WASHINGTON – The first major federal tax overhaul in more than three decades has been approved by congress and now awaits the signature of the president.
After clearing the House and Senate, the GOP’s Tax Cuts and Jobs Act is on its way to the President’s desk to await his signature.
Republicans steamrolled opposition from Democrats to pass a bill that slashes taxes for corporations and the wealthy while giving mixed, temporary tax relief to middle-class Americans.
The House approved the measure by 224-201, passing it for the second time in two days after a procedural foul-up forced another vote on Wednesday. The Republican-led Senate had passed it 51-48 in the early hours of Wednesday.
Congressman Tom Reed (R-Corning, NY-23), a member of the tax writing Ways and Means Committee, said the legislation ensures historic tax cuts for hardworking Americans and the launch of a new era of economic opportunity, growth and job creation.
He also said that while the tax bill is written to offer temporary tax relief, he believes the cuts will be extended before sun-setting in eight years.
“There are sun-setting provisions that hit corporations, businesses, and individuals,” Reed said during a conference call with regional media on Wednesday morning. “Mostly on the corporations and business side we are dealing with the expense provisions being temporary. Obviously this was driven by DC bureaucrats. I’m very confident that when we get to that eight-year window for those sunset provisions that they will be dealt with by Congress appropriately and responsibly and no one is going to, I believe, allow those sunsets to occur.”
Another criticism of the tax bill is that it removes the enrollment mandate for the Affordable Care Act. Many fear that as a result, health insurance rates will go up because fewer healthier people would be part of the insurance pool.
Democratic Congressional Candidate Ian Golden of Ithaca, who hopes to challenge Reed in next November’s general election, explains.
“For those of us that do have to buy insurance, whether – speaking for myself – as a small business owner or for my family, that is going to mean that my premiums are going to be going up that much more to counter-balance the healthier people who are not being forced to buy into the plan,” Golden said during a phone interview with WRFA on Wednesday.
Reed said he supports the elimination of the mandate, but also added there are other mechanisms included in the final tax reform plan to provide help for those who are unable to afford health insurance payments.
“I think it gives the people the ability to choose where they want to buy their health insurance. And remember we did not repeal the premium tax credit assistance program that is out there. If people engage in the process – they’ll do what they need to do to protect their families and themselves – using the tax credits to get help to get health insurance is still on the books and is available,” Reed countered.
Another potential opponent of Reed, Jamestown attorney Eddie Sundquist, sent a media release on Wednedsay calling the tax reform plan a tax scam that will give corporations and the GOP’s wealthiest donors significant tax breaks at the expense of New York families.
Sundquist said the GOP’s elimination of the State and Local Tax (SALT) deductions means that middle-class families in New York will have to pay federal taxes on income that went to state and local governments, effectively a double tax.
The final plan limits deductions of state and local income and property taxes, known as SALT, to $10,000.
“I am incredibly disappointed that Tom Reed would vote for a bill that would do more harm to his constituents than good,” Sundquist said. “While he claims this will help families in our district, elimination of deductions like the state and local tax deductions will do the opposite – and the cuts to entitlements like Medicare & Medicaid will be devastating.”
Reed has said that provision will not affect most of the residents in his district because very few pay over $10,000 in annual state and local taxes. However, critics say it will create a chilling effect in New York State, because those with high enough incomes who would be impacted may decide to move out of the state to save money, forcing the remaining residents to cover the lost tax income in Albany.
Democratic-leaning states, including New York, are expected to take legal action to challenge the SALT cap and even though such lawsuits would face long odds, they could help galvanize Democrats for next year’s mid-term election.
Sundquist also said Congressman Reed is a direct beneficiary of a newly added provision that gives a tax break to those who own LLCs, something that will personally benefit him. Reed and his wife take income from two LLCs: R&R Properties, LLC, and R&R Resource Recovery, LLC – a medical collections business.
“One of the few people who comes out ahead in this deal is Tom Reed himself. It’s alarming to hear that Reed’s yes vote comes after the GOP added a special provision to cut taxes for those who own LLCs. Reed and his family own two, and this provision would lower taxes on the income his family takes from them,” the Jamestown Democrat said.
Sundquist said that as a member of the House Ways and Means Committee, Reed was directly involved in determining the provisions that ended up in the final bill and he should be held accountable for the long-term consequences the plan will have on the public.