Indivisible Gainesville’s response to Ted Yoho’s Tax Reform Op-Ed, November 14th Gainesville Sun
Representative Yoho’s Op-Ed is full of omissions and outright lies. Below we will take apart his op-ed one paragraph at a time (his original text in bold, our response beneath), share with you how this latest Tax Bill (known as H.R. 1, the Tax Cut and Jobs Act) will actually affect you, and demonstrate how your own elected leader is not only betraying you but also misleading you .
“The United States tax code has over 70,000 pages and roughly 3 to 4 million words. It is complicated, filled with special-interest loopholes, makes our companies less competitive and costs Americans countless hours in productivity just to file their returns. House Republicans want to change all of that.”
While this statement sounds good, those taking advantage of the loopholes are actually the 1% and large corporations. The Tax Bill does not close these loopholes. In reality, it lowers the corporate tax rate by about half, in an attempt to encourage companies to actually pay taxes on their offshore funds and return those funds to the US using a special low tax rate. The entire business tax system would also change to one that only taxes the domestic income of companies, rather than their global income.
No one likes to pay taxes and Yoho attempts to pander to this dislike by discussing how complicated it is. In reality, the simpler the tax code is, the more you end up paying. The reason your tax return takes hours to fill out is because you are allowed to make several deductions that result in lower income taxes. This Tax Bill simplifies your return by getting rid of most of those deductions which means you end up paying more in taxes.
“The goal of tax reform is straightforward: simplify a very complicated tax system, allow working families to keep more of their hard-earned money, stimulate the economy and create jobs. I believe these are goals that everyone can agree on and goals that will benefit all Americans across the board.”
Yoho states his Tax Bill accomplishes three goals, a) allow you to keep more money, b) stimulate the economy, c) create jobs. While lower and middle class working families would save only a marginal amount of money in the first year (about $60 total for lowest-income households and $800 for middle-income ones), these tax cuts phase out quickly for lower income taxpayers.
Indeed, Americans earning $75,000 or less would face large tax increases in 2027, and those making under $30,000 would see their taxes increase by 2021. At the same time, wealthier families will continue to see tax cuts at the end of the decade, averaging $8,871 by 2027. So, according to his Op-Ed, Yoho believes that “working families” are only those in the wealthiest 1%, and that they deserve to keep their “hard-earned” money. (Sources here and here.)
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He claims giving more money to the 1% will stimulate the economy and create jobs. Also known as trickle-down economics, this strategy has been proven false over and over again throughout our country’s history. Repeated tax cuts imposed during the Bush administration did nothing to create jobs or help working families. Giving tax cuts to the wealthy just makes them wealthier. The real way to stimulate the economy is to give tax cuts to the middle class, who in turn actually spend the money, stimulating the economy, and creating more jobs. This tax bill does not achieve any of these goals and only hurts working families.
“House Ways and Means Committee Chairman Kevin Brady (R-Texas) introduced a proposal to overhaul our outdated tax code on Nov. 2. Notice I said “proposal.” The proposed plan — the Tax Cuts and Jobs Act (H.R. 1) — is not a finished product. It is the first step in the arduous process of creating legislation that will become law.”
It’s no longer a proposal, it was voted on last week after only two short weeks of consideration and it has passed the House. There is a Senate version, which will be combined with this House version, that will do far more damage, including repealing the Affordable Care Act’s individual mandate (the Senate version is discussed more below). Complicated legislation affecting every American should take longer than two week’s consideration.
“As soon as the proposed bill came out, immediately there was a chorus of criticism. I will remind the critics that the bill has many hurdles to jump before it is a final product. The House Ways and Means Committee spent all last week debating and amending the bill, and the Senate just introduced their version on Nov. 9. H.R. 1 has to gain House approval, the Senate’s version of tax reform must be passed in their chamber, and then both approved bills will go to conference to iron out any differences between the two; then, and only then, will a final vote be taken.”
Here, Yoho uses discussion of congressional procedure to give the impression that the bill has been thoughtfully considered. However, something can be thoughtfully considered and still be detrimental—especially if your only consideration is to satisfy your donors and not your constituents. In June, the Associated Press reported that big Republican donors were insistent that tax reform be enacted. One large donor had stopped hosting fundraisers, saying: “You control the Senate. You control the House. You have the presidency. There’s no reason you can’t get this done. Get it done and we’ll open [fundraising] back up.” “My donors are basically saying get it done or don’t ever call me again,” Republican Rep. Chris Collins of New York told reporters. This same sentiment has been repeated by COO of Americans for Prosperity, a political group associated with the Koch brothers, and Sen. Cory Gardner (R-CO).
Democratic Rep. Joe Crowley lectured Republicans as the Ways and Means Committee when considering the Tax Bill saying, “We know who you’re all catering to today. We also know that it’s been rumored that if you don’t get this done you might as well give up the majority… And that’s kind of sad that that’s how we’re going to be putting together a tax bill that affects so many people.” The final version of the Tax Bill after the Senate has added their changes will make things even worse (see below).
“As a taxpayer, father of three and former small business owner, there are a lot of things to like about the Tax Cuts and Jobs Act. For families and individuals, the bill will simplify the tax code by lowering rates and consolidating the eight current tax brackets down to three. The standard deduction would be nearly doubled from $6,350 to $12,000 for individuals to $12,000 to $24,000 for families. This means lower- and middle-income earners will be able to keep more of their hard-earned money. For the third district of Florida, this is an estimated median tax saving of $1,400.”
Consolidation of the tax brackets raises taxes in the lowest bracket (from 10% to 12%) and decreases taxes in the highest tax bracket (from 32.4% to 20.9%). And the rates will increase over the years. By 2027, most Americans earning less than $75,000 will end up paying more in taxes. This is because Republicans opted to make the tax cuts for individuals to expire.
The Tax Bill increases the standard deduction, which sounds good, but it would cause most people not to itemize their deductions. Collateral damage caused by this will negatively affect charitable giving. The loss of itemized deductions could have a huge impact. Itemized deductions provide an incentive to donate to charities. The standard deduction would reduce charitable giving by $13 billion annually. The long term impact on job training programs, food banks, homeless shelters, and disaster relief could be catastrophic.
Yoho omits a lot in his Op-Ed. He does not mention that both Senate and House bills eliminate personal exemptions, which would negate any tax relief that you get from the increased standard deduction. You also will not be able to deduct your property taxes, which would be capped, and you can only claim as an itemized deduction of $10,000. Personal exemptions, this year worth $4,050 each for taxpayers, spouses and children, would be eliminated.
There are many other deductions that are being eliminated:
- The tax credits for plug-in motor vehicles is repealed in 2018.
- The deduction for medical expenses disappears in 2018.
- Being able to write off the costs of your tax preparer goes away in 2018.
- The deduction for moving expenses goes away in 2018 (except for members of the military).
- Deductions for disaster losses, eliminated.
- Deductions for theft or loss of valuables, eliminated.
- Teachers’ costs for classroom supplies, eliminated.
Most tax benefits for college disappear, as well. At the moment, low- and middle- income Americans can deduct up to $2,500 a year in student loan interest. That benefit would go away in 2018. In addition, grad students who receive tuition waivers because they teach or do research would now have to pay income tax on the waiver. Grad students would be paying a tax rate calculated as if their income were double. This change would cause an increase of at least an additional $10,000 a year. Most graduate students at UF earn less than $27,000 per year. This dramatically hurts a population in this very district. This is also a way to disincentivize higher education, which would only be accessible to the wealthy, and would lead to less scientific research and innovation.
Meanwhile, big corporations will get to keep all of their deductions as well as getting new additional deductions, allowing them to avoid paying their fair share of taxes. Companies could continue to deduct business-related state and local taxes.
Yoho also fails to mention that the Senate version will remove the ACA individual mandate, which would lead to higher health insurance premiums for you. You may save $1,400 in taxes as Yoho claims, but you will be giving much more money to health insurance companies. Because people will no longer have to purchase health insurance, they may no longer receive tax credit subsidies for insurance that they do not purchase, and without those credits, they see an overall uptick in their tax liability. The net result being that you are poorer, Corporations are richer, and the national debt increases (sources here and here).
The list of things that Yoho doesn’t mention, in addition to the repeal of the ACA individual mandate, is extensive.
- A provision allowing religious organizations to donate money to political candidates.
- The impact on the deficit of $1.5 trillion.
- The elimination of the estate tax, giving a huge windfall to the only 5,500 wealthy estates to which it applies, in 2024.
- Among the more egregious elements of the Tax Bill, it lowers taxes on storing and staffing private jets.
- The Tax Bill also chips away at women’s reproductive rights by including a definition of an unborn child and stipulates that they are eligible for a college savings account, an important first step in illegalizing abortion.
“The corporate tax rate will be dropped from 35 percent to 20 percent to help stimulate our economy and make U.S. companies more competitive globally. This is a big help in getting U.S. companies to repatriate profits parked overseas to reinvest and expand their businesses here at home.”
As discussed above, changing the corporate tax rate doesn’t stimulate the economy, trickle-down economics do not work. The Tax Bill does nothing to stop corporate tax havens, it only attempts to encourage companies to bring assets back to the US, and will only result in lower tax rates on large Corporations and higher tax rates on working families.
“For small businesses, which are the backbone of our economy, there is expanded capital expensing. This is important for Main Street businesses so they can write off the cost of new buildings, equipment and machinery. As a former small business owner, I know this change helps tremendously. By lowering the tax burden on American businesses large and small, they will be more competitive, invest in our communities and create jobs.”
Does the bill have added deductions for small businesses as Yoho claims? Yes, but those deductions aren’t only for small businesses. They are for all businesses large or small. One deduction would allow large corporations to deduct huge expenses immediately upon purchases instead of slowly depreciating over time. You will be subsidizing large corporation’s capital investments with your higher taxes.
“Tax reform is no easy task. It hasn’t been achieved since President Ronald Reagan did it in 1986. The House, Senate and White House are on the verge of accomplishing meaningful tax reform that will benefit all Americans. When the final vote is called, I will cast my vote for a modern tax code that puts more money in the pockets of hard-working Americans and unshackles the economic engines of our country.”
The deregulation policies of Ronald Reagan’s administration directly caused the 2008 Great Recession, the largest financial crisis since the Great Depression. Not only that, Reagan increased the National Debt by 186%. In fact, Reagan was the first president since FDR to increase the debt by more than 50%, and FDR had the Great Depression and World War 2 to contend with.
Yoho’s pet project has been railing against the deficit, which is the driving force behind many of his votes to cut social welfare programs. But he voted for this Tax Bill that in total, would add more than $1.4 trillion to the national debt.
This is just his first move to cut social safety net programs, which you have likely paid into, like such as Social Security. They will use the increase in the deficit, which they created with this Tax Bill, to justify slashing away at these programs, devastating working-class individuals who rely on them. In the end, Ted Yoho is not representing your interests; he’s trying pull the wool over your eyes while he sells you down the river. Let him know you will not be deceived: (352) 505-0838.
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This piece was was written as a collaborative effort by the Indivisible Gainesville research team.