Mr. Speaker, I rise to alert the American people to the tax scam that is the Republican "tax reform" proposal, unveiled last week. It is reported that President Trump wanted to call this bill, "cut, cut, cut." That would have been apropos. The first cut is for him and his family members, the second cut is for his wealthy friends and acquaintances, and the third cut is for large corporations classified as LLCs. It certainly does not cut taxes for middle income families or most small businesses. In fact, it does just the opposite. It is crystal clear who gets the cuts and who gets to pay more.
First and foremost, the GOP tax plan eliminates inheritance taxes. This tax only applies to estates of over $11 million and only affects two tenths of one percent of families in America, those who wish to pass along their wealth, unearned and untaxed.
Why are Republicans doing this? Because it's a huge priority for some of their biggest donors. In fact, this cut is not even about the 0.2 percent–it's really about two families–the Mercers and the Kochs.
The bottom line is that America's hard-working low, moderate and middle-income families will be asked to pay for this $172 billion dollar give away to the super rich.
At the heart of this scam is the GOP pretense not to be cutting taxes for the super-rich by maintaining the top rate of 39.6 percent. However, it increases the income level that the 39.6 percent applies to; from $470,000 to $1 million. These proposed rate changes will cost over $1 trillion.
This cut also goes to those who make far more than $1 million as well. Whether your income is $1 million, $10 million, or $100 million, this provision alone gives you an extra $25,000 a year. Mr. Speaker, many South Carolinians I represent do not make $25,000 in a year.
The GOP tax plan also features a special rate for the owners of "pass-through" businesses at a cost of $448 billion. These are LLCs and partnerships, who pay zero corporate tax, and whose owners' income is treated the same as anybody else's.
The Republicans claim that giving these owners a special lower rate will help small businesses, but nothing could be further from the truth. LLCs and other types of pass-throughs make up 95 percent of all the businesses in the country. In fact, some of the largest businesses like Koch Industries, Chrysler, and of course, most of the entities owned by the Trump Organization, are LLCs.
Pass-throughs that are truly small businesses are not currently subject to the highest individual rates, and already pay 25 percent or lower. The National Federation of Independent Businesses opposes this provision for this very reason. It delivers a special low tax rate to wealthy owners and will not help the small businesses they claim that it will.
Mr. Speaker, most of us, especially those who have worked in State governments, view our states as the best laboratories for the development of good ideas and best practices. This pass-through idea was the centerpiece of Governor Sam Brownback's tax overhaul in Kansas just five years ago. The Governor promised it would yield massive economic growth. And what happened? Kansas was plunged into a massive budget deficit and forced to make draconian cuts to education, infrastructure, and the rest of the state's operations.
This year, the Kansas legislature overrode Governor Brownback's short-sighted experiment.
I urge my colleagues not to make the same mistake. This scam will subject the good people of this country into a second great recession in a single decade.
Let's take a look at who pays more while the President and his wealthy friends and acquaintances pay less.
Middle income families will pay more because the GOP plan eliminates deductions on state and local taxes. This includes millions of Americans and over 500,000 South Carolinians.
Middle income families who itemize deductions will pay more because the elimination of the personal exemption will cost their households $4,000 per member.
Middle income families who utilize the mortgage interest deduction will pay more because the GOP plan lowers the cap, costing millions of Americans more.
Middle income families with children in college or recent graduates will pay more because the GOP plan eliminates the deduction for interest on student loans.
Middle income families that are victims of natural disasters will pay more because the GOP plan eliminates the casualty loss deduction.
Middle income families who adopt children will pay more because the GOP plan eliminates the adoption tax credit.
Middle income school teachers will pay more because the GOP plan eliminates their ability for to deduct for supplies they may purchase for their classrooms.
Middle income families struggling to pay costly medical bills will pay more because the GOP plan shamefully eliminates their deductibility.
Mr. Speaker, paying for pass-through gimmicks and tax giveaways to multi-millionaires by raising taxes on moderate and middle-income Americans is reprehensible.
Democrats are ready to do real tax reform on a bipartisan basis. But not once in this process, has the other side attempted to negotiate. In fact, they have publicly made it abundantly clear that they want a bill that only Republicans will support.
Bipartisan tax reform should lower taxes for working people, not raise them.
Bipartisan tax reform should end incentives for offshoring jobs and level the playing field for American corporations.
Bipartisan tax reform should expand the Earned Income Tax Credit for single filers and the Child Tax Credit to help families.
Real bipartisan tax reform would not increase the deficit, add to the debt and pass the bill on to our children and grandchildren.
I know many of my colleagues share these values. Let's set aside this partisan process and do something worthwhile for the American people. Until then, the Democratic Caucus will be resolute in our opposition to ramming through tax increases for middle income Americans and massive giveaways for the rich.