House GOP Approve Tax Overhaul, Senate Readies Its Version
On a largely party-line vote, the House this week approved a massive rewrite of federal tax policy that has been strongly opposed by the Connecticut delegation. The five House Democrats say the plan would result in higher taxes for many state residents while also increasing the national debt.
Representative John Larson, who sits on the tax-writing Ways and Means Committee, spoke loudly against the bill during floor debate pointing to an analysis of the tax plan that shows a family with a combined income of $125,000, with a mortgage and kid in college, would see a $767 tax increase next year — and owe $1,667 more in 2023 when some of the GOP tax provisions expire.
“Machinists, teachers, engineers, mechanics in Connecticut, who already give more in federal taxes than they receive back in federal funding, will be bearing this cost, and will be doubly taxed from the eliminations of deductions like the State and Local tax deduction,” he said in a statement.
The legislation would lower the corporate tax rate from 35 percent to 20 percent and reduce the number of tax brackets from seven to four. It would double the standard deduction for non-itemizers to $24,000 for a couple filing jointly while simultaneously eliminating or capping some itemized deductions. It would eliminate the deduction for out-of-pocket medical bills, phase out the estate tax and end the deduction for state income-tax payments, and cap property tax deductions at $10,000. Many of the provisions would sunset after five years and over a 10 year period it is estimated that it would add $1.5 trillion to the debt.
The bill passed 227-205 with no Democrat in support. It was also opposed by 13 Republicans mostly from New York, New Jersey, and California where the loss of itemized deductions would hit many taxpayers.
Kevin Sullivan, commissioner of the Connecticut Department of Revenue Services, said that in Connecticut over 75 percent of the tax benefits in the GOP bill would go to the top 1 percent who would pay 8.5 percent less on average while everyone else would pay 1.2 percent less on average.
Connecticut taxpayers annually claim deductions for about $8.7 billion in state income taxes, $4.8 billion in local property taxes, and $1.6 billion in medical and dental expenses, Sullivan said.
Representative Joe Courtney spoke on the floor against eliminating the student loan interest deduction saying it would add $24 billion to the cost of higher education saying it moves the country in “exactly the wrong direction” to close the skills gap in our workforce.
Representative Rosa DeLauro also spoke on the floor against the bill calling it a “scam” and chiding Republicans for embracing a bill that “cuts taxes for the wealthiest Americans, raises taxes on the middle class, and it increases the deficit.”
With the House bill now approved, the focus shifts to the Senate where the Finance Committee late Thursday night marked up its tax overhaul bill that is substantially different from the House version although it too is supported only by Republicans.
The Senate bill would lower the corporate tax rate to 20 percent from 35 percent, while making temporary changes to individual income tax rates and several deductions. It also includes a repeal of the so-called “individual mandate” in the Affordable Care Act that requires most people to purchase health insurance or pay a tax penalty.
Senator Richard Blumenthal spoke out against the Senate version on Friday in Hartford, focusing particularly on the effort to weaken Obamacare.
“As if eliminating money-saving deductions for working class families wasn’t vile enough, the Senate GOP is now ready to hike premiums and kick millions off their health insurance in order to pay for their tax breaks for the wealthy. This isn’t tax reform — it’s an all-out assault on the middle class and a backdoor attempt to repeal the Affordable Care Act,” he said in a statement.