In Senate, Portman wonders why Democrats are focused on giving tax breaks to the rich

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December 6, 2021

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WASHINGTON DC – Today, United States Senator Rob Portman (R-OH) delivered remarks in which he expressed his concerns about the State and Local Tax Deduction (SALT) provision in the massive U.S. Democrats on taxes and spending. In the reconciliation package passed by the House, the $ 10,000 cap on SALT implemented in the 2017 tax reforms is raised to $ 80,000, creating a tax break that almost entirely benefits wealthy Americans. Portman noted that this increase will cost up to $ 100 billion more than the child tax credit, which Democrats say is the backbone of their entire spending bill.

Portman believes these tax breaks for the rich, combined with stimulating spending and job-killing tax revisions for working families and businesses, are reasons why Congress should not pass the partisan reconciliation bill of the United States. democrats.

A transcript of his remarks can be found below and a video can be found here.

“I am again here in the Senate tonight to speak about the so-called Build Back Better legislation. This is legislation that Democrats are trying to push through here on a purely partisan basis as part of what is called the reconciliation process. I think this huge tax and spending bill is irresponsible at a time when we see an uncertain economy, in large part thanks to all of the challenges we face now when it comes to COVID and Omicron, in particular. At a time of very high inflation which is hurting my constituents and all constituents in this House. And in a time of record debt. Surely this is not the time for us to pass another bill that spends significantly more money and also imposes significant tax increases on the economy.

“This is the 10th consecutive week that Congress is in session that I rise to speak to why I think this legislation is bad for America. As we’ve discussed before, this massive new spending bill represents the largest amount of spending of any legislation ever passed by the US Congress. This is a big deal. Now some would say, “Well, the official score is only $ 1.7 trillion, so this is the second most important, because the first would be the $ 1.9 trillion that was already spent earlier this year. year. “

“That’s fine. You can say that. But what sets this bill apart, as a number of analysts have shown us, including the Penn Wharton study, is that spending portion of this bill, the costs of the bill, have timeouts, so it camouflages the full cost of the bill. I’ll give you an example of one of the top spending priorities that will eventually end up being cost much more than the estimates suggest.The improved child tax credit in the March spending bill is extended for a year in this law, which means that after next year this news benefit that people expect will be cut. Based on the history here in Congress, this is not how it works. Such benefits are not over. So if it does not end and these programs don’t end up going away, Penn Wharton estimates that the total spending on this project d he law goes from about $ 1.75 trillion to about $ 4.5 trillion – wow – more than double the biggest spending bill ever considered by the US Congress.

“In an age of record debt and deficit, I hope the Democrats and the Biden administration have found a responsible way to pay for this multibillion-dollar reconciliation package. Sadly, some of us have argued for months that this law is about as far from being paid responsibly as it gets. One of the main sources of the proposed revenue is a series of tax hikes that, despite what Democrats might say, hit the middle class, hit middle-class families, hit small businesses hardest. For example, the proposed Medicare surtax on active investment income will hit millions of small businesses that structure themselves as intermediaries with a further general increase of 3.8% on all income.

“The proposed corporate tax increases will hit American workers based on analysis by the non-partisan Congressional Budget Office and the Joint Committee on Taxation. They say that when you increase taxes on businesses, the main effect is to increase taxes for workers. Why? Because the wages and benefits are reduced because of it. The costs will be passed on to working families, which means higher prices for everything.

“What’s even worse is that while the worker who earns $ 20,000, $ 40,000, $ 60,000 a year is hit hard, having to pay more because of inflation for gasoline, the groceries and clothing, at the same time, wealthy Americans under this legislation would receive tax relief in the hundreds of millions of dollars thanks to Democrats’ insistence on raising the cap on what is called SALT, the national and local tax deduction. As part of the 2017 tax cuts, we decided to limit the deduction you could take for national and local taxes to $ 10,000 per year. Why? Because it was very expensive to have that deduction there. Because it’s regressive, it helps the wealthiest Americans a lot more. Because it’s an ineffective policy that leads to an incentive where states are incentivized to raise their taxes because people get federal tax deduction for it . And that’s just not fair. My constituents in Ohio are subsidizing New York and California for their high taxes. It doesn’t seem to make sense to people.

“However, under this Build Back Better bill that was passed by the House, they increased that cap from $ 10,000 to $ 80,000. Over the next five years alone, this provision would cost $ 285 billion. The vast majority of that tax benefit would go to the wealthiest Americans, with a recent Tax Policy Center analysis revealing that almost no benefit would go to Americans who are not in the top 10 percent of earners. Conversely, the expansion of the child tax credit, which Democrats say is designed to help low- and middle-income Americans, cost $ 185 billion. So, $ 285 billion for SALT, which goes mostly to the wealthiest people, $ 185 billion is being put in place for what is seen as the cornerstone social safety net program of this whole bill. So there is $ 100 billion more in regressive tax cuts than in this fundamental social safety net program.

“As Marc Goldwein of the Committee for a Responsible Federal Budget said, ‘We are debating whether to give lower and middle class families $ 1,000 more per year for the child tax credit while giving upper class families $ 10,000 or more through SALT. ‘ That’s pretty specific.By removing the SALT deduction and a number of other poorly planned tax revisions, under so-called Build Back Better legislation, nearly 70 percent of people making $ 1 million or more a year, nearly 70 percent of them, so over 68 percent, get a significant tax cut. So if you earn more than $ 1 million a year, 70% will get a tax cut. significant tax.

“Almost 90% of taxpayers earning between $ 500,000 and $ 1 million will benefit from a significant tax reduction. Compare that to people making $ 30,000 a year, for example. While 70 percent of those earning $ 1 million or more benefit from a tax cut, only 30 percent of those earning $ 30,000 a year or more will benefit from a tax cut. And guess what? This is the first year. In the second year, it drops to 12%. In the third year it goes down to 10% or less and then goes to single digits. So if you’re making $ 30,000 a year or more, you really don’t have any significant benefit here. But if you make a lot of money, you get a huge advantage. That does not make sense.

“For example, in California, where there are graduated tax rates over 10% – that’s the state tax rate – that would equate to a deduction of $ 47,000, on average, for someone. one who earns $ 500,000 a year. It’s a lot. Whereas the average taxpayer in California only sees a benefit of $ 20 per year. So again, you get a deduction of about $ 47,000 if you earn more than $ 500,000, whereas the average taxpayer will only get a benefit of about $ 20 per year. That does not make sense. It doesn’t make sense to Americans as they learn more about it.

“The people I represent in my home state of Ohio are very concerned right now about the economy, especially inflation. They worry about rising prices for everything from gasoline to groceries. They worry that their hard-earned paychecks aren’t going as far as they were just a few months ago. In March, when Democrats pushed through this $ 1.9 trillion spending package, many of us on this side of the aisle tried to warn them that this stimulus was not necessary to do advance the economy. The economy was moving forward on its own at this time. And yet the stimulus has been kicked into the economy, which we believe would cause the economy to overheat. And it wasn’t just Republicans. Larry Summers, who served as Secretary of the Treasury to President Clinton and director of the National Economic Council under President Obama, warned that pumping so much money into demand for the economy would lead to inflation. He was right.

“Now the same lawmakers are preparing to start over. Not only will Build Back Better give an unfair hand to the working families they claim to defend, giving tax relief to the rich and leaving other Americans to struggle to get by, it will fuel more inflation by injecting more money. money in demand from the economy. This is not what we should be doing now.

“At the end of the day, the American people are going to have to look at this reconciliation package, this so-called Build Back Better package, with its job-killing tax hikes, tax breaks for the rich and stimulus spending, and judge if this is the right thing for the economy right now, as we grapple with high inflation and struggle to come out of this pandemic. It is definitely not the right thing. It is not in our national interest in giving tax breaks to the rich and weighing down our businesses and ordinary taxpayers while further fueling inflation.

“We are currently facing a multitude of economic challenges, from inflation to supply chain delays to Omicron and labor shortages. As we seek to overcome these challenges, let’s not build back for the worse.

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