Monday was Tax Day, and despite the President’s boasts to the contrary, recent polls from NBC, Wall Street Journal and Reuters show that most Americans do not believe they have benefitted from the GOP tax bill. Why?
There are three reasons:
- The 2017 GOP tax bill simply reinforced the historic narrative that Republicans are more concerned about corporations and wealthy Americans than they are about working families. And to pay for these targeted reductions, the GOP has dramatically increased the nation’s debt.
- Instead of simplifying tax preparation with their “postcard,” they created a more complicated system that has resulted in a 200 percent increase in taxpayer filing errors.
- The GOP consciously exacted revenge on Democratic states such as New York, California, New Jersey, Massachusetts, and Illinois by capping the state and local tax (SALT) deduction. This cap, on a deduction that had been in place since 1913, was a punch in the gut to many middle-class families in those states and places like Long Island, who, while they have higher incomes, also have a much higher cost of living.
The GOP’s preoccupation with pleasing their base is clearly delineated by a report released by the Institute on Taxation and Economic Policy, which states that about twice as many of the largest U.S. companies reported they did not owe taxes in 2018 compared with previous years.
Mega-corporations like Amazon, Netflix, Chevron and Eli Lilly and Co., paid no federal income tax whatsoever. Zero. Nada. Nothing. These companies were able to zero out their federal income taxes on $79 billion in U.S. pretax income. The Tax Bill cut the corporate tax rate from 35 percent down to 21 percent.
The tax bill also cut the top tax rate for America’s super-rich from 39.6 percent to 37 percent. Does anyone believe that the richest Americans really need the most help? At the same time, the Congressional Budget Office has projected that the GOP’s signature tax law will increase the national debt by $1.9 trillion over the next 10 years.
One effort to help average Americans was to simplify the tax code and reform the Internal Revenue Service. Whatever happened to that much-touted “postcard-size” 1040 form that the President and Treasury Secretary Mnuchin promised last June? In fact, they made the tax forms more complicated, not simpler.
Imagine my surprise when I heard from the taxpayer advocate in February, that there has been a 200 percent increase in filing errors this year. To make matters worse, when taxpayers sought assistance from the IRS hotline, only answered 17 percent of the calls were answered with an average wait time of 18 minutes.
Finally, in a bid to make up the difference from lowering the tax rate of corporations and the wealthiest Americans, Republicans placed a $10,000 cap on state and local tax (SALT) deductions. This cap has negatively impacted middle-class families, particularly those in areas with a high cost of living, such as Long Island.
The cap on this critical deduction has resulted in a devasting tax increase for the middle class. In my district alone, over 250,000 families, or 43 percent of households, claim this deduction at an average rate of $18,300.
In 2017, one-third of all taxpayers claimed the SALT deduction, and more than 80 percent of those taxpayers earned under $200,000. This is demonstrably unfair to New York taxpayers, who are understandably galled by having to pay more than $36 billion in taxes to the federal government than it receives back.
Conversely, New Yorkers are now subsidizing other states that have benefitted from the GOP plan.
I recently was appointed to the House Ways and Means Committee, the chief tax-writing committee of the House of Representatives. Using my new position, I have and will continue to fight for middle-class taxpayers on Long Island and across America.
In January, I introduced a bill with Congressman Peter King which would retroactively reinstate a full deduction for state and local taxes. I was instrumental in the formation of a Congressional working group of Ways and Means Committee members that is focusing on and examining the best ways to combat the issues presented by capping the SALT deduction.
Along with Reps. Nadler and Lowey, I introduced the Tax Equity Act, which would adjust federal income tax brackets to reflect the actual cost of living.
The American middle-class needs a raise. Since the 1980s, the stock market is twelve times higher and the nation’s GDP is six times higher. Yet, middle-class families struggle with stagnant wages, high debt, and a lack of savings.
The $1.9 trillion that will pay for the corporate and wealthy American’s tax reductions could have been put to better use. We must work together to incentivize investments in infrastructure apprenticeship programs and other investments in human capital that will result in wage increases.
The GOP’s promises to hard-working, middle-class Americans notwithstanding, their tax bill has continued to cement their reputation as champions of corporate and wealthy America. It is no wonder that they refused to campaign on this bill, ultimately losing the House.
