Mr. President, I come to the floor this afternoon because of the reports that the House and Senate conference committees on the tax plan are nearing an agreement or may have reached an agreement. By all accounts, this would be shaping up…
Mr. President, I come to the floor this afternoon because of the reports that the House and Senate conference committees on the tax plan are nearing an agreement or may have reached an agreement. By all accounts, this would be shaping up to be one of the greatest legislative heists in American history.
It is hard to imagine that you could take a tax code that is already stacked in favor of the very wealthy and very powerful special interests and actually make it worse, but that is exactly what we are hearing coming out of the conference committee. This is being worked on, essentially, by our Republican House colleagues and our Republican Senate colleagues.
The actual conference committee is a bit of a charade because all the real discussions going on with respect to the tax bill are done behind closed doors, with lobbyists who are putting on the finishing touches.
Here is what we are hearing from the reports that are coming out. We have already gotten details; some of the details had been released.
From the Associate Press: ``Ample tax cuts for business, wealthy in new GOP tax accord.'' That is the headline about the tax plan that will be coming to this Senate soon.
The reality is that any tax cuts for middle-class families are going to be a lot smaller than the tax cuts for the very wealthy, and they are only temporary.
Also, make no mistake, you are going to see millions of middle-class families actually see a tax increase, but those who will get some small tax relief will see it only on a temporary basis, and then it will disappear. The corporate tax cuts--they are forever under this Republican plan.
Here is the headline of the Washington Post about what is coming out of the House-Senate Republican conference committee: ``Republicans reach compromise tax plan, expanding tax cuts for the wealthy.''
Let's get this straight. We had a Senate bill and a House bill. The Senate bill actually reduced the top rate--that is the rate that applies to the wealthiest in this country--to 38.5 percent. It is currently 39 percent; they reduced it to 38.5 percent. In the House, they kept the top rate where it was. So the Senate bill is 38.5 percent; the House bill is around 39 percent. Republicans from the House and the Senate go behind closed doors, and where does it end up? They actually cut that top rate for the wealthiest folks in this country to a place that is lower than either of the tax bills that went into conference.
So you take these bills and go behind closed doors, and all of a sudden, the wealthy--who are already doing really well under the House tax plan and the Senate Republican tax plan--do even better because they are dropping that top tax rate to 37 percent.
For those who think that a drop from 39 to 37 percent doesn't sound like a lot, I will tell you, if you are making $1 million, that is an average tax cut of $20,000 a year when millions of American middle- class families are seeing their taxes go up and so many others are getting crumbs and, again, just temporary crumbs.
We were promised this would be very different. This is what President Trump's Secretary of the Treasury, Steve Mnuchin, told us: ``There will be no absolute tax cut for the upper class.'' That is clearly false because the upper class is getting a big tax windfall. Not only that, but as I just said, those tax windfalls are getting larger in the bill coming out of the conference than they were going in.
What we are seeing is a lot of promises that sounded really nice to the American people, but it turns out it has been a scam. What people were told was that this was going to be out there
to help working folks, and that is not what they are getting. That is why all the public surveys show that the American public doesn't like what they see, and that is why there is this effort to rush this through so quickly.
My plea today is that there is still time. There is still time to turn back from this tax plan that is going to do so much harm to our country in the coming years.
There certainly is an opportunity here for our Members on the Republican side to take a final look at what is coming out of this conference and decide to turn back and work on a bipartisan basis for real tax reform, not just something masquerading as tax reform, which is really a tax break for the big corporations.
Exhibit A as to why this is not tax reform is the broken promise with respect to closing the carried interest loophole. People will remember President Trump talking about that. I don't know what is going to come out of conference in the end, but what I do know is that neither the House bill nor the Senate bill closed the carried interest tax break. For hedge fund managers who are making big bucks, that is the loophole that allows them to pay a lower tax rate than the folks working for them in their office--for the secretaries who work in their office, for the folks who come in and clean the offices. The hedge fund managers, through the carried interest loophole, actually pay a lower tax rate in many cases than those folks who are working for them.
In fact, it is such an outrageous loophole that Donald Trump got big headlines during the 2016 campaign. He promised during the campaign that he was going to close that loophole. In fact, when he was asked on the campaign trail for an example of what was wrong with the current Tax Code, for an example of how powerful special interests got their day using their lobbyists in Washington, he said: Take a look at that carried interest loophole. In fact, Candidate Trump specifically said: ``The hedge fund guys are getting away with murder.'' That is what he said on the campaign trail.
We are about to vote on a bill that claims it is tax reform; yet neither the House bill nor the Senate bill that went into conference touched this loophole. By all accounts, the bill coming back to the Senate doesn't close it either.
It is not as if we didn't have a chance to fix it. In fact, right here on the Senate floor, Senator Tammy Baldwin offered a motion to close the loophole, to do exactly what Candidate Trump said that he wanted to do. But every single one of our Republican colleagues voted against closing the carried interest loophole. I guess that means, in now-President Trump's words from the campaign, that this tax bill will let those hedge fund managers ``get away with murder.''
Don't tell us that this is about getting rid of special interest loopholes when it doesn't eliminate exhibit A of a special interest tax break that Candidate Trump talked about. It is exhibit A of broken promises. He said: Let's not let those hedge fund managers get away with murder when it comes to the Tax Code. Yet nothing was done about it in this piece of legislation.
It gives you a clear understanding that this is not about tax reform, not about getting rid of those loopholes. What it is about is stacking the deck even further in favor of very powerful corporate special interests and the very wealthy against middle-class, working Americans.
After all, President Trump said: This tax bill is going to put the middle class first. In fact, here is what he said, again, when he was running for President: ``Everybody is getting a tax cut, especially the middle class.''
More recently, this is what the Republican Leader Senator McConnell said: ``Nobody in the middle class''--nobody in the middle class--``is going to get a tax increase.'' That is untrue, and the Republican leader has acknowledged that. But that is not what was promised to the American people, not by Senate Republicans and not by the President of the United States.
In fact, under the House and Senate bills, more than 10 million families--10 million families--who make less than $200,000 a year are going to see immediate tax increases. What happened to that promise of no tax increases for anyone in the middle class? It is already broken.
Instead of putting middle-class families first, the biggest tax cuts, by far, go to people making more than $1 million a year. In fact, those families making more than $1 million a year get an average tax cut of $35,000 a year right away. Just to give people some perspective, this is a tiny sliver of American households, fortunate households. We want more millionaires, but how do you explain in a bill masquerading as a middle-class tax cut that it is the millionaires who are doing so much better than everybody else?
Just to give you some perspective, for every 1,000 American families, there are four who make more than $1 million a year. That is great for them, and we want them to do well, but why we would give them the biggest tax cuts, rather than folks in the middle who are working hard every day, is something our Republican colleagues will have to explain.
We are now talking about 710,000 wealthy families getting that tax cut of an average $35,000 a year, compared to 10 million middle-class families who are going to see tax increases--tax increases. It gets worse because the tax cuts for families are only temporary. At first, many people will pay more right away. Other families may see a little tax break right away, but it goes away, except for the corporate tax cuts, which are permanent. In fact, some families are going to see permanent tax increases to pay for the permanent tax cuts for corporations.
This chart is from the nonpartisan professionals. This is the Joint Committee on Taxation. As we can see, when this bill fully kicks in, here is what the situation looks like. If you make $75,000 a year or less, your taxes are going to go up when it is fully kicked in. I am going to say that again. If you make $75,000 or less, your taxes are going up when this plan fully kicks in.
As you can see, in addition to that, that means, of course, that your after-tax income is going to go down. This chart takes into account the idea that because we are going to give tax cuts to corporations, some people are going to see some lift in their income. So what this chart tells us, which is very important, is that even if you take that into account, people's after-tax income, if they are at $75,000 or below-- what they have for their family, what they have to pay the mortgage or pay the rent--is going down.
Then there are some folks between $75,000 and $100,000 who pretty much, when this is phased in, will see no real change.
But let's look out here. Let's look at the folks who make over $1 million. When this kicks in, they are going to be doing even better-- much better--when it comes to their after-tax income. How much income do they have after paying taxes for their families? Even after many of the tax cuts phase out, the after-tax income for folks at the top will go up. Why? Because folks at the very top are the ones who have most of the stock holdings in our major corporations. So they are the ones who will continue to benefit over time from those permanent tax cuts to corporations.
So this is a really important chart done by the professionals here in Congress that lets people know the answer to the very important question, which is this: How much will I actually have in my pocket after taxes for my family when this thing fully kicks in? That is what that tells us.
In fact, this chart really undermines entirely the Republican claim that there is going to be some kind of big trickle-down benefit from this tax plan to most families. We have tried trickle-down before. We tried it in 2001 and 2003 with the Bush tax cuts. Trickle-down ran into the wall of reality around the country. After-tax incomes for the folks at the top went way up. The debt went way up. Everybody else was standing still or falling behind. That is what happened, and that is what will happen again.
Now, we were promised by the Secretary of the Treasury that they were going to do this analysis that showed that if you cut taxes for all of these folks at the top--the wealthiest Americans--and you cut taxes for corporations, it was somehow going to create
so much economic growth that the additional tax revenue from that additional growth would actually pay for the tax cuts. They promised we were going to get this big analysis. At the end of the day, they couldn't produce it; could they? They couldn't produce it.
Instead, just a little while ago, we got one page. We got one page from the Department of the Treasury. Nobody put their name on it because the Secretary of the Treasury couldn't find any professional person to put their name on this one page. When you actually read it, you know why. It is because it just assumes the answer to the question. It assumes there is going to be all of this additional economic growth. Although, if you actually read it, they even acknowledge that the tax plan itself will not generate enough economic growth. They talk about other policies that are going to generate all of that other economic growth to allow the tax cuts for corporations and others to pay for themselves. They don't tell you what it is. The Presiding Officer could make up a number or I could make up a number. That is all they did. They made up a number and put it on a page.
I really hope our Republican colleagues, who were serious when they asked the Treasury Department for that analysis, will recognize that they got taken for a total ride by the Treasury Department, because this doesn't pass the laugh test. This is intellectually dishonest, and I am sure that the folks who put it out know that.
So if it is not going to happen by magic--and economic growth is not going to happen by magic--how are we going to see the benefits that were promised by our Republican colleagues, that when you give those big tax cuts to corporations, it is going to result in higher wages and all of this economic growth? We know it is not going to be true because they couldn't come up with any serious analysis. We also know that it is not true because the CEOs of these corporations are themselves telling us it is not true.
Here is what happened just a little while ago. The Wall Street Journal had a forum. They invited CEOs. At this forum, they asked the CEOs in the room to raise their hands if they planned to use the tax cuts their corporations were getting to invest in their own businesses, to invest in their workers. Guess what. Hardly any of those CEOs raised their hands. In fact, Gary Cohn, one of President Trump's top economic advisers, looked around the room and saw just a few hands raised, and he asked: ``Why aren't the other hands up?''
The reason the other hands weren't up is because the CEOs of those corporations do not plan to use their big tax breaks to give their workers wages or to invest in their businesses. These corporations are making record profits now, and they are not using those profits for those purposes. In fact, as has been widely reported, those corporations plan to use their tax windfall for stock buybacks and to provide higher dividends to their stockholders. So stockholders are going to do great. CEOs are going to do great. Everyone else is going to be left holding the $1.5 trillion debt that they are putting on the national credit card.
Here is what MarketWatch reported. This is the MarketWatch, December 8, headline: ``Share buybacks spike--dropping a strong hint at what CEOs plan to do with tax savings.''
This is before the tax plan was even passed. People were just salivating at the idea that they are going to get this windfall that is going to go to CEOs and other executives and big shareholders.
Here is the subheadline in MarketWatch: ``Forget trickle-down economics: Shareholders, not workers, will be big beneficiaries of tax reform. . . . ''
Next sentence: ``Long-term investors and workers hoping that the tax overhaul and repatriation holiday will encourage investment in growth and a rise in wages should brace for a disappointment.''
No Senator should tell us a few months from now that they were not warned that this is exactly what is going to happen.
Do my colleagues want to know who a good chunk of those shareholders who are salivating about this windfall are? Well, 35 percent of the shareholders in American corporations are foreign stockholders. Thirty- five percent of those folks who are waiting for that big corporate tax windfall are foreign stockholders. In fact, the Senate tax bill gives these wealthy foreign shareholders a $31 billion tax cut in 2019 alone. In the House bill, it is even bigger: $50 billion in tax breaks to foreign shareholders in 2019 alone, paid for by increasing taxes on millions of middle-class Americans.
For those Americans who are getting a small tax cut, let's take a look at how their tax cut compares to the windfall for big corporations. Here is how skewed it is. In the year 2019, the House bill gives $11 billion more in tax breaks to foreign shareholders than it does to every single working-class and middle-class family in all of the States that voted for Donald Trump in 2016 combined--combined. Think about that. For every single middle-class family in every one of those States who voted for Donald Trump--those who are actually getting some tax cuts--you add it all up and foreign shareholders get $11 billion more than they do. Again, millions of middle-class taxpayers in these States are actually going to see their taxes go up so that the money goes into the pockets of foreign shareholders--so much for putting America first, so much for putting middle-class taxpayers first.
So just to be clear, it means that all of these families in all of the States that voted for Donald Trump with incomes of $100,000 or less, if you add up their small tax cuts, it is still $11 billion less than the tax cuts for foreign shareholders. That is for the folks who are actually getting tax cuts in those Trump States. As I say, millions are actually going to see their taxes go up.
Now, I want to focus on one other promise that was made by President Trump and Republicans about their tax plan. They said it is going to bring jobs back to America from overseas. As we look at this plan coming out of conference committee, this may be the worst and meanest of all the broken promises, because when you look at this plan and you talk to economists who don't care about political party, they will tell you that this plan is actually going to increase the incentive of American businesses to move their jobs and operations and factories overseas.
Let's just take a quick look at this because I am appealing to my Republican colleagues to fix this before it is too late.
First, it is important to understand that the Republican tax plan now will allow U.S. corporations to pay zero taxes on their foreign profits. If you have a company overseas, currently you have to pay U.S. taxes on the proceeds on that after you have paid the foreign government, but under the Republican plan, you pay zero taxes on those overseas profits. So under the new plan that reportedly is emerging, corporations will have a 21-percent U.S. tax rate, but if you move your business or company overseas, it is zero, not 21 percent.
Now, just like today, those corporations that move their businesses overseas will have to pay taxes to those foreign governments on the profits they make overseas. Lots of those corporations can shift those profits to parts of the world where there is zero income tax liability, and Republicans in the House and Senate claim that they solve this problem by going to a minimum tax on certain foreign profits.
Here is how our Republican colleagues claim they fix this problem. Let's say a company either has its headquarters or puts its profits in the Cayman Islands. I hope my colleagues will follow this and fix this while there is still time. You have $2 million in profits in the Cayman Islands, so you pay zero foreign taxes because the Cayman Islands doesn't have any tax. Of course, under this plan, you pay zero U.S. tax--except our Republican colleagues said they have a plan to address this problem; that is, in this situation, there will be a 10-percent minimum tax. So on the $2 million in profits in the Cayman Islands, you would actually pay a tax of $200,000. That sounds good. At least that is a small fix, supposedly. But then in the same bill there is a huge loophole to this fix, and that is that corporations get an exemption from this minimum 10 percent tax if they move their factories overseas. If you move jobs overseas, you
can escape that 10 percent minimum tax because in the Senate bill corporations get an exemption that equals 10 percent of the value of all their offshore factories and equipment. The House bill is similar. What does that mean? That means that if you are a corporation, you get an exemption from the foreign minimum tax by shipping factories and jobs overseas.
Here is the math. A corporation made $2 million in the Cayman Islands. Remember, they were going to pay $200,000 in taxes on that. But now they move the factory overseas. That is worth $100 million, and it makes a $5 million profit. Now they add up their overseas profits, and they are now below that--they are 7 percent--and they pay no foreign minimum tax on that.
Since then, Gene Sperling and many economists have raised alarm bells about this. Yet our Republican colleagues seem to have blinders on about the commitment they made to make sure that we don't offshore more American jobs. This will offshore American jobs.
This bill is full of broken promises. I ask my colleagues to go back and look at what was promised by Candidate Trump, President Trump, and our Republican colleagues, because the tax bill doesn't do that. I also urge my colleagues to allow the newly-elected Senator from Alabama, Doug Jones, to have a vote on this incredibly consequential piece of legislation. He was just elected by the will of the people of Alabama, and we should not rush headlong into passing this bill, which will impact the people of Alabama like everybody else, without his having a chance to vote on it.
This is something Senator McConnell mentioned in a similar situation many years ago when Scott Brown from Massachusetts was elected to fill the seat of Senator Kennedy. He asked people to wait and allow Senator Brown to weigh in on the healthcare bill. They did. Doug Jones and the people of Alabama deserve the same respect, and the people of this country deserve a Senate that is duly elected to make this very important decision.
There is still time. There is still time to turn back in the conference committee. There is still time for Senators to say that the bill that is emerging doesn't match the promises that were made. We can go back to the drawing board and come up with real, bipartisan tax reform. Let's do that.