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tv   Key Capitol Hill Hearings  CSPAN  November 16, 2017 12:26pm-1:49pm EST

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c-span.org, type tax reform in the search bar. while we wait for the senators to return to continue their deliberations we'll take you back to earlier today to hear from some of the senators as they got this markup session today started. >> the committee will come to order. today we're going to -- we're going to continue our consideration confident chairman's mark as modified to the tax cuts and jobs act. having balked through both the mark and nod modification with extensive questioning and discussion of anticipates last night, admittedly things were a little chaotic at the outset and i know some tensions ran high. we're going to improve the process and communication today and hopefully make things move a little more smoothly. with that issue addressed i'd like to say a few words about
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the tone of our discussion this morning or this week. because i think it has been a real problem. as i've said, i don't begrudge anyone for holding a passionate viewpoint on any issue. and i don't doubt my colleagues' various colleagues' sincerity in any views express or votes they take. but for the committee to operate, we need to be respectful and allow the debate to unfold in an orderly fashion. members are of course, free to disagree about any issue. but no one should interrupt another member or shut down the other side or impugn their colleagues' motives on substantive or procedural disagreements. in my opinion we saw quite a bit of that yesterday and some of it was pretty inflammatory. as for myself, i can take it. i can guarantee that in my 40
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years in the senate, 40 plus years in the senate, i've been called worse names than anyone on this committee would come up with. but for the good of the committee, i want to urge my colleagues to dial back the rhetoric and turn down the volume of some of our arguments. this is the last time i will raise issues about process for the duration of this markup because in my view, if we're going to have a lively debate it should be about policy. so let's talk about policy differences for a moment. let me reiterate what our bill does. our by gives tax relief to individuals and families across the board with the middle class getting the largest benefit relative to their income. we provide this relief prip earl by cutting rates and expanding credit is for parents and families. our bill will also help bys of all sizes. our pass through solution is simple and effective which is
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why the bill is supported by the national federation of independent business, the largest small business organization in the country in the world really. and also, most other small business organizations. the business section of the mark also includes among other things a significant reduction in corporate rates. i know my colleagues have characterized this in a number of ways but this is not some radical right wing approach. as i've noted members of this committee on both sides have supported the proposition of lowering corporate rates for years now. the ranking member actually introduced legislation that would have reduced the rate to 24% in the past. yet, now it appears that the notion that we'd even consider moving down from the highest corporate tax rates in the industrialized world is something totally important to democrats. i've yet to hear an explanationings from anyone on the other side as to why they've
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changed their minds and are now characterizing our efforts to modernize america's business tax system as a "corporate giveaway." that would be interesting to hear. as we debated at length yesterday, the mark will also zero out the punitive individual mandate tax established under obamacare. despite claims to the con contemporary, we contend -- we contend that this is a pro family pro middle class and pro growth proposition. it will undo one of the most regressive taxes in the tax code and allow us to provide additional tax relief to middle class families. by now i'm sure most of my colleagues are aware of the most recent developments with jct's updated distribution counsel analysis. i expect our friends on the other side will try to make some hay out of the new table this morning and that's their right but i want to provide some context before that begins.
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we developed a modification to the chairman's mark that included additional tax relief for families throughout the middle class. once again, it expanded further the child tax credit, made it more refundable and provided it to a greater number of families with children. we also adjusted the rates downward for middle class families. and, of course, we relieved those middle and lower income families by the burdens imposes by the individual mandate tax. with those changes in place, jct noted a projected uptick in taxes owed by those in some lower income brackets. obviously, we have no intention of raising taxes on these families. every republican on this committee has been committed to providing tax cuts to every income cohort. so here's the rub. jct's analysis doesn't show that we're raising taxes on lower
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income americans. we're seeing some taxes go up in the distributional analysis because of a scoring assumption, not because of tax rates or even tax policy. congressional score keepers have assumed that if if the individual mandate were to be repealed a segment of people will opt voluntarily to not get health insurance. the assumption extends even to those who currently get their insurance for free under medicaid. so jct began with an is this that some people in the lower income brackets will opt to not purchase health insurance and thus not take advantage of available tax credit subsidies. without those credits they see an overall uptick in their tax liability. now, i do not fault jct for this. they have to make assumptions in order to make credible projections. however in the world that emptieses outside of those assumptions, people will be
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making their own choices. in fact, our bill will give them additional freedom to do so. nothing in our mark will impact the availability of premium subsidy credits. nothing in the mark will direct or suggest to taxpayers that they should not take advantage of the credits. this is the result of an assumption about economic behavior that is 100% voluntary. i believe jct has additional data that will demonstrate that, but for the behavioral assumptions that accompany the repeal of the individual mandate tax, our mark provides significant relief to all low and middle class income brackets. i know we're going to hear arguments to the contrary this morning but let's be clear. anyone who says that we're hikingtachs on low income families is misstating the facts. anyone who says people will see their taxes go up because we're taking away their health insurance is also misstath the
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facts. just to make sure this is an bup dantley clear, i want to ask mr. bartold about the latest jct distribution counsel analysis. let me just ask you this question, mr. bart old. does anything in the mark lee deuce the availability of premium subsidy tax credits? >> mr. chairman, you're modified mark leaves in place the existing premium subsidy credit structure. leaves it in place. no change. >> okay. >> does anything in the mark suggest or direct individuals in any income bracket to not purchase health insurance orator forego the use of available subsidy tax credits it. >> no, it does not sir. >> is the impact we're seeing in the distributional analysis relating to decreased utilization of the premium subsidytach credits the result of voluntary taxpayer behavior that is not mandated under the
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mark? >> that's correct, mr. chairman. all the analysis that we try to provide to the members in the revenue stims, the conventional revenue estimates and in the distribution analysis accounts for taxpayer behavior. the specific example that you're referring to includes a lot of taxpayer behavior in the analysis. >> thanks, mr. bart old. i appreciate you and the work you've done for this committee over the years. senator wyden and then we'll start. >> thank you, mr. chairman. first you made some comments about our personal demeanor and personal relations. i can go down the row and mention my colleagues' affection for you starting with senator mccaskill who said, and i quote, she loves you. >> i love her too. >> i can't top that. but as you know, nancy and i are so fond of you and elaine and besides colleagues, everybody who doesn't know it, chairman hatch is a former boxer.
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we do not want to mess with the prospect of had his right cross. so that's the story. >> that's good advice. >> that's the story with respect to the personal relations. now, colleagues, i'm going to make my opening statement, then i have a question based on the jaw dropping news of yesterday and senator cardin indicated that a number of our colleagues have questions because of the very extraordinary news we've just learned about. so i'll make my opening statement. then i have a question. then mr. chairman i feel very strongly that colleagues ought to be able to ask mr. bartold questions about what we have just learned. we have gotten astounding news in the last hour according to the latest figures from the yoint committee on taxationings in 2021, families earning $30,000 and under are going to get clobbered by a tax hike of
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nearly $6 billion to pay for this handout to multinational corporations. a $6 billion tax hike on low income americans. and by 2027, the news is even worse, a decade out. this bill raises taxes by $27 billion on families earning $75,000 and under. and meanwhile, the big corporations are guaranteed a cut across the board. colleagues, i believe this process ought to end right here and now, and we get together when we are prepared as our side wants to do to work in a bipartisan way. i don't know how anybody can go home now to the folks they represent and explain why it's a
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good idea to hike taxes on parents who barely stay afloat to pay for a massive corporate handout. what is happening now is just shameful. republicans in this room spent all day yesterday stating that repealing the individual mandate is a tax cut. we now have proof positive that is dead wrong. and this is what happens when you legislate in secret with such reckless haste. this apartments to writing tax policy in the dark, and the majority has done its best to keep the lights turned off. the first version of the bill that cape out last week was a huge tax hike for millions of middle class votes. then on tuesday, after two entire days of markups had passed, there was a new version
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that attacked the health care of millions of americans. now, we have shocking new information as of this morning. at this rate, republicans are going to test the limits of exactly how many different ways hard working americans can be forced to pony up vast sums for corporate handouts. and i want to be clear because we touched on this yesterday. i think we're getting a bead, colleagues on what's ahead. once the finance committee process wraps up, this bill is headed straight back behind closed doors. senators head home at the end of the week for the thanksgiving holiday. but the majorities from the house and the senate are going to be hashing out the differences in their two bills. they're looking to cut a back
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room deal and make $10 trillion in tax changes on the fly. and if you're watching at home and it's been a minute since you took civics, here's what that means. when you're reaching for the cranberry sauce, republicans are going to be reaching for your pocketbooks to give handouts to multinational corporations. this is not a real honest to god attempt to have a full bipartisan debate on tax reform that gives everybody a chance to get ahead. there were apes to bring some sunshine to the process. there was an amendment to protect medicare and social security. there was another on protecting veterans. in my view, the real stunner was what happened with senator brown yesterday. he brought up an amendment because he wants to protect red, white, and blue jobs. he doesn't want them going overseas. he has been leading this crusade
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for years now. and he took his proposal to the president. he handed it to the president twice. i know because i was at the white house when he did it. and when you're dealing with a smart bipartisan proposal, it's all about protecting and creating red, white, and blue jobs, senators ought to look on a bipartisan basis at ways to make it happen. that's not what happened yesterday. yesterday it was said the amendment was nonjermaine. because senator brown didn't have a score. he submitted his proposal for a score nearly a week ago. hours before the chairman's billing became public. how can you ask a senator to do better than that? in my judgment, it seems like a convenient excuse to say no. if a pro jobs idea, a pro american jobs idea is important
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to senator brown's gets blocked without any valid reason, it's hard to see what this process is about other than getting this bill out of committee and back into closed doors. back into secret discussions. this morning, people across the country are waking up to confirmation that the bill pays for massive handouts to corporations with a multibillion dollar tax hike on those who can't afford it. colleagues, this is nothing like the thoughtful measured, bipartisan approach that in my view defines this storied committee's history. this isn't a process now of bringing together good ideas from both sides. this is as exercise in legislating with reckless haste and working families and middle class families can now see especially because of the news of this morning that it has disastrous consequences.
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before my question, i just want to say and i say this with great sorrow, that if this process continues this way, when the history of this extraordinary committee, the senate finance committee is written, this is going to be a dark dark chapter. i want to ask my first question, mr. chairman, and then -- mr. chairman, like you, i have one question but i want to emphasize, colleagues on my side have asked specifically for the chance to ask mr. bartold about this exftraary news of this morning. mr. bartold and colleagues i've been asking for a distribution table -- >> mr. chairman, i'd like to ask a question like you did. >> i'm going to run the committee. what we're going to do is we're going to have ten minutes to
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each person. everybody will get their chance to ask questions. and a apologize to you for having asked a question of mr. bart dld old. >> parliamentary inquiry. in the interest of just fairness, could i now ask one question after my opening statement. >> sure. >> because you asked one question after your opening statement. >> you go ahead. >> thank you for your courtesy. i've been asking for a distribution table on the modified mark for the past two days. i still haven't received the table directly. but i understand the table was put out earlier today. my understanding is that by 2027, almost every middle class taxpayer is going to get a tax hike or crumbs. i would like mr. bartold to describe what the result is of this new plan for middle class people in 2027.
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that is my one question. and as i've indicated my colleagues have questions, as well. >> okay, thank you. >> do you want to -- >> no, the senator wanted me to respond? >> just as he did to you. >> sure, sure. >> senator wyden in 2027 and remember that's the year that enincludes the sunset of the provision -- the individual income tax provisions in the chairman's mark as well as some additional provisions that increase taxes on businesses by changing the business tax base, the page 5 of jcx5 that we released approximately 9:40 this morning shows that, let's see, that compared to present law, the change in federal taxes is
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generally positive for the income groups from less than 10,000 to 75,000. slight modest negatives in comparison to the underlying mark for taxpayers in our income categories above $75,000. >> but that's my point. i'm going to let other colleagues but i'm looking at the chart on page 6, and everybody over $75,000, these are hard working middle class families in michigan and maryland and colorado all of the states represented here, you look at page 6. and those folks get hammered. under $75,000, excuse me. under $75,000. those folks get hammered and right in the table, colleagues,
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on page 6. middle class families making under $75,000 in 2027 page 6, they get clobbered. they pay more taxes. >> all right. you've made your point. senator toomey. >> mr. chairman, thank you. i am going to -- i have to assume for now that there's a profound misunderstanding on the part of the ranking member because i know him well enough to know that he wouldn't knowingly suggest something as absurd as what he seems to be alleging. let me explain what's going on here to clarify this. first of all, i think we all know we subsidize.activities through the tax code. whether people think that's a good idea or not, it happens all the time. and here in congress, we have very, very strange and i would say even ridiculous rules and scoring conventions that wildly mischaracterize these subsidies in a number of circumstances.
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specifically, when we think a taxpayer voluntarily choos not to participate or engage in a program that has such a tax code subsidy, we take that subsidy and we stick it in a table as though it's a tax increase. the advanced premium tax credit is one such example. this is absolutely not a tax increase and you guys know that. the fact is, and i'll demonstrate this in a minute, every single income cohort has substantial savings in taxes and virtually all middle income taxpayers are going to get a substantial tax cut. so let me try an analogy here. let's imagine somebody qualifies for unemployment insurance. they qualify. they could get unemployment insurance. they lose their job. they could get unemployment insurance if they wanted it. but they dhoos k choose not to sign up for whatever reason.
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they would not get the insurance payments. did retheirtachs? did that person just get a tax increase or how about more directly through the tax code, the earned income tax credit. somebody is working and have a job that pays $8. they get the earned income tax credit. they qualify for it and get that. for whoever reason, they decide to quit that job. well, they could be still working. they could still be getting their earned income tax credit. but they've chosen not to. do we think we raced theirtachs? that's ridiculous. how about the american opportunity tax credit? that is a partially refundable tax credit. it covers the cost, part of the cost of tuitions and fees for people who go to college up to $1,000 in my understanding is refundable. if somebody decides they're not going to go to college, did we raise their tax because they didn't take the american opportunity tax credit?
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that's ridiculous. and that's what our colleagues are suggesting is a tax increase. now, it is not a tax encrease if a person decides they don't want to don't want to buy an obamacare plan and as a result we don't send a payment to an insurance company. that's what this is about. that's what the advanced premium tax credit is. it's a payment to an insurance company. if a person chooses to participate in the program. if they decide not to participate in the program, we don't send the payment to the insurance company. that's a tax increase? it's actually a tax cut. let me show this chart that depicts this and we'll make sure everybody's got one if you don't already. this simply shows the effect on taxpayers by cohorts, by income cohorts, with the insurance company payments put aside. and it shows that each and every single income cohort has a substantial tax increase. what this reflects is the reality that the family is going
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to experience. they're going to owe less money to uncle sam. and if somebody decides that they want to participate in obamacare, then again, we don't make any change in that whatsoever and the premium tax credit goes as it would otherwise go forward. but if they decide they can't afford that, we're going to give thm the tax benefit of not penalizing them anymore and then we won't send a payment to the insurance company. it has no e fact on them. this is is chart that reflects the tax reality for virtually everybody and every single cohort in every single year has a savings. that's the reality. thank you, mr. chairman. >> mr. chairman, just quickly -- >> wait, wait, wait. look, we're not going to have a free-for-all here today. this is going to be run in a fair but responsible manner. >> mr. chairman. >> i don't think we did it yesterday very well. we'll turn to the ranking member
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first then we'll go back and forth. >> isle take only 30 seconds because my colleagues have been waiting. i've never heard a senator try to psychoanalyze a joint committee on taxation table, but at the bottom of page 6, colleagues, it's all there in black and white. you make under $75,000 and according to the table going through every group they pay more in taxes and anybody who wants to try to psychoanalyze otherwise their constitutional right, but the table is indisputable. >> mr. chairman? >> let me just see is there anybody on this side want to answer that? senator crapo. >> thank you, mr. chairman. it's correct that the table the ranking member is reading from has that number on it. but it's also correct that no
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american who is attributed a tax increase by that number is paying it. it's a payment to an insurance company. and it is a payment that every american who's on that chart could choose to take if they wanted to. and the bottom line is if you look at the tax liability of the people that you're talking about, saying they're getting a tax increase here and just calculate out their tax liability, whatever it was before this bill and whatever it will be under this bill, their tax liability is going down. the example -- the examples that senator toomey made are accurate. you could come um with a number more. if somebody qualifies for food stamps and chooses not to apply for them, did we take away their money? no. if somebody qualifies for any of the other government programs but -- somebody qualifies for medicaid but chootzs not to sign up for medicaid, did we give thm
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them a tax increase? no. and no matter how you try to characterize it, exactly what is reflected on these charts is the fact that people who are required by law to pay a penalty for not buying insurance and are under this bill relieved of paying that penalty are then going to have the choice as to whether to buy insurance or not buy insurance, but they now know they don't have to pay a tax penalty if they don't. and if they choose not to, that opportunity mean their taxes went up. there's not one dollar taken away if they don't make that choice. this bill does not take one dollar away from them or charge them one dollar more no matter what the way our conventions about scoring refundable tax
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credits say. >> mr. chairman. >> senator. >> mr. chairman, i listened monday, tuesday, and wednesday as my republican colleagues pointed to the joint tax committee distributional chart as evidence that this bill hemmed middle-income families. now, i also heard my republican colleagues dis the joint tax committee on their revenue estimates saying they were wrong and the $1.5 trillion wouldn't be there, when, in fact, we know it's going to be more than $1.5 trillion because a lot of this is temporary in nature and will be a greater deficit than $1.5 trillion. now we have the joint tax analysis that shows that middle-income families will actually see their taxes go up, not down, as effective rates, yet high -income families know they do fine.
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they'll do fine. i heard the chairman talk, well, this is their own behavior. it's interesting that the $180 billion we're talking about that comes out of middle-income families on the health care subsidies, the majority use that money in the chairman's bona fide mark. they used it to make certain changes that are reflected in the distributional charts. to is you're saying, no we're not going to count the behavior on the health care in the distributional charts but when you take that revenue that's not going to be spent and use it to make the distributional charts look better, how hypocritical can you be to do that? voluntary action, people make decisions. businesses make decisions as to how they're going to spend their money. that decision affects their tax liability. you're not challenging that. let's have the decency to
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respect the professional work that's been done here and call it the way it is. what this modified mark will meenl is that middle-income families are to pay more. higher-income families are going to pay less. you've targeted the relief to help the wealthy and the middle-income families are going to get stuck with it. now you say voluntary activity, a person makes a voluntary chartdable contribution. that affects their tax returns. joint tax committee has to make certain assumptions as to what's going to happen. i don't think you're challenging their assumptions because you've take than $180 billion under the affordable care act and you spent it. you also took the money with less people on medicaid and you spent it. >> senator, your ten minutes is way up. senator. >> thank you, mr. chairman. >> after senator cornyn finishes we're going to g back and forth.
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>> right. >> thank you, mr. chairman. i've found ins i ef been in the senate more shouting goes on the more tenuous the ground the senator is on. and i think that's the case here today. we flatly deny, disagree with the accusations made by my friend from maryland and the ranking member. let me just ask, could i ask the -- what is the -- what is the income threshold for let's say a single mom with two childr children, what's the income threshold that has to be achieved before they pay any income tax at all? >> the standard deduction for head of household, senator,
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is -- let's approximate, $9,000 and each personal exemption is $4,050. you said there were three so that's $12,150. so we're saying approximately the first $21,000 of income for that household is exempt from tax before calculating any benefit that the household might receive assuming it's a working mother in your situation from the earned income tax credit and the refundable portion of the child tax credit. >> so -- >> so, in fact, more income would effectively be not taxed by reason of those credits. >> so did i understand correctly the $33,000 roughly under this circumstance that would be tax free?
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did i understand that correctly? >> a thousand dollars of tax credit, the person be in a 10% bracket so, there's $3,000 of child tax credit. so that would -- so that would -- let's see -- i hate doing this on the -- on the fly. >> you're doing better than i could. >> yeah, no, so if we had another -- you said another 33,000 so another $13,000 worth of taxable income, most of it in 10% bracket would be only $1,300 of income tax before claiming the child tax credit so the $33,000 worpt worth of income this individual should have no tax liability under present law. >> okay. >> sorry to be -- >> so the single mom with two children everyoning $33,000 a year would pay zero tax
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before -- >> under present law, rough calculation. >> under the chairman's modified mark, how much would be the income tax responsibility of that same single mom with two children? >> tho no change there. no change. >> you're kidding me. our colleagues over here are claiming that we're somehow targeting individuals like this single mother of two kids saying we're going ratz hise her taxes benefit multinational corporations when from what you've told me her tax liability under current law is ezero and after this bill passes her tax liability will be zero. >> e thank you. >> is that accurate? >> the income tax liability for
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household that senator cornyn described should be zero under the present law and under the chairman's mark as modified. >> well, that's the point he's making, isn't it? >> i believe that was his point. >> to counter some of the outrageous claims from the other side. back and forth. five minutes. >> senator stabenow. >> senator stabenow, we'll turn to you. >> thank you, mr. chairman. first a comment then a question. you know, this -- this bill just gets worse and worse and worse. it was trickle-down economics on monday, and then it got worse and more people were going to have to pay more on tuesday, plus now people losing health insurance and now today -- which day is this -- they all bleed together. but the fact is that today we
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now see the worst yet in terms of the numbers. and i guess the broad point i would make is no matter how you cut this, this bill is about trickle-down economics. it's about give-aways for the wealthiest americans, multinational corporations, most people, people under $75,000 a year, will pay -- many pay more in taxes, and many, many people will lose their health insurance. so you lose your health insurance to give trickle-down tax cut to the wealthiest among us or you pay more taxes so that those who are the wealthiest among us will be able to get another supply-side tax cut. every piece of this bill is skewed to the wealthy and those at the very, very top and the very, very largest corporations, wealthiest individuals. every single piece of it.
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and now we know that three years, 2021, the latest version gives families earning less than $30,000 a year a tax increase. all together $6 billion spread out among taxpayers. while millionaires and billionaires get a $28 billion tax cut. that's what the joint committee on taxation has given us in terms of numbers. so every day this bill gets worked on it gets worse and worse for middle-income and working-class people. laegs a question -- by the way, the personal exemption is limited in this bill so that if you have more than one child you're going to be penalized. if you are a family of two
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children, three children, four children, that personal exemption is gone, which means you start in the hole. but the child tax credit to me is another example of how this is skewed to the top and trickle-down economics. the current child tax credit is $1,000, correct? >> that's correct, senator. >> and the new version is $2,000, correct? >> that's correct. >> which sounds good. how much of that is refundable? >> under the chairman's modified mark, $1,000 remains refundable and that's indexed. >> okay. >> which is a change for the -- >> so there's an increase, but if you're a working family, the mom that was just talked about, you won't benefit from that increase. but you know who benefits from that increase? they raise the cap on the income of the households that can benefit from the child tax
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credit five times higher. five times -- five times higher. $500,000. so the working mom who now under this analysis, earning less than $30,000, may see a tax increase, may have more difficulty getting health insurance, but she's not going to benefit from this child tax credit any more than she does now, maybe a tiny bit, because of the indexing. but the folks that will benefit is somebody making a half a million dollars. so every piece of this bill unfortunately in the fine print goes back to the same thing. it is skewed to the wealthy and the well connected and it's trickle-down economics, which has never worked. just ask the folks in the state of kansas, where after the disaster they had there, a
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bipartisan group of democrats and republicans had to come back and repeal the whole thing because it was hurting families in their state. thank you, mr. chair. >> senator warner, we understand you're next. >> thank you, mr. chairman. i just want to make three quick points. one, with all due respect, if we're assuming that individuals have r not going to make rational economic choices in their own best interest in terms of receiving benefits that are available, i agree they're voluntary. i guess then i would say should we also make those assumptions that businesses are not going to choose the expensing opportunities, that businesses are not going to choose to immediately write off their r&d expenses? i mean, we get ourselves into a land of hypotheticals that i
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think are -- really don't get us there and consequently you've got a hard job. i think a business would make a rational choice, an individual would make a rational choice, so i respectfully completely disagree with some of my friends on the other side that people aren't going to act that way and as has been made mention by other folks on this side, you can't argue people -- there's not going to be this loss when you then use the dollars for other purposes of folk who is make choices, presuming that people are not going to make rational choices to take their subsidies or other benefits from the government. i also heard one of my colleagues make mention of putting out a hypothetical that said this individual with three children and -- because i think our tax code under current and future proposals does try to take care of those. i guess i would ask mr mr. barthold, using your
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numbers, if a young man in dallas, texas, a young, struggling entrepreneur trying to get his business started in dallas and he makes $29,000 in 2027, i believe based on your charts he's going see a 25.4% increase in his taxes from where they were at least in 2019. is that not a correct assumption? i'm looking at page 5. so this young single entrepreneur who's trying to make a business, entrepreneur, failed a few times, live in that tax bracket, based on where he might be in 2018, 2019 if this bill goes through, is he not going to see a 25% increase in his taxes? >> it depends -- 25% for a
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specific individual depends on the specifics of the -- >> not somebody -- not three kids, not a single mom. this is a young entrepreneur in dallas, texas, trying to make things -- am i misreading any of your charts? >> the only clarification i was trying to make, senator, is that the specifics, when you say a single -- a single individual, entrepreneur, $29,000 in income, that's one of many of actually millions of people in different circumstances. >> yes. >> and the total that we support there is the aggregate change in tax liabilities. >> the point being if we create an example that says the single mom is struggling with three kids, maybe she's going to as you pointed out, not going to have tax liability. if you have a 25.4% blended increase on that cohort, then someone, and i was trying to pick an example that would seem to have the least amount of other deductions sshg going to
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see a big hit. >> and this would reflect, just to maybe be more precise, what this reflects is in the chairman's modification there is the modified indexing, and so that means that the tax brackets, the values of the personal exemption, which would be back at effect under president law because of the sunset, that they are lower than they would be under present law, so therefore -- >> i don't want to use the chairman's time, but i just want to say, we can automatic show examples but i think you're the referees and i think we have to count on the referees. and my last point, mr. chairman, briefly, is just that if we are going to end up -- and you've made the point and unfortunately since i've been here we've done this and i remember a few years back i want to give you and the ranking member credit, i thought we were going to vote on the final time of extenders. well, we have created a whole new bucket of extenders by this
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gimmicks being used, not my words, the committee for a responsible federal budget, and i again want to introduce if i could into into the record their analysis, which most of us on both sides have supported, that really say that this added to the debt is about $2.2 trillion, when you presume that when these popular benefits expire we're going to extend them, and we ought to be straight with the american people. adding $2.2 trillion, that includes the additional interest charges, that is i believe a much more accurate number of -- >> time is way expired. >> thank you, mr. chairman. >> let me call on first senator toomey and then senator portman. >> thank you, mr. chairman. >> five minutes. >> to my colleague from virginia, i don't think anybody here is suggesting that people are not going to make rational choices. people will make rational choices. what i'm pointing out is the bizarre anomaly of the way we require joint tax to casualty
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for them. that's what's so misleading about what you guys are alleging here. so the senator from michigan seemed to suggest that every iteration of this is getting worse. these iterations are getting better and better for working families, middle class, and in every cohort. so, mr. bartow, let me ask you a couple questions if i could. i want to focus on taxes that people have to pay, not payments to insurance companies. let's not focus on payments that my colleagues are certainly suggesting is a tax increase. if you look at the actual taxes that are actually paid by human beings, and i look at the chart that was produced on november 11th, i see reductions in every single cohort. every income cohort. let's take, for instance, the $20,000 to $30,000 cohort. the number on my sheet here is a
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7% average reduction in taxes. you see that number? >> which year, senator toomey? >> i'm sorry. 2023. >> the senator is referring to jcx-53, which was the distribution analysis for underlying chairman's mark. >> right. >> yes, in the $20,000 to $30,000 we had estimated that the total taxes collected attributable to that income group would fall by 7%. >> right. and it falls in all the brackets. >> he's on page 3 of jcx-53-17, which was the distribution of the chairman's mark before the modification. >> which simply illustrates, contrary to what we of been hearing all week long, that every middle-income familitax c as a tax cut on average. and, again, putting aside the
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payments that the federal government makes to insurance company s, which is ridiculous to consider taxes, i know you ran a set of numbers exclusive of that dynamic. and i've got a chart up here for the calendar year 2023. that is the joint committee on taxati taxation, knoch 16th, 2017-d-17-52. >> yes, senator toomey, you and the chairman had asked if we could distribute the effects of the mark as modified absent the zero-rated individual mandate penalty. >> right. and when you then -- when you look at the $20,000 to $30,000 income cohort, the average savings now is not the 7% it was before, but it's 9.5%. >> that's correct, senator. >> and actually, every single cohort has a larger savings
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which is to say a bigger tax cut under this more recent version than the previous version, right? >> that's correct. >> so contrary to what our friend from michigan said, actually -- >> mr. chairman, do we have this document? >> -- is getting better -- >> do we have this document? i'm just trying to follow. >> should have it. >> senator toomey, it was not a public document. you had requested it separate analysis. i'll have it provided to all the members. >> i had no idea that this was not being districted. and i put it on a chart. this is how big a secret i wanted to keep. >> can't read it. >> my eyes are not as good as yours. >> i get that and my glasses work well, i'll help you with, that but listen, the fact of the matter is what we of don in the latest version is further reduce -- and there's no mystery about how. again, mr. bartow, what are some of the devices that were used to further reduce the tax burden for middle and working class
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families? did we increase the child tax credit? >> in the chairman's mark modified to increase the tax credit to $2,000. >> any other changes that had the e fact of reducing taxes? >> also changed the original mark had tax brackets of 22.5%, 25%, and 32.5% in sort of the middle brackets. each of those you reduced to 22%, 24%, and 32% respectively. >> so we lowered rates -- >> lowered rates. >> -- on working and middle-income fam lis, increased the child tax credit for these families and that's why unsurprisingly the tax burden in this iteration is lower still, a bigger savings for middle-income families. >> senator portman. >> thank you, mr. chairman. if i were watching this from the real world, not from this
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podium, i would wonder how this all squares because we're hearing very different messages. and let me just make one obvious point, i hope. when the ranking member, senator widen, and/or more recently the senator talked about 2027, which is ten years from now and what the effect is going to be on middle-income families, they were talking of course about after the proposal is sunset. and so senator widen went to page 6 and talked about 2027 and said that he was concerned that taxes went up for individuals. well, yeah, that guy up because the tax cuts that we're putting in place with this proposal end. so if you're watching and wondering how could both these things be true, that there are middle-class tax cuts as mr. bartow just said, from today
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until ten years from now, but somehow in ten years from now, taxes go up, yeah, that's true, because it's sunset. and so my friend senator warner talked about the entrepreneur in texas and he referred to the chart of 2027, yeah, that's true. of course the taxes go up because under the budget rules within which we have to operate here, there cannot be eve an penny of deficit as scored on a static basis in the second ten years. and so, we sunset those tax cuts that are substantial between now and then for that individual you're talking about because of these budget rules. and mr. bartow, is it true that in 2027 the difference you see in these charts -- again, i would refer you to the chart that senator widen asked us to go to, page 6 of jcx-58-17, if
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you look at, that you'll see there is substantial tax relief until that last year, 2027. look at the bottom chart. all taxpayers -- is that accurate there is tax relief until the 2027 year? >> yes, senator toomey. >> i'm senator portman. >> portman. i'm sorry. >> i appreciate the compliment. so -- thank you, john. i mean tom. sorry. so i just -- for the folks in the real world watching this, that's what we're talk about here. now every member of this panel, including the democrats, have the opportunity to strike that sunset. if they want to offer an amendment to say let's not have this sunset leshgts's not sunset this legislation after ten years because we want to continue this substantial tax relief that we're providing under this bill, we have the opportunity do that. on the floor of the united
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states senate. and it was indicated yesterday that perhaps one of our colleagues is going to do that. and if so, if won't be an issue. the tax relief will continue. but again, if i were watching, i'd be kind of confused. the other part i might be confused about is this notion that in the lower bracket, $10,000 to $20,000, $20,000 to $30,000, there's been the argument that there is a tax increase. that tax increase is because of the expiration of the individual mandate as was talked about. let me try to put it as plainly as possible, these are people who do choose -- senator warren is absolutely right. people are rational, they'll make their choices. and the joint committee on taxation is supposed to reflect that rational choice. people are going to say, you know what, i'd rather not take this affordable care act health care plan even though i get a tax credit if i do it, because
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i'll have other costs attendant to that. some people get more of a premium credit than others. some people are going to have co-pays. some people are going to have deducts that are higher. and so i'm choosing not to take that. tom bartow in the joint committee reflects that as tax increase. it's a choice by people not to accept the tax credit because they would rather as a rational human beings make a decision, not have the other costs that are associated with that. that's why i just hope as you're watching this and listening to what we're saying, it's a decision, it's a policy decision, and i would hope that the bottom line is recognized, which is that this provides substantial tax relief, particularly to middle-income families, and that tax resleef going to be across the board and every single different group of taxpayers, as is indicated on these charts, as tom as
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confirmed time and time again, again today, and that means that the promise that we have made that will will be relief from middle-income families that are feeling the stress higher expenses, flat wages, middle-class squeeze are going to get substantial relief. in ohio it's about $24 00 for a family at the median income. thank you, mr. chairman. >> thank you. >> going to 2027, ceding senator portman's point that the individual tax cuts expire there, let's look at what happens in 2027.
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mr. balltold, isn't it true based on the last distribution table that you've given us that while taxes go up for people with $100,000 of income or less in 2027, they continue to be lower for everyone over $200,000? >> jor, that's correct and you can see that in the subtables. >> so my point is that even when the individual goes away, the millionaires are still paying less taxes. folks that pay 500 to a million are till paying less taxes. it's only the bottom folks that end up paying more assuming these individual rates aren't -- and let's look at another diagram. on year 2021, based on the
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distribution table, federal taxes paid in, people between $20,000 to $30,000 under the present law pay in $22 billion in taxes, $22.5 billion based on your chart. on page 2, year 2021, people between $20,000 to $30,000, nothing's expired yet, they pay $22 billion, point knife taxes now. they'll pay $25.5 billion under this proposal, $3 billion more. correct? >> that's the consequence of predominantly of the change in the premium credit subsidies. >> and cpi. >> and cpi. >> but for millionaires, they're going the pay 671 under the current law and only going the pay 643. so they get to pay $28 billion less in 2021 while people
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between $20,000 to $30,000 have to pay $3 billion more. now let's look at the last bun 2025. it's really stark here. if you add up the numbers of the federal taxes paid by people who make $30,000 or less, they're going to pay $4 billion more in 2025 based on this proposal. 27.2 going to 31, minus 4.7 is going to minus 5.9, 5.9 is going the 6.1. that's a total of $4 billion more they're going to pay. but if you add up everyone who makes more than $200,000, they're going to pay $90 billion less. if you add up how much tax theys pay presently, 200 to 500, follow with me, guy, 889 under
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this proposal. 500 to a million, they pay $321 billion in taxes. under this proposal, they're going to pay 301. a million and over they pay 780 now, they'll pay 764 under this proposal. so in 2025,understands this, people making less than $30,000 a year are going to pay $4 billion more in tax, while people who make $200,000 and over are going to pay $90 billion less. that's what we're talking about. that's what's wrong with this bill. that's why we are offended at all of these things that are skewed toward the people at the tom of the income charts. and if anybody's confused about the numbers i just did, i'm happy to walk them through it, but i added them up myself and i used to be an auditor. thank you, mr. chairman. >> mr. chairman, thank you. and thanks for this hearing.
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listening to frooefrs speaker, wondering what her point is to make all these rates permanent, i'll join you on that, if you want to make all these individual rates permanent if that's what you're -- >> i'd love to work in a bipartisan way to low for corporate rate, the child tax credit -- >> i don't think anybody on this side will disagree. >> maybe the -- >> -- permanent. but i want to go on the theme of my friend senator portman in that if you're watching this on temperature o tv outside and listening to the other side of the aisle argue gens themselves, it's pretty fascinating. i listened to my friend from michigan talk about how those less than $30,000 a year are going to be paying more taxes and we just had jcts tell us they will not be paying more taxes. then my friend from virginia said he agrees with jct that they will not be my-paying more taxes because there's the facts. now i listen to my friend from missouri and now she's saying
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under $30,000 you're paying more taxes. which is it? i want to hear from the other side, what is it? the fact is, and i'll tell you what it is, if you're make less than $30,000 a year under the current tax system you're not paying taxes. and that was well document ld by the majority chwhip. and under this new, under this new tax system that's being presented today, you still won't be paying taxes. so to listen to time and time again -- i know we wear earplugs around here and that's the key because you have your talking points in front of you. mr. barthold was very up front and said under the current system if you make less than $30,000 a year today you don't pay taxes. you do not have a federal liability. under the new bill that we have in front of us today and you make $30,000 or less, you stim won't be paying additional taxes. so maybe i should ask this question one more time.
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mr. barthold, is there anything under this legislation that would prohibit an individual from seching federal assistance to help them afford coverage? >> senator heller, the chairman's as modified makes no changes to the credits available under 36-b, the advanced premium subsidy credit. >> if you make $30,000 or less today under the current system, do you have a federal liability? >> again, individual specific case if we were turning to senator cornyn's example -- >> a mother with two children. >> noun. >> none. under the bill that's in front of us today, would that same individual have a tax liability? >> the same individual would have no tax liability. >> mr. chairman, i'm getting tired of listening to individuals talk about those who make $30,000 and less and having their taxes increase. that's absolutely absurd and not true. so if we could go on to other
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portions of this particular piece of legislation i'm willing to listen, but to continue to beat on that point is literally untrue. simply because we choose. because you choose not to take individual mandate is not a tax increase. i can tell you stories after stories back in my state that was hit hard by the recession of individuals that lost their jobs and were told that they could pick um unemployment insurance and they said, you know, by my bootstraps i'm going to pick myself up, i'm going to work hard, find a job, chose, chose themselves not to take unemployment insurance. none of them believe the their taxes were raised on them. there's none of them out there. and i of talked to hundreds of people l e in nevada that chose not to take unemployment insurance during the depth of the recession. yet everybody on the other side over here is saying they of got their tax increased.
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that's what think ear saying. >> one other point before we finish t. i want to thank my friend from virginia for his indoor voice. i want to thank you for your indoor voice. and i hope the others on that side of the panel will use that as an example, as an example of how we can have a decent discussion back and forth. thank you for that. mr. chairman, i'm done. >> mr. chairman, point of first on privilege if i might just e just for a moment that my comments have been -- a number of folks have referenced comments. i would like to ask just one question of mr. barthold given the fact that my comments have been referenced on a number of times. >> i want to keep this in a regular order. >> i know but as a point of personal privilege -- >> the next person up was senator bennett. >> might i take 30 seconds from -- mr. chairman, i just know that in looking at these charts, just for the record, 201 2 1, the new version of the bill
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gives families earning less than $30,000 a year a net tax increase of almost $6 billion according to jct. >> thank you. >> is that -- thank you. >> thank you, mr. chairman. i will clear this up later, but, mr. barthole hold's answer to senator warmer was very clear there was a circumstance where there's a tax increase. look, this is supposed to be a tax bill. it comes on the heels of two attempts to try to repeal the affordable care act. the republicans decided to put health care into this bill and the result of that is that at least $13 million people are going to lose their health insurance. speaking of real life and real colorado, i was recently this sumner frils coe, colorado, where i went to visit the health clinic there, a rural part of our state, and i asked what the pair mix and the health clinic
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was. 33% was medicaid.state, and i ar mix and the health clinic was. 33% was medicaid. 53% was uncompensated care. i said what? what's that 53%? and he said, those are people that are making too much money to get medicaid but not enough money to get private insurance. they are in the middle of the middle class and those are the people whose insurance you're taking away with this tax bill. 13 million americans. and the reason it shows up in the tax tables is that you're making it harder and harpder for them to be able to afford insurance. and with respect to my friend from nevada, and itch a lot offed a misch rapgs for him, it's not true that people aren't paying taxes. they're paying payroll taxes nape ear paying state and local taxes. they're paying sales taxes, all of which are regressive, many of which are regressive taxes. in fact, you will have an opportunity today to vote for a bill here that recognizes that fact, a bill that i have with
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senator brown and senator casey, that would actually make a profound difference in the lives of working people this country, especially ones that are raising children. you will have a chance to vote for that. so if that is your concern is what i of heard today, you will have the chance to exe prsz tpr in this vote. but the tax tables that i've seen, and i'm happy to be proven wrong on this, the tables i've seen, when you add up the state and local taxes people pay, the payroll taxes that people pay, it's roughly in proportion to what they're earning. so the idea that there are a bunch of people in the country that are kind of free loading or might have some opportunity to pay more at the bottom, i think, just is incorrect. and i guess i would ask mr. barthold whether it's true that people at this level are paying lots of taxes. i won't even use that characterization. are paying taxes, state and local taxes, payroll taxes. theiss a federal tax.
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>> mr. chairman, the distortion of what i said -- i said federal tax liability. i didn't say they don't pay federal taxes. i said federal tax liability. >> okay. >> you have to understand. you have to understand that. >> i agree. i appreciate that. mr. barthold, could you answer my question? >> certainly, sir. there are many taxes lech vied at different levels of government and at the federal level we have the income tax, we have payroll tax, we have some selected excise taxes. >> right. >> and many people, particularly low-income people, purchase gasoline, purchase alcoholic beverages, tobacco products -- >> thank you. and that's federal tax reliability. i enjoy sod much the chance to work with the senator from nevada on our infrastructure subcommittee from this committee and i thank the chairman for putting that together. i really think that all -- what all this reveals, this argument
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that we're having today between senator toomey and senator warner and between me and senator -- all of it suggests to me we should go back to regular order. let's have a bipartisan approach to reforming our tax code. to reforming the corporate rate. to bringing it down. let's do it together and let's do it in plain sight of the american people. i think they'd have a lot more confidence in this process if we were doing that, especially with the chairman and the ranking member leading it than they will have in a process where the numbers change from day to day and the work is done behind closed doors. mr. chairman, i yield back 40 seconds of my time. >> thanks so much. senator thune. and wind up mr. senator cantwell. >> thank you, mr. chairman. mr. chairman, and i think that in response to senator from colorado's comment, i think in a lot of ways our colleagues on the other side foreclose that opportunity early on this year by setting -- sending a letter
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stating the conditions under which they would participate in a tax reform bill, many of which were just not feasible. so let me just come back to this question that's been kind of batted around all morning, and i think with respect to federal income tax liability, the issue's been raised, raised by senator cornyn, raised by senator heller as well, that if you have an individual with the income characteristics that was described earlier, that person would not have a federal income tax liability. and i would just ask mr. barthold, under the chairman's modified mark, the standard deduction goes from what for a single and what for a married filing jointly? >> married joint goes from present law today $12,700 to $24,000 head of household goes
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from $9,350 to $18,000. the single goes from -- i don't have the right number -- $6,000 and couple hundred dollars to $12,000. >> so you're lifting more and more people -- they're raising the income thresh hold at which somebody would have a federal income tax liability. so what does the child tax credit go to under the chairman's modified mark? >> it increases to $2,000. >> $2,000 per child. >> per child. >> who benefits from a $1,000 increase in the child tax credit distributionly if you look at the income distribution tables? >> well, the increase -- remember, the tax credit reduces tax liability, so anyone who before the child tax credit
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would have a positive tax liability. part is refunded under president law, everyone up and down the income level except the area where it's where it's phased out, which the mark would set that at above $500,000. >> so basically those two basic changes are going to flow through all the income categories, income cohorts that have been talked about. we've stated as our objective in all this the desire to lower taxes for middle-income families, those changes would in effect make that happen. and then we're also reducing the rates throughout the entire tax structure in a way, too, that i think also helps or in many ways impactings those same income cohorts. would that be right? they would also benefit from the rate reduction that are occurring under the chairman's
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modified mark? >> the mark maintains a 10% bracket and then lowers brackets that by having the 12 instead of 15, 24 instead of 25, et cetera. >> so basically, everything that the chairman's mold fied mark does should accrue to people who are in those middle-income categories, those middle-income families that have been the principal beneficiaries has been our intention with this legislation all along. so it is hard to understand why our colleagues on the other side somehow think that they're not going to benefit from this. people in the lower income thresholds we talked about earlier, who don't have a tax liability, income tax liability federally can't raise taxes on people who don't have a federal income tax liability. and that's at -- for a single mom, suggested earlier weather a couple kids in the $30,000 to
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$33,000 range so, it's hard to argue taxes will go up on somebody those income categories if that's all true and that's all true under the chairman's modified mark. what i would say, and i guess i look at the distribution tables that have been districted based upon the initial proposal, the chairman's modified mark and if you look at who bears the tax burden when this is all said and done, it's very similar to today. in fact, people over a million dollars, as far as i can tell most cases, their actual share of tax paid -- of taxation in this country is higher than it is today. so people over the so-called rich, the people who are in that income category, are going to pay more as a percentage of total tax burden than they pay today. so it seems to me that the chairman's modified mark accomplishes the objects that it set out to accomplish, and that is to deliver meaningful tax
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relief to middle-income families all across those middle-income categories. so i hope we can get on with it and vote on some amendments, but let's move this legislation forward and bring-needed relief to middle-income families in this country. thank you, mr. chairman. >> i appreciate the distinguished senator's comments because that's true. we're going to wind up here with senator cantwell. the vote's already been called and we'll -- she'll finish t off and then we'll recess until 2:30. >> yes, sir. >> thank you, mr. chairman. i wish -- anyway, i'll take the opportunity even though i think this is a very important subject and i know we have a vote that's down to one minute on the floor. the mark repeoples the subpart f that specified that foreign-based oil-related income are subject to the current taxation. is that correct? >> that's correct, senator kanltd well. >> so how much revenue does this provision lose, this break?
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how much revenue?cantwell. >> so how much revenue does this provision lose, this break? how much revenue? >> isle have to look it up. >> i think it's 3.9 over 10, $3.9 billion over ten. >> if that's what we reported in jcx-57, i agree. >> so your comments are the that the foreign-based company income consists of personal holding, company income, which includes passive income such as dividends, interest, royalties of income, business operations, foreign-based company sales income, foreign-based services, foreign-based companies related income. any other categories of foreign-baylesed company income repealed in this mark in addition to oil companies? >> no, senator. >> okay. so why are we assuming a revenue loss for this provision? does jcta believe the oil xaenl revenue will not be captured by the mark's current inclusion of
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global intangible lode-taxed income? does drilling a well not create a global low-tax intangible income? >> well drilling wouldn't necessarily create global intangible low-taxed income, senator. the estimate prs provided here reflect a lot of interaction between the different provisions. so i will have to -- i'll have to provide you -- i don't want to waste your time by floundering here. i'll provide a more detailed explanation to you separately if that's all right. >> thank you. well, i think the question here is that current law was initially enacted to combat any kind of tax haven for these kinds of operations. so the committee report from which this provision was enacted
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stated because of complex structures, oil income is particularly suited to tax, even type activities, and the net as a result that petroleum companies have paid little or no u.s. tax on their foreign subsidiary operations despite their extremely high revenue. so if we repeal that provision, will there be foreign-based fuel revenues that will never with taxed by the united states? will we be creating a new tax haven for oil companies? my concern here is understanding why oil companies get a special deal on this. i think our colleagues would say, oh, no, no, this is about this larger repatriation, but if it is, then why do we have to give this additional tax break to them? and what haven are cree v we creating by doing that? so you can take the time and come back to us, but that's the concern i have with this provision.
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and it's very costly provision. it's nearly $4 billion, so it's a big cost and really want to understand the difference for oil companies versus other companies. >> i'll provide you more detail. >> thank you. >> thank you, senator. the committee will stand in vesz until 2:30 this afternoon. we'll resume. >> thank you.
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the senate finance committee continues its review of the gop tax reform bill at 2:30 eastern time. when they return, we'll have live coverage here on c-span3. until then, here's some of the debate from yesterday. >> let's get going. so, next amendment. okay. it's coming from your side, i believe. >> senator. >> you're up. >> thanks, mr. chairman. today -- this evening i'm pleased to say offer amendment 233. it would be carper amendment number 17. i would ask toak

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