Cantwell Lays into GOP Tax Plan Over Middle-Class Tax Hikes

Senator cites new analysis: 300,000 Washingtonians will see higher tax bills next year under GOP plan

Washington, D.C. – Today, at a U.S. Senate Finance Committee hearing to review the Republican tax proposal, Senator Maria Cantwell (D-WA) criticized the misguided bill for increasing taxes on working and middle-class Americans to further enrich corporations and the very wealthy.

“Gouging middle class families to pay for the corporation [tax] breaks that you want to give is just wrong,” Senator Cantwell said, addressing her Republican colleagues.

Further, Cantwell defended the right of Washingtonians not to be double-taxed by repealing the state and local tax deduction. She noted that Washington state taxpayers will be forced to pay for tax breaks that businesses in Washington state don’t even consider a priority.

I guarantee you that none of [the businesses in WA] are going to call me and say, ‘Yes, please gouge middle class taxpayers in King County and make them pay $1,000 more and please open the Arctic Wildlife Refuge. Because, by God, I can’t be competitive without it.’ I guarantee you they aren’t going to call me up and say that,” said the senator.

Recently, the Joint Committee on Taxation (JCT) released analysis indicating that almost 14 million families across the country would face a tax increase if the proposal becomes law. Cantwell noted that more than 300,000 middle-class Washingtonians would also see an increase, according to IRS data and an analysis by the New York Times.

Senator Cantwell also released an example of how the Republican tax plan would affect one of the 300,000 Washington families who would be saddled with a tax increase.

A transcript of Senator Cantwell’s questions and the witnesses’ answers is below.

SEN. CANTWELL: Yeah, we do want more jobs here in America. And if you wanted more jobs right now in Ohio you’d make sure that the Export-Import Bank was reauthorized. GE jobs have left Ohio because we don’t have a functioning Export-Import Bank. So that should be number one. We’ll talk to your colleagues and to this administration.

If I could, Mr. Chairman… We had this discussion yesterday, which was about middle class individuals. Now I’m all for having the broad discussion my colleague from Ohio just wanted to have, but I’m not willing to have it at the expense of Washington tax payers.

That is to say, this chart shows two earning families and an average salary for an elementary school teacher and a police officer. They have two kids under the age of 17. So they are trying to live the American Dream.

Yet under this proposal they will pay $900 more in taxes than they currently do. $900 more, which is less money for college education, less money for groceries, less money for a rainy day.

So when we started this debate, it was about how we were going to close corporate loopholes and make sure that the tax bill paid for itself. Or that we were going to close loopholes but maybe add… But not that we were going to do it on the backs of my constituents. So this number right here--$927 more for this family, which is average.

Now, I think some of my colleagues, “Now that must be an anomaly. That must be this mythical person that you came up with.”

No. I’ve read Mr. Abraham our chair, the things pointed out by Joint Tax.

My estimate in my state is 20% of my middle class is what you say this affects—it’s more than 300,000 or could be 300,000 people in the state of Washington that this could affect.

So am I reading the charts right from Joint Tax that they’re estimating that it’s 20%, Mr. Abraham. I’m going to ask Mr. Barthold the second question.

Abraham: Yes, that’s correct.

SEN. CANTWELL:   OK and Mr. Barthold, you’ve come up a number that you think that this is the number that could be affected across the United States. Your number is 13 million, is that correct?

Barthold:   Senator Cantwell, I believe you’re referring to in analysis we did at the request of Senator Wyden. I think I have that here but it will take a moment. So if you want to ask another question…

SEN. CANTWELL: Mr. Abraham, Is that right? Estimating that it’s 13 million people?

Abraham: That’s correct.

SEN. CANTWELL: I hardly call 13 million middle class people inconsequential. I hardly call it a random thing where we're raising taxes on just a few people. 13 million people and certainly 300,000 in my state aren't just a few people.

So the point is, Mr. Chairman, when we started this exercise we were going to close some of these other business loopholes. We talked about that businesses were coming to tell us they wanted simplification. They were willing to do things in order to get these. But yet we haven't done those things.

I don't know in the process of this markup whether we're going to continue. But did we -- I don't want to distract you, Mr. Barthold, from your looking at these. Are you verifying the 13 million?

Barthold: I can't immediately verify the 13 million. The information we provided to Senator Wyden's staff was a percentage calculation of percentage of taxpayers in different income categories that would have a tax increase, no tax change or tax decrease. So I assume the 13 million was calculated by my friend Mr. Abraham or one of his colleagues.

SEN. CANTWELL: I think it's actually 13.8 million. But my point is people are talking about letting states do what they want to do. Our state has a unique tax code. We've grown economy faster than the national average every year since World War II. Now you're taking that away from us. People said they would close these loopholes. The CEO of AT&T said he would give up expensing perks on the books in exchange for 20% corporate rate. Mr. Barthold, does this mark eliminate bonus depreciation, accelerated depreciation or other expensing?

Barthold: After five years.

SEN. CANTWELL: So we're going to take it from my constituents in the meantime. So Mr. Chairman, I want us to understand that these are states like Nevada, Texas, Florida—that all have tax codes that are, I would say, efficient tax codes. A lot of people have debates about them, about whether they should have a different tax structure like the rest of the country. But this is our tax system and we do not appreciate   … Now a lot of these corporations are in our state too and they are doing very, very well. And if you ask them what do they want dealt with here, they say, “I want the immigration policy dealt with. I want a trained and skilled workforce. I want affordable housing. I want the infrastructure to work.” That’s what they want.

And I guarantee you that none of them are going to call me and say, “Yes, please gouge middle class taxpayers in King County and make them pay $1000 more and please open the Arctic Wildlife Refuge. Because, by God, I can’t be competitive without it.”

I guarantee you they aren’t going to call me up and say that.

So I hope—and I’ll be happy to send my colleague from Louisiana the details here—so I hope that we can come to some resolution because the day that you switched over to making the state and local deductions the major pay-for in this bill along with this huge deficit is the day that you made a mistake.

And gouging middle class families to pay for the corporation breaks that you want to give is just wrong.

Thank you, Mr. Chairman.