Tax Talk with Sandy

Given the potential impact on the people of Michigan of a massive new tax proposal shortly coming before Congress, I hope to provide daily updates through this blog to keep the people informed about the tax legislation, as it is introduced, considered by the Committee on Ways and Means, and then considered on the House floor.     

Blog Post 11/16: House passes harmful tax bill

Today, the House voted to pass the harmful Republican tax bill, H.R.1.  Every Democrat and 13 Republicans voted against the legislation.  Earlier today, I gave a speech on the House floor urging my colleagues to oppose the bill. You can read the full text of that speech here. I also found this article in The Detroit News very helpful in localizing the debate.

So what happens now?  The Senate decides what type of bill, in any, it will pass.   The current GOP bill in the Senate shares many of the basic faults of the House bill by raising our debt to mainly pay for tax cuts for corporations and the wealthy.  In addition, it also repeals a provision in the Affordable Care Act that the Congressional Budget Office estimates will increase the number of uninsured Americans by 13 million by 2027, while also raising premiums in the individual health insurance market.   

Tax reform is a difficult topic to discuss. This should only be the beginning of our conversation, not the end. We need to thoughtfully deliberate each of the many topics in a bipartisan fashion so we can come up with a plan that truly works for Michigan families -- not just one that works for the very wealthy and large corporations, as the Republicans have passed in the House.

 

Blog Post 11/15: How the House tax bill would harm Michiganders

Tomorrow, the House is set to vote on H.R. 1, the Republican tax bill. The bill is harmful to so many Michigan families.  In fact, the non-partisan Joint Committee on Taxation estimates that roughly one out of every four Americans earning between $50,000 and $100,000 will pay higher taxes in 2023 under the GOP bill, and many with incomes below $50,000 will also have their taxes increased. 

One of the things the bill does is repeal a number of deductions that are help low taxes for families in Michigan. Let’s walk through a few of these. The Republican bill repeals the student loan interest deduction, which allows filers to deduct up to $2,500 in interest paid on student loans from their taxes in a given year. Those who claim this deduction cannot make more than $80,000 annually (or $160,000 for married couples filing jointly). In Michigan, this tax credit helped lower the tax burden for more than 410,000 individuals in 2015 by an average of $1,105. Yet House Republicans want to take that away from families.

Teachers, also would get hit. The tax code allows teachers to claim a maximum of $250 for out-of-pocket classroom expenses, whether or not they itemize their deduction. In Michigan, this tax deduction helped more than 94,000 teachers afford classroom supplies. But House Republicans don’t think that’s a good benefit for the middle-class families.

Another key deduction is the medical expense deduction. Under current law, individuals can deduct qualified medical expenses. In Michigan in 2014, this provision helped 235,000 filers afford medical expenses by lowering their taxes on average by $9,200. This provision helps ensure families stay afloat when they get hit by very high medical expenses – especially those that are unexpected.

Finally, the House Republican bill removes the provisions that allows families to deduct the full amount they pay in state and local taxes. About one in every four Michiganders benefits from this provision, and is able to claim an average of $9,795 in state and local taxes on their federal returns.

These are just a few examples of tax provisions that are repealed in the Republican bill that truly help Michiganders.
 

Blog Post, 11/14: Starting a list of organizations opposed to the Republican tax bill (updated)

The National Committee to Preserve Social Security and Medicare
“On behalf of the millions of members and supporters of the National Committee to Preserve Social
Security and Medicare, I am writing to urge you to vote against H.R. 1, legislation that would result in cuts to Medicare, Medicaid and Social Security – all to pay for massive tax breaks for the very wealthy and profitable corporations.”

National Education Association (NEA)
NEA President: tax cut is giveaway to wealthiest funded on backs of students and working families Plan would put middle-class families at risk of higher taxes, jeopardize students’ education.
Hide

Committee for a Responsible Federal Budget
The Tax Cuts and Jobs Act (TCJA) would lose $1.4 trillion and significantly worsen our already unsustainable budget outlook. However, the cost could be even higher after accounting for higher interest spending and gimmicks embedded in the bill. Ultimately, the House tax plan could add over $2 trillion to the debt. As a result, trillion-dollar deficits would return by 2020 and debt would exceed the size of the economy in just over a decade.

Center on Budget and Policy Priorities
The tax bill approved by the House Ways and Means Committee on November 9 is fiscally irresponsible.  The bill would cost nearly $1.5 trillion over the decade, according to Joint Committee on Taxation (JCT) estimates.  But provisions in the bill that would phase in slowly or expire after several years obscure the bill’s true cost and would almost certainly drive the ultimate cost even higher.

American Association for Community Colleges/ Association of Community College Trustees
On behalf of the nation’s more than 1,100 community colleges, the American Association of Community Colleges (AACC) and the Association of Community College Trustees (ACCT) write to express our  opposition to several of the provisions in the Tax Cuts and Jobs Act (H.R. 1).

Environmental Organizations – Clean Water Action, Earthjustice, Greenpeace, League of Conservation Voters, National Resources Defense Council, Union of Concerned Scientists, and more
On behalf of our millions of members and activists, we write to urge you to oppose the Republican leadership’s tax legislation, the misnamed Tax Cuts and Jobs Act (H.R.1). This plan would lavish huge and permanent tax cuts to the richest 1% and corporate polluters that are destined to be paid for by the health and environmental well-being of communities across the country.

UAW
On behalf of the more than 1 million active and retired members of the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, UAW, I am writing to strongly urge you to vote ‘NO’ on H.R. 1, the Tax Cuts and Jobs Act.

Fraternal Order of Police
I am writing on behalf of the members of the Fraternal Order of Police to urge you to protect the State and local tax (SALT) deduction in the current tax code.  Our members put their lives and safety at risk to protect our homes, schools and communities.  Their salaries and the equipment they use are paid for by State and local taxes on property, sales and income.  These funds are then invested in our law enforcement agencies and the men and women serving in law enforcement.
 

 

Blog Post, 11/9: Conclusion of Committee Action

The Ways and Means Committee concluded its work on the Republican tax bill. Earlier today, the Committee voted along party lines to move the bill of Committee so it can be considered by the full House.

Just before the Committee finished its work, Chairman Brady offered a manager’s amendment that made substantial changes to the bill in the hopes to gain more popular support – as many in the media noted that the bill would increase taxes for the middle class. Democrats offered many amendments to try and make the bill better. All were rejected – including one from me, which would have closed the carried interest loophole once and for all.

In the end, this Republican tax bill picks winners and losers – the big winners are the very wealthy and some corporations, and the losers are the middle class and those who aspire to it, and the rest of America who will be forced to pay for the bill’s massive debt for years to come. While the GOP bill gives the very wealthy enormous tax breaks, it actually raises taxes on tens of millions of middle-class families by eliminating the personal exemption and deductions for medical expenses, for full state and local taxes, and for educational needs. Speaker Ryan has said the bill is focused on the middle class, but that is simply not true. It’s really the opposite: it’s a bill built for millionaires. And the process used to consider it has been driven by desperation, rather than deliberation.

The more the American people learn about the Republican tax bill, the more they will reject it, just as every Democrat did today on the Committee on Ways and Means.

Next week, we could see action on the House Floor. We’re also expecting to see a tax plan from Senate Republicans. I’ll continue to keep you updated.

 

Blog Post, 11/8: Top 10 Worst Provisions...

The Ways and Means Committee continued its work on the Republican tax plan today, though the day's work will be cut short as Republicans are going to make yet another round of changes to the bill.

In it's current form, this bill is bad. So bad, in fact, that I came up with my top 10 reasons (through it was hard to keep it to just 10):

10. The bill repeals a tax credit for purchasing electric vehicles – hurting a growing US industry.

9. The bill gives a tax advantage to companies to move abroad.

8. The bill creates a new tax loophole for millionaires by lowering top rate on pass-through income.

7. The Republican bill limits the deduction for state and local taxes. 

6. The GOP bill eliminates estate taxes on the wealthiest 0.2% of estates worth over $5.5 million.

5. The tax bill repeals tax deductions for the middle class, including the medical expense and education deductions.

4. The bill breaks President Trump’s promise to end the carried interest loophole for fund managers.

3. The Republican legislation gives millionaires an average tax cut of $58,000.

2. The GOP bill raises the deficit by $ 1.7 TRILLION.

1. The bill would RAISE taxes on 22 million Americans, including one out of every four Americans with income between $50,000 and $75,000, in 2023. 

 

Blog Post, 11/7: New JCT Data Shows Many in Middle Class Get Hit with Higher Taxes Under GOP Bill

Congress’ nonpartisan scorekeeper, the Joint Committee on Taxation (JCT), released new numbers this morning on the Republican tax plan. These numbers show even more clearly that large numbers of middle-income taxpayers would be required to pay higher taxes under the Republican tax bill, especially in future years.

The data is clear. By 2023, one out of every five taxpayers with incomes between $75,000 and $100,000 would be hit with a tax increase of more than $500 under the Republican tax bill.  And at least some Americans in every other income group would also see significant tax increases, including one out of seven of those with income between $50,000 and $75,000.

Republicans keep talking about how their bill puts the hardworking families first. About how it’s a tax break for middle income families, but these numbers show just the opposite. Not only does this bill increase taxes for a sizeable number of Americans, it slips in that tax increase several years down the line. We need to put the middle class first, not slash the corporate tax rate and pay for it on the backs of hardworking Americans.

If you want to look through the table that shows this increase you can find it here. And if you’re interested in seeing the full remarks I made on this during the continuing markup in the Ways and Means committee, you can watch that by clicking below or here.

 

 

Blog Post, 11/6: Committee Markup - Day 1

Today, the Ways and Means Committee began the work of digging into the Republican tax proposal, a process known as marking up the bill. . Republicans have said they hope to have the bill passed by Thanksgiving, and President Trump says he wants a tax bill on his desk by Christmas.

If the pace of this is giving you whiplash, you’re not alone.  The bill was only introduced on Thursday.

Today was the first opportunity for Members to examine the proposals contained in the legislation. I questioned the expert witness, the head of the Joint Committee on Taxation (JCT) – who prepares the analysis of the bill – on the effect of the bill on moderate-income, working families, those earning $20,000 to $40,000 annually. Most people in that bracket work hard to make ends meet, and Republicans claim their bill delivers middle class tax cuts.

So I asked. And according to the analysis prepared by the JCT, Americans who make between $20,000 and $40,000 a year would see on average an overall increase in their taxes starting in 2023. And how many Americans might be in that group? About 38 million Americans, according to JCT.

I was also curious about how the bill affected the wealthy in our country. JCT projects that in 2027, those earning $1 million or more a year will receive an aggregate tax cut of $36.6 billion – meaning that each of these very higher earners will receive, on average, a $58,000 tax cut. 

Time and again, Republicans have said this is a tax cut for middle class. Here are some recent quotes, cited from the AP:

PRESIDENT TRUMP: “It’s a tax bill for [the] middle class…”

HOUSE SPEAKER PAUL RYAN: “The focus is on middle-class tax relief. The focus is on directing that tax relief to the people in the middle and the people who are trying to get there. And that is why we put our emphasis on that tax relief for those people who are in the middle.

Despite President Trump and Speaker Ryan’s words – the numbers don’t line. And the numbers from the non-partisan JCT show aggregate tax increases for many in the middle class, and a huge cut for the very wealthy.

Watch a clip of our exchange below.

Blog Post, 11/4: Another Tax Break for Millionaires...

In reviewing the potential impact of the GOP tax bill’s provision on pass-through business income, it’s hard to come to any other conclusion than it’s another huge handout to the very wealthy.  

Under the proposal, a portion of income from a business that is passed through to an owner or shareholder would be taxed at a maximum rate of 25%, rather than being taxed at ordinary individual income tax rates. The Joint Committee on Taxation estimates the provision would cost the Treasury $448 billion over the next decade in lost revenue. 

So who gets the money? First, this new top rate of 25% for pass-through income would only help those with incomes over $260,000, since that’s the level the bill’s 25% rate goes up to for individual income taxes. And second, consider that JCT data illustrates that total pass-through income is massively top-loaded for the wealthiest taxpayers, with nearly 44% of the income filed under Schedules C and E of the tax code (which includes sole proprietors, partnerships and S corps) going to those with incomes over $1 million.

Tax expert, Professor Daniel Shaviro of NYU Law School, recently wrote that the GOP pass-through provision was “very carefully crafted to make sure that people in the 39.6 percent [bracket] get the full rate reduction. Under the bill, these are people with taxable income of at least $1 million. So we can be reasonably confident that…this is mainly about big non-corporate businesses and their very rich owners.”

Regrettably, that seems to be a common theme with much of the Republican tax bill – big breaks at the top financed by debt for everyone else.

 

Blog Post, 11/3: JCT Score Shows GOP Tax Plan May Hurt Middle Class

The Joint Committee on Taxation (JCT) has released part of their analysis on the Ryan-McConnell Republican tax bill.  JCT is a nonpartisan and their “scores” help Members and the public understand the revenue effects of tax legislation, which can reveal winners and losers when it comes to these bills. Their early analysis confirms our worst suspicions that the tax plan may hurt the middle class.

Earlier today, I released this statement in response to the JCT Score:

“The non-partisan numbers we are seeing suggest the Republican tax bill squeezes the middle class and blows up the debt to give big tax breaks to the wealthy and to corporations. 

“Based on estimates recently released by the Joint Committee on Taxation (JCT), the individual tax provisions in the GOP bill actually raise taxes by about $385 billion over the next ten years after setting aside the repeal of the estate tax, the lowering of the top tax rate for pass-through business income, and the repeal of the Alternative Minimum Tax – none of which provide any significant tax relief for middle-income families. Many of the deductions and exemptions that middle-income families depend on to lower their taxes are reduced or eliminated under the Republican bill, including personal exemptions, and deductions for interest on student loans, medical expenses, and state and local taxes. This could mean higher taxes for millions of middle-income Americans, even as the wealthy and big businesses get big tax cuts.      

“Republicans need to slow down their rush to pass their bill before anyone knows what’s in it, and fully explain who is helped and who is hurt. The American people have a right to know.”

Here are some concerning policies in the Republican tax plan that you may not be aware of, and some articles that explain those missteps:

• The bill doesn’t address the carried interest loophole that lowers taxes for investment managers, even after Pres Trump promised to eliminate it.
• Eliminates the deduction for interest on student loans
• Eliminates medical expenses deduction
• Reduces state and local taxes deduction
• Repeals deduction for home casualties and losses due to disaster or theft
• Eliminates Coverdell Education Savings Accounts
• Elimination of Electric Vehicle Tax Credit
• Repeal of adoption tax credit
• Repeal of exclusion of dependent care assistance
• Repeal of credit for testing drugs for rare diseases
• Repeal of the work opportunity tax credit (which helps veterans among others)
• New, less generous inflation update for individual brackets using chained CPI
• Temporary provision $300 family credit
• Reduction of the Wind Tax Credit

 

Update, 11/2: Statement on Ryan-McConnell Republican Tax Plan

As you’ve probably heard by now, Republicans released the language in their tax cut. I’m still working to review the bill fully, but wanted to share my initial statement with you:

“While we need to carefully review the over 400 pages in the GOP tax bill, one thing is already clear – it provides a huge giveaway to the wealthy and corporations financed by debt that middle-class families will ultimately have to pay for.  Republicans claim this will stimulate economic growth, but history has shown their trickle-down economics don’t work.

“Additionally, this bill reduces tax credits that help many middle class families, like the state and local tax deduction, the student loan interest deduction, the itemized deduction for medical expenses. At the same time it gives the very wealthiest families a huge tax break by ending the estate tax, which now applies to only the richest 0.2 percent of all estates.”

 

Blog Post, 11/1: So where's the tax bill?

Today was supposed to be the day that Republicans released language and full details for their tax plan. However, it’s been confirmed that at the earliest, language won’t be released until tomorrow.

So why does this matter? A couple of reasons.

First of all, news outlets are reporting that the reason for the delay is that Republican’s haven’t finalized the details of the plan. To date, they’ve only released broad framework that lacks certain key details. And what’s more, new proposals have been recently floated to reduce tax benefits and incentives that help the middle class – like pre-tax contributions to 401(k) plans that help you save for retirement – in order to help pay for the tax cuts in the GOP bill.

Which leads us to the second reason why this matters: the longer Republicans delay on releasing the text – the less time everyone has to understand what’s in this proposal before it’s rammed through Congress.

When Congress last considered borad tax reform in 1986, the process was open and bipartisan. There were months of bipartisan meetings, allowing Members to thoughtfully consider the full ramifications of different policies.

In contrast, Republicans want to start considering their legislation in the Ways and Means Committee on Monday – but we don’t have the final proposal yet. The public deserves the opportunity to understand and digest this proposal, to learn what might happen to individual tax rates, the corporate tax rate, tax-exempt savings for 401(k) plans, and so much more.

Not only does the public not have time to evaluate the proposals, but the nonpartisan analysts that help Congress may not have time to fully digest the proposal either. The Joint Committee on Taxation (JCT) works to analyze the revenue, distributional and economic impacts of tax-related bills, but given the already-close timeline, this delay undermines their ability to help legislators and the public understand the bill.

Republicans may feel they need to deliver big on “tax reform,” because they have failed to legislate on other issues. But attempting to hide the impact of their bill is not the way to legislate, especially on a proposal that would have such wide-ranging implications for families in Michigan and across the nation, for our national debt, and for our economy.
 

Blog Post, 10/31: What to expect in the details of the GOP Plan

Congressional Republicans just recently passed a partisan budget resolution, paving the way for a massive tax cut package that would primarily benefit large corporations and the very wealthy. The budget allows Republicans to pass tax cuts that add $1.5 trillion to the deficit – sticking the middle class with a future deficit tax. 

As soon as tomorrow, Republican leaders will unveil their tax cut plan based on the Ryan-McConnell framework released at the end September.  The final details have been kept secret – even from most Republicans – but here’s what we know so far.

The framework provides far too much help for the wealthy and corporate interests and burdens the rest of the country with an enormous deficit that will force future cuts in programs like Medicare or future tax increases for the middle class. It calls for cutting the top tax rate for those with high incomes, and providing a lower top tax rate for pass through business income that will give the vast majority of benefits to those with incomes over $1 million. It would repeal the estate tax, which will benefit only the richest 0.2 percent of all estates and exacerbate income inequality. The non-partisan Tax Policy Center analyzed the framework and found it would cost $2.4 trillion over the first decade it was implemented.  According to this analysis, the Republican plan would hand out 80 percent of the tax cuts to the wealthiest one percent while 30 percent of middle class families could see a tax increase.  And the very wealthiest taxpayers, the top 0.1 percent, would individually receive a $1 million tax break under the Republican plan. 

I support simplifying our tax code, increasing fairness, reducing special interest loopholes, and doing so in a fiscally responsible manner.  I have long called for meaningful, bipartisan tax reform that focuses on helping the middle class and those striving for it. That’s what hard-working families in Michigan deserve. 

I hope there is still a chance for tax reform to pursue these goals, but so far the GOP has opted for a partisan process, shutting the door to bipartisan cooperation.  I will try to keep you up to date in the coming days.