WASHINGTON, DC - Ways and Means Committee Ranking Member Sander Levin (D-MI) today released the following statement after House Republicans unveiled their “Better Way" messaging platform on tax reform:
“The Republican blueprint on tax reform is long on rhetoric and short on important details. But its general direction is clear: huge, unpaid for tax cuts mostly directed to the wealthy. Everyday Americans will ultimately get stuck with the bill.
“The Republican blueprint would reduce individual tax rates and dramatically reduce taxes on wealthy individuals. Reduced rates at upper incomes coupled with generous exclusions for capital gains income significantly decrease the tax burden on the wealthiest households, with no relief for hardworking American families. The blueprint would first cut individual rates at the top significantly, reducing the top rate to 33 percent. On top of that rate cut, the Republican blueprint favors wealth over work by providing a massive 50 percent deduction for an expanded definition of investment income - a huge tax cut on capital gains, dividends, and interest income-effectively lowering the top rate on this income to 16.5 percent. Even though these new rates create a greater incentive for wealthy fund managers to shift their income from ordinary to capital gains income, there is no mention in the blueprint of closing the egregious carried interest loophole.
“For the wealthy, the Republican blueprint also eliminates the estate tax, which would provide a $269 billion tax cut to the wealthiest 5,500 estates in this country. Less than 0.15 percent of Americans owe any estate tax under the current system, and repeal of the estate tax would represent an average $4 million tax cut to the wealthiest Americans.
“In contrast, for hardworking Americans, the Republican blueprint increases the risk of them shouldering the burden of these significant tax cuts for the wealthy. The blueprint converts the personal exemption for dependents into a nonrefundable $500 credit and eliminates the refundable portion of the child tax credit for taxpayers without a Social Security Number - further hurting working Americans at the lower end of the income scale. The Republican blueprint also effectively eliminates all itemized deductions (such as the state and local tax deduction and deduction for real estate taxes paid), including the ones it purports to retain (deductions for mortgage interest and charitable giving).
“On the business side, the Republican blueprint would slash the domestic corporate income tax rate to 20%, allow for immediate expensing for investments, and reduce the small business income tax rate to 25%. It would also shift the current system to a territorial system of taxing foreign income of U.S. multinationals without any word on how the U.S. would protect itself against base erosion. Layered on top of the rate reduction and a move to a territorial system is an adoption of 'a destination-basis tax system,' which would be achieved by providing for border adjustments exempting exports and taxing imports. Indeed, what the Republicans have included here is a key feature of a VAT, except that the blueprint goes through pains to insist such proposal is not a VAT. Instead, they refer to it as a shift to a consumption-based tax system, with no detail of what that consumption-based tax system looks like, and no detail of how that system would impact consumers and businesses.
“It is extremely unclear how the provisions in the Republican blueprint work together in any manner of fiscal responsibility. The blueprint relies heavily on dynamic scoring to 'achieve revenue-neutrality in part by including the positive revenue effects from the economic growth that would result from a simpler, more pro-growth tax code.' Dynamic scoring has proven to be extremely unreliable and is used by Republicans to cover up their fiscal irresponsibility. Additionally, it appears that the provisions that were intentionally not extended in the PATH Act are assumed to have been permanently extended in the baseline, resulting in approximately $400 billion in additional revenue in the baseline.
“This Republican plan is a ‘better way’ for the wealthiest among us, but it is the wrong way for everyday Americans."
