How the Trump Tax Plan Will Affect You
Any overhaul of the tax code should help working Americans and grow our economy, as the Republicans promised they would do. Unfortunately, that is not the reality of their tax bill, which was written behind closed doors on a totally partisan basis. Instead, the Republican plan passes over true reform and tax relief for hard-working Americans in favor of providing massive tax breaks for corporations and the wealthy while exploding our national debt.
On December 19, Republicans pushed through the House H.R. 1, their tax legislation, with 227 Republicans voting in favor and 191 Democrats and 12 Republicans opposed to the bill.
I spoke on the House floor following the vote on the tax bill.
The GOP tax plan reduces the rate on income over $500,000 to 37 percent, down from 39.6 percent under current law. According to previous nonpartisan estimates from the Congressional Budget Office and Congress’s Joint Committee on Taxation, this reduction could cost up to $130 billion over a decade. In an unprecedented tax cut for the estates of the ultra-wealthy, the plan also doubles the estate tax exemption amount to $11 million ($22 million for couples). This plan also slashes the corporate rate from 35 percent to 21 percent, an expensive handout to large corporations, which will decidedly not create jobs or increase wages. Corporations are currently enjoying historic profits, yet wages are stagnant. Previous corporate cuts have only led to stock buyback, dividends, and executive bonuses, not higher wages or more jobs.
The tax plan also cuts taxes for wealthy passive real estate and other investors and pass-through businesses, entities that don't pay the corporate tax but instead report income on the business owner’s individual tax returns.
And how are these handouts to the wealthy paid for? Outrageous hits to middle class families. For us in Oregon, there is an incredibly partisan provision in this plan. Most of the states that voted against Donald Trump have higher state and local taxes, and this plan targets states that voted majority-blue by capping state and local income tax deductibility. Forty percent of Oregon taxpayers claim this deduction. This would hike taxes on middle class Oregonians by forcing them to pay taxes twice on their income.While the few provisions that do benefit some in the middle class will expire in five years, the corporate cuts and estate tax elimination are permanent.
Even with these hits to middle income families, the price tag on the Republican plan is at least $1.5 trillion. Our national debt has ballooned to nearly twenty trillion dollars, and raising our national debt further will create an increase in interest rates and further hurt working Americans that have to borrow for mortgages, cars, and education. Additionally, the Pay-As-You-Go Act (PAYGO) of 2010 required any legislative changes that would increase the deficit to be offset by equal spending cuts. If Congress does not act, PAYGO cuts would include hundreds of billions in cuts to Medicare payments, a doubling of the fees charged to students for student loans, and cuts to social services block grants, critical transportation programs, public health and prevention activities, and assistance for workers displaced by NAFTA and other failed trade agreements. Cutting taxes for our nation’s wealthiest at the expense of these programs is unacceptable.
I believe there are better priorities to spend this money on: