy program. Senator your time is up. I have got a lot of questions ill pass through. I hope to get another round. I have got passthrough questions. Senator nelson. Thank you mr. Chairman. Mr. Chairman was that applause for me . [ laughter ] i dont think so. Well, let me just say that you know im kind of surprised that we are going through this drill again. If i remember correctly, i think was 1 30 in the morning in a completely hushed Senate Chamber back in early august or late july that john mccain strode into the Senate Chamber and walked up to the reading clerk and said, no. And as a result, the repeal and replace of the Affordable Care act was over. I thought it was done and we had saved health care for over 30 Million People. But lo and behold, it came up again in september. Again, an attempt to repeal and replace a different version. And finally, instead of three republican senators voting no, they found that it was going to be more like ten, ten republican senators that wouldnt vote for the package of a repeal and replace. And therefore, they didnt eave bring up the bill for a vote. And here we are again. And its the same thing. We are going to take the economic underpinning out of it thats going to cause 13 Million People, as stated by the authorities 13 Million People are going to lose their coverage. And premiums are going to go up what did we hear . What did cbo say . 10 a year. So lets see now. The first year premiums go up 10 . According to the base. Now it comes around to the next year. Premiums go up another 10 . Im just a country boy, but i understand that if you add that up over ten years, its something in addition to 10 all the way up to 100 that premiums are going to go up depending on the base. And we want to go through this drill again . On what has been stated over and over that the American People want to have health care for those people that in the past have not been able to Purchase Health care or to have health care and this is going to take place when everybody on this committee, in fact, wants to reform the tax code and yet this is the avenue to get additional revenue in order to cut out the Affordable Care act. Im really surprised. So instead of working in a bipartisan fashion, which this committee used to be, were taking more of the same old, same old. I thought that once the Affordable Care act was saved in early august, i thought we were going to see the sprouting of blossoms of bipartisanship. And indeed, we have. We saw those early efforts with Lamar Alexander and patty murray and then they were squelched in september. Althou lo and behold lamar and patty are meeting as we speak with about 20 bipartisan senators sponsoring the stabilizing of the current law, the Affordable Care act. 20 sponsoring that legislation. And here we go again. Under the guise of tax reform. I thought that that issue was behind us and yet here we have it coming back. And so in my remaining 17 seconds, mr. Chairman, i think that your provision to generate 338 billion to help pay for Corporate Tax cuts when the light of day is shined on this and people recognize whats happening, theyre not going to like it one bit. Well, thank you. Senator toomey, youre next. Thank you, mr. Chairman. So i want to get back to this issue, and lets get some clarification, because weve heard quite some extraordinary comments from the other side. Mr. Barthold, can you tell me wherein t where in the bill is the text that disqualifies people from medicaid . The chairmans mark had no provision related to medicaid. It was really just tax provisions, sir. There is no provision that disqualifies people for medicaid . Not in the mark as modified. Didnt dis kwaqualify anybod from medicaid. How about medicare . No changes in terms of medicare. Nobody is disqualified from medicare whatsoever. Thats correct. How about the text in the bill that denies People Protection for preexisting condition . Where is that text . The chairmans mark is a tax ma mark. It doesnt change requirements on the insurance industry. Doesnt change that one bit, does it . Slee completely silent on that. How about how much does the bill text specify that reimbursements to Health Care Providers have to go down . Where is that text . Again, the chairmans mark about the Internal Revenue code. Theres nothing related to right. So the point that im obviously trying to make here is that there are no cuts to medicaid. There are no cuts to medicare. Nobody is disqualified from insurance. So what does happen . Well, we have a mandate where some of our friends thought it was a good idea that the government should be able to force people to buy a product whether they want it or not. Which strikes me as an outrageous and unconstitutional infringement on personal freedom. But people are forced to buy a product whether they want it or not and the government gets to dictate the terms of that product irrespective of whether people think its a good idea. And then theres a category of people, many, who cant afford that product because this market is so badly designed. What we do is we say if youre in that category of people that cant afford this product that doesnt suit your family well, then were going to punish you with this tax. What we do in this bill, this is all we do in this bill is we zero out the punishment that we currently under current law we inflict on people who decide they cant afford to comply with this mandate. Thats what we do. Thats it. And it turns out that in pennsylvania 83 of the people who are currently absorbing this punishment, forced to pay this tax, their Family Income is less than 50,000. You want to talk about a middle class tax cut. Its the people who cant afford these unaffordable plans who will no longer be punished with this tax. Thats all we do. There are no cuts to medicaid. Theres no changes to the program. Theres no reimbursement differences. Its no dis qualifications for people to participate. None of that. Were simply saying if you cant afford these ill designed plans with respect to your family, anyway, youre not going to have to pay this penalty. Let me move on to the issue broadly of middle class tax relief. Mr. Barthold, my understanding is we dont yet have the new distribution tables, but we have distribution tables from the previous itratieration . Thats correct. I see a reduction in federal taxes paid in every single income cohort. On average, thats correct, sir. In total thats correct also, right . Thats correct, sir. And i also see that in every single income cohort the average tax rate goes down. Is that correct . Thats correct also, sir. There have been some changes. Is it your impression that the result of those changes will be to further reduce some of the average tax rates and to further reduce some of the Tax Obligations for low and middle income cohorts . In years before the sunset, sir, because the sunset turns off, so it would return basically to present law in the very last year. But as noted when the senator asked earlier the expansion of the Child Tax Credit increased the value, and also actually made a further modification that no taxpayer with a taxable income in excess of half Million Dollars could claim Child Tax Credit. So that means all that increase in value accrues to taxpayers with dependent children less than 500,000 and the tax rate bracket affects have effect for everyone in the new 22 bracket and above. Right. So mr. Chairman, im running out of time. I would just observe this product lowers taxes on the overwhelming vast majority of middle income and working class families and individuals. The earlier iteration did and the final iteration does. Im glad you pointed that out. Mr. Barthold, earlier there was a question about the refund ability of the Child Tax Credit. It is my belief that we index the refundable thats correct, mr. Chairman. Your underlying mark provided indexing of the 1,000 refundable portion of the Child Tax Credit. And so throughout the budget throughout the budget period, that indexing would apply. Up through the sunset. Im glad you pointed out that we indexed the refundable product, the Child Tax Credit, which will actually increase it. Thats correct. Actually, our estimate is that the refundable portion would increase from 1,000 to 1,100 in the first year. The claim that the market has no refundability on the Child Tax Credit, is there any accuracy to that at all . No. As you just pointed out, it increases the amount of the refundable tax credit through time. So basically the prior claim that we did not improve the refundable part of the credit is untrue. Thats correct, sir. Okay. Well, my Democrat Friends may not support tax relief for the middle class. Lets not misstate the facts. Mr. Chairman, if we can be a little bit more careful about it. Mr. Chairman, just yield for a moment. Thats just not factually accurate that we dont support tax relief for the middle class. We do. What we object to is what is on offer now which is permanent relief for the Multi National corporations and temporary relief for the middle class. Thats a double standard that favors the powerful. Will the gentleman yield . I had the time from the chairman. Ill yield for you. I was simply going to observe, mr. Chairman, would it be in order for a the Ranking Member to offer an amendment to make the tax reductions for individuals permanent . Second. If you wish to do so. Mr. Chairman, i intend to offer exactly that. I want it understood if i could respond to my let me just answer that because were not going to do that in the committee f. We do it, well do it on the floor. I intend to offer it, mr. Chairman. We understand it. Senator portman. Thank you, mr. Chairman. We were just talking about the changes that were made in the draft. One change is to enhance the Child Tax Credit. It was stated earlier by one of my colleagues that there is a reduction in the refundability, maybe even no refundability in the Child Tax Credit. Thats just not true. The Child Tax Credit is expanded. Its an expansion from current law. So not only is the tax credit richer than it was before, its a doubling of the Child Tax Credit. It also is available to more families and also the refundability of it is expanded. I just think, again, if we can stick to the facts, for those who are watching, you might want to go on jct. Gov. Theyve analyzed this tax proposal. Every income category gets a tax cut in the aggregate and therefore in the middle class there are real tax cuts. In ohio the number weve gotten is 2,375 per family per year. It will now be greater than that based on the changes that were made last night because the individual mandate funds are going into more middle class tax ruts. I would encourage people to look at the joint committee numbers which are the official numbers and see the fact that despite what was said earlier today, if you want to tax middle class more, then you should vote no on this bill. If you want to give middle class a tax cut, you should vote yes. I appreciate the other revisions you made. I think they make the bill better including a bunch of bipartisan ideas that we already had in there including middle class tax cut and including a territorial system and a 20 rate, a system that enables us to bring trillions of dollars overseas back to this country for more invest more and more jobs and higher wage system already in the bill. Then you added other bipartisan revisions that i think can be put in three categories. One, promote for economic growth. Two, promote the ability to save for retirement and promote Employee Ownership which is a good thing in my view. And one thats common sense. Economic growth. I want to thank the chairman for including a provision a lot of us have worked on. The Craft Beverage modernization and tax reform act. Senator wyden has been a champion of that approach and the growing Craft Beverage industry. This bill now gives the Smaller Companies much needed exise tax relief. Ohio is number four in craft beer. 61 new breweries have opened last year alone in ohio. This legislation is only going to promote the expansion and the jobs that come with these entrepreneurial Small Businesses. Id like to thank the chairman for accepting the amendment. And also the 401 k catchup contributions. The amendment that protects in the nonqualified space the i think thats a good thing among small startup businesses theyre really important. This gives all employees better stake in their company in the future of that company. We protect the stock option holders that would have been from phantom income they may never have received. These type of saving vehicles are critical at helping small employers attract new talent and for giving employees new stake in the company they work for every day. The amendment also restores the ability for those over 50 years old to use the catchup contribution. This is something ben cardin and i fought for. We want to make sure it stays in the law. We want to encourage people to save more for their retirement. These are important changes. I appreciate you doing them. Finally, common sense. Senator kunz, the stop taxing death and disability act. Thats a pretty good title. What it says is that if someone as a child who develops a pe permanent disability or that child dies, their Student Loans should be forgiven. Maybe mr. Barthold, maybe you could walk us through what happens under present law if a child dies or develops a permanent disability what would happen under this legislation. Weve had some tragic circumstances in my state of ohio. One was the family in stubenville, ohio. They had a child who developed a permanent disability and they had a big Student Loan Debt to pay and this legislation would help them. If you would speak briefly on this new legislation thats in the chairmans mark today. Certainly, senator portman. Under general tax principles and feature of the intern revenue code is forgiveness of any debt is considered an increase in income. What your legislation would do would be in the situation where more generally where a student loan, often they are cosigned by a parent or a guardian, and they die. By having cosigned or guaranteed the debt, that would become, if the loan is forgiven, as is often done, the debt that the student, that becomes forgiveness of indebtedness to the guarantor, so to the parent and they would otherwise have taxable income. Your legislation would make an exception from the general rule in that situation. Well, again, i think this is just common sense. And its an example of some of the changes in the chairmans mark last night that are bipartisan. That are broadly supported in this committee and that will improve the legislation. Thank you. Thank you. Our next person will be senator warner. Mr. Chairman, im not going to try to maybe get as excited as some of my colleagues, but im so personally offended by this whole process and disappointed. My good friend senator portman just listed some of the changes that were made. Some of them might have been good changes. But if you want to know how the worst of sausage making is, he just enumerated a whole series of items, some which may be pretty good, that got secretly crammed in late last night with no input from any of us. Why do people think this is a swamp . Well, that was swamp 101. My other colleague, senator ben n bennett raised, and no one was willing to answer, but ive got the cbo letter right here. Violates statutory pago, 25 billion cut next year to medicare. Anyone denies that, id ask them to refer to this document. The senator from pennsylvania went through the point there is no cuts to medicaid, no cuts here or there. Well, technically, and what is so absurd about what you proposed is to save 43 billion in a socalled tax cut, its going to actually cost the government 44 billion because more people who are going to be uninsured are then going to go to the hospital without any coverage and that means were going to have to pay 44 million on medicare payments. This is a double net loser. I strongly find it offensive when somebody says theres no cuts to medicaid. Wherein the heck did you get the 30 300 300 billion to make some of the tax cuts permanent. To get rid of the mandate costs americans their Health Insurance and that does have ripple effects. So dont claim youre not cutting medicaid when youre spending the decrease in medicaid spending of 179 billion in increased subsidies. At least dont claim youre not doing this when youre then spending these dollars. I think theres a lot of comments weve heard from both sides that want us to slow down the movement of american businesses abroad. Im still trying to work through all of the guilty, the new minimum tax procedures. And i absolutely do claim to have a little background in math and a little background in tax policy. But i fine the complexity of what i will grant the majority, maybe they wanted to do the right thing, but i believe what you have created is a per verse incentive to actually send more jobs abroad. Because the ability of a company to make an investment, a Capital Investment in a relatively high tax nation like germany and still move their property to a tax haven like bermuda, and this bill does nothing to remove the biases towards tax havens. My understanding, and mr. Barthold, i dont think youve had a chance to work through all this, that you can take those whats called normal return deduction amounts and then if they exceed the 12 rate the corporation has, those excess credits can be in effect blended and moved over towards the intellectual property tax returns resulting particularly if you then have that averaging and its not taking country by country. And that the interchange between the 10 normal return deduction, the foreign tack credits, the 12 now guilty tax rate and the ability to average these across a series of countries means that rather than decreasing the incentive, we may have actually increased the incentive for companies to move offshore. I particularly add you layer that as well as the top through efforts and we may have opened up a bonanza to International Companies but some small and Medium Size Companies using their lower pass through rates to mimic their behavior to some of the large nationals. If i could clarify for you, sae senator warner, on the point about tax credits, normal return and intangible low taxed income, taxpayers are supposed to apportion taxes attributable to the low taxed income. So in sort of simple terms, tack credits attributable to normal returns cannot be used to shelter but there is the averaging across the but it is done on a global outside the u. S. Basis. So the global outside will mean you can then keep your property in the tax haven, make your Capital Investment in a high tax nation like germany and blend those two and the effect youll have american Companies Paying zero. Well, not it would depend on the specific, but not completely i think as you described it, because again one of the reasons why this needs more review and more time. I will clarify the one point for you. You have to a popportion the ta attributable to the income so if your example was most of the tangible income is in your tax h haven and there was next to no tangible income in germany, there wouldnt be anything to blend. I can blend across anyplace theres low tax intangible income. Senator, your time is up. My colleagues are trying very hard to link tax reform to cuts to medicare by referencing statutory pago rules. But lets be clear. There hasnt been a single sequester ordered under the pago statute. Congress routinely exempts spending and revenue measures from the pago scoreboards. Si since pago statute was enacted included pro vegvisi to exclude all or parts of the law. Most of those took place when the democrats controlled the senate. Lets not be so far no law has. Mr. Chairman wait. Wait. Wait. Mr. Chairman, if i could just comment briefly. Mr. Chairman, since youre commenting on something ive raised, could i at least get ten seconds to respond . Ill be happy to do that. Lets let the Ranking Member respond and then ill turn to you. I would simply say mr. Chairman, because of congresss unwillingness to sometimes meet its own rules. Thats why i think it would be appropriate that we actually dont continue to use these gimmicks and lets go ahead and put the true cost of this bill out to the American Public and presume that all of these things are going to get waived so we actually know the true cost rather than trying to fit this box within the 1. 7 trillion debt youve already in plain english this still exposes medicare to a 25 billion hit in this fiscal year. Thats what we find so troubling. Particularly when once again we have this double standard with Multi Nationals getting a permanent tax break and working families getting a temporary one. In plain english, it does not. Thank you, mr. Chairman. Actually i appreciate you making the point you just did because a lot of concerns are being raised here by my colleagues on the other side about what possible things might happen outside of the tax code because of the legislation we are considering. Congress has a perfect record of fixing those things. It doesnt have very many perfect records, but congress has never allowed that se quest transportatiquest even made the point that senator alexander and senator murray are as we deliberate here working to address some of the concerns that they raise outside of the irs code that can help to adjust some of the issues that are being raised. I just think its a little bit disingenuous to point to issues outside the scope of this bill that are going to be resolved or are already being resolved in terms of attacking these policies. What is the policy that is in this bill that is being attacked . It is the elimination of the individual mandate. One of the most regresssive taxes in the Internal Revenue code. And mr. Barthold, could you confirm to me, i have information in front of me here that of all the taxes paid by americans under the individual mandate, 58 of that burden is carried by individuals who make less than 50,000. Is that correct . Senator crapo, i dont have your particular figure. I can tell you that in 2015, okay, the Congressional Budget Office has im using a cbo document. I was going to tell you whats reported in the statistics of income. And thats that there were 6. 7 million taxpayers made penalty payments in 2015. And about a quarter of them had adjusted gross incomes of less than 20,000. A little less than 10 had adjusted gross incomes of over 100,000. 58 make less than 50,000 and another 28 make between 50,000 and 999,999. One of the most regresssive taxes in america. That is ifsimply a punishment o those who make less than 100,000 for not being able to buy a product which they dont want to buy. And what does it the attack has been made that we are somehow using the revenue that comes from eliminating this tax to feather the nest of the wealthy, the typical argument that is always made. Common sense would tell you if we take this money from the increase and turn it into a tax cut, it would help across the board. What we do is double the Child Tax Credit from 1,000 to 2,000 allowing more parents to claim the credit. Individual income tax rates are reduced from 22 from 32. 5 to 32 which will help taxpayers keep even more of their hard earned money. And the chairmans modified mark also updates the measure pass through provisions to better assist main street businesses. This is what generated the stro strong support from the nfib, the Small Business groups in e. Mr. Barthold, i want to come back to that question of is this bill a bill that reduces taxes for the middle class and lower income categories . Youve already discussed in answers to questions from my colleagues about how every income category has a reduction in its tax rate under the previous analysis that youve done. I know you havent run those numbers for this new mark. But do you expect that those numbers will simply go down further in terms of the reduction of tax rates across income cohorts . Remember, senator crapo tlrk there is the sunset so youll see changes back in the other direction. I think the analysis lawyer similar and potentially lower across the income classes. On a percentage basis, arent the percentage reductions larger in the lower income categories . Well, i believe thats what we discussed yesterday. It is. When we looked at jcx 53. Thats correct. My point is, and ill just conclude on this, there is the point that this tax cut has to expire because of the reconciliation rules. But weve already had agreement i think from the Ranking Member that hell support an amendment on the floor to make it permanent. I think youll find great support for that on our side of the aisle. Thank you, mr. Chairman. Senator heller, youre next. Mr. Chairman, thank you. Thank you for holding this hearing. I want to thank all those that are on the panel today for your patience. Through yesterday and today. Were here today and were discussing the individual mandate because the u. S. Supreme court, including justice john roberts, said that the individual mandate was a tax and thats whats on a tax bill today. And frankly, it is the most regresssive tax in the irs code. It is a tax on poor people. Mr. Chairman, ive heard from different states and the impact that this mandate, individual mandate have on their particular states, but id certainly like to share the impact that it has on the state of nevada. State of nevada, for the tax year 2015, paid 33. 5 million. 33. 5 million in fines to the ira because they couldnt afford a product that the government told them that they had to buy. Thats 70,000 people. 80 of them make 50,000 or less per year. That means that 56,000 people in nevada, pic56,000 people paid a fine on a product that they couldnt afford because their government told them they had to buy it. My state has 17 counties. 17 counties. This is the impact of the aca. Only three of those counties have more than one insurance carrier. Only three of them. 14 of them as of the beginning of next year will only have one. 14 counties will only have one carrier. Im listening to my colleagues on the other side of the aisle complain about a 10 increase if this mandate is reversed. Mr. Chairman, nevada will experience a 38 increase under the aca next year. 38 . And we can double that. We can trib ple that. We seem to be doing that on the other side. But a 30 increase. We have failed. This government has failed these individuals. I want to read a letter if i can quickly from a woman that wrote me recently. She lives in gardnerville nevada. She says a drive a 1990 chevy suburban that is falling apart but it runs. Our house is small for five people. But we make it work. My husband works construction. Gets laid off when the weather is bad. We are the family that falls in the middle. We make too much for medicaid, not enough to cover the affordable insurance. And she puts that in quotes. Affordable insurance out there today. When my kids get shots, when they get their checkups or anything else, i pay cash for them. For an additional hit on our finances, i have to now pay a fine for not having insurance for the past three years. Mr. Chairman, thats what this bill is all about. This is to give relief to these individuals that fall in the middle. That through this bill and through your efforts through this committee to give tax relief, tax relief to these individuals to make sure that they have more takehome pay, that they have better quality work, and that this country is competitive. Mr. Chairman, i want to quit on one other note. That is to thank you for the work last night on the Child Tax Credit. That was a heavy load. But this is additional relief. Additional relief to this family of five in gardnerville that we have now doubles the tax credit from 1,000 under current law. I want to take a moment to thank you. I want to thank those that were involved in that, that worked hard, did the heavy lifting, pushed hard so that we can give middle tax families tax relief here in this country. Whether chairman, thank you. Thank you, mr. Chairman. Thank you for all the work youve done on this. As i travel around wyoming and im in wyoming almost every weekend, often going about 500 miles so i can get around to a lot of really small communities and i get to talk to a lot of people. Taxes is on their mind