Congress is working on tax reform. Earlier this week, we heard about the effort from Republican member of Congress Fred Upton. Today, Stateside talked with Democratic Congressman Dan Kildee.
Listen above to Kildee’s full interview with Stateside host Lester Graham, or read a transcript of the beginning of the conversation below.
LESTER GRAHAM: Congressman Upton said repeatedly that this tax reform is targeted for the middle class, aimed at reducing their tax burden. In a release you put out last week, you said that would be good, but unfortunately the Republican tax plan puts billionaires first, prioritizing tax breaks for the wealthiest Americans.
How do you and Congressman Upton arrive at such different perspectives on this effort?
DAN KILDEE: Well, you know, I just looked at the numbers. I just looked at the facts and saw that 80% of the tax benefits accrue to the people at the very top of the income scale – the top 1% – and saw that while there are some purported benefits that would accrue to middle income earners, those benefits are offset with other losses.
So by increasing the standard deduction to $24,000 for a couple, that would sound like, ‘Well that’s great because that’s almost doubling the standard deduction.’ But, we have to keep in mind, they eliminate the personal exemption. So if you’re a family raising a couple of kids, that’s a wash. And then you lose the ability to deduct interest on student debt. And then you lose the ability to deduct any cost associated with medical care that’s not compensated by your insurer. And then if you have a significant mortgage, you lose part of the interest deductibility. And then you have to back off some of the deductibility of state and local taxes. And for a lot of middle income earners, it’s either a wash or you end up actually paying more.
Most of the benefit goes to the very top, but here’s the real problem with the whole thing: This bill makes these changes by borrowing $1.7 trillion that we don’t have to give tax cuts mostly that would accrue to the people at the top. Now, I think we need tax reform. I’m all in in simplifying the tax code, but just saying that this is a plan that benefits the middle class doesn’t make it so. The facts just don’t support those conclusions.
GRAHAM: You also stated that, as we know the bill now, it will explode the national deficit – you just mentioned that – and would pave the way for massive cuts to Medicare as well as education and infrastructure. On what do you base that prediction?
KILDEE: Well, I mean, the fact that this will force a budget crisis.
And what we are very fearful of is that the same individuals in the House and the Senate right now that are willing to look the other way when it comes to tax cuts that are paid for with great big borrowings – with $1.7 or more, maybe up to $2 trillion in debt – in a year or two or three, they will say, ‘Hey look, wait a minute now. We are way overspending. We’ve got to cut, cut, cut.’ And so, to me, they can’t have it both ways.
Now, I think the problem here is this is a plan that has been entirely developed by just a handful of people with very little input and it’s not bipartisan even at all. A lot of these details can be worked out, but we can’t do this in the space of three weeks and change what is essentially the underpinning of our entire economy without much input, without really any hearings at all on the legislation – rushing it to the committee and then rushing it to the floor the very next week.
There are things that we’re finding out about right now that haven’t even come to light. I was speaking with some municipal bond lawyers yesterday. They’re petrified that this plan takes away many of the municipal financing tools available to local governments to save them money. And so, what the federal government might end up doing here is not only borrowing money to give the wealthiest Americans big tax cuts, but actually making it harder for local governments to meet their obligations by taking away the exempt status of many of the financing tools that they have and costing local government more money.
We just need to do this right. We need to take a deep breath, not try to rush this stuff to the floor because there’s some sort of political deadline that Republicans feel they’re facing because this has been such a do-nothing Congress. And the president wants to have some points on the board so, ‘Well… we can’t do health care, we don’t want to do infrastructure even though we say we want to, let’s just do taxes because we love tax cuts,’ and it’s much more complicated than that. It’s just an irresponsible way to govern.