Congressional Republicans are pushing forward a tax bill they say benefits the average American. They argue by simplifying the codes and deductions, Americans will save money and have a better understanding of how they’re taxed.
Congresswoman Louise Slaughter and Lieutenant Kathy Hochul., both Democrats, disagree.
On Friday, they jointly discussed the many disadvantages in the new bill. Slaughter said it’ll disproportionately harm the poor and middle class, harm New Yorkers and only help wealthy Americans and corporations.
“This façade, this charade of saying this is for the middle class; this will not help the middle class individuals whatsoever,” Hochul said, agreeing with Slaughter. She says specifically the $10,000 cap on the State and Local Tax (SALT) deduction harms New Yorkers.
SALT keeps taxpayers from essentially being double-taxed, Slaughter argued. By claiming the property, sales or income tax they paid to the state, they can be sure this is accounted for when filing federal taxes. And for wealthy New Yorkers, she says it can balance out the high amount of taxes they pay annually to the state.
“The taxpayers of the State of New York give $48 billion more to Washington for them to disburse around the nation than we receive back in services, so if they want to eliminate the deduction for state and local taxes give us a check for $48 billion and we’ll call it even. How about that?” said Hochul. She said it could push wealthier New Yorkers out and into states with lower taxes.
“It is all to give a massive tax cut to the wealthiest individuals in our country,” said Hochul of the bill. “60 percent of the tax cuts will be enjoyed by the top 1 percent of wage earners in this country.”
Slaughter says the argument has been made that if corporations have more money they will raise wages for employees, hire more or otherwise expand to the benefit of American workers.
“We know that trickle down doesn’t work,” she said. “We knew that when Reagan tried it, it didn’t work. We knew when Bush tried, it didn’t work. Corporations getting to bring that kind of money back, don’t necessarily expand, create more jobs or pay more wags but often use that money to buy back their stock.”
“The bill not only increases taxes on working people to make the rich richer, it will increase the national debt by 1.5 trillion dollars over 10 years,” she continued. “That’s 150 billion dollars of debt every single year.”
According to data supplied by the Congresswoman’s office, Americans making between $40,000 and $50,000 will pay an additional $5.3 billion in taxes over the next decade. Conversely, she says that Americans making 1 million dollars or more will see a $5.8 billion cut during the same period.
The Associated Press reports the bill would drop today's 39.6 percent top rate on individuals to 37 percent. The standard deduction — used by around two-thirds of households — would be nearly doubled, to $24,000 for married couples.
The $1,000-per-child tax deduction would grow to $2,000, with up to $1,400 available in IRS refunds for families who owe little or no taxes.
Those who itemize would lose some deductions. The deduction that millions use in connection with state and local income, property and sales taxes would be capped at $10,000. That's especially important to residents of high-tax states such as New York, New Jersey and California. Deductions for medical expenses that lawmakers once considered eliminating would be retained.
The bill would allow homeowners to deduct interest only on the first $750,000 of a new mortgage, down from the current limit of $1 million.
Votes in the House and Senate on the tax bill are expected next week.
(The Associated Press contributed to this story)