On Nov 8, 2017 Rep Betty McCollum gave a standard floor speech to rail against the on going work to provide Tax Reform and Reduction to the American people. This paralleled speeches and language from Nancy Pelosi (a California multi-millionaire, with net worth of $196 million) seen here.
Here is the transcription and the video:
Mr. Speaker, I rise today in strong opposition to the Republican’s Tax Scam. The middle class receives virtually no benefits from this bill. This bill hits middle class Minnesotan’s especially hard by dismantling the state and local tax deduction. It increases cost for college students and their families. It abandons adoptive parents and it punishes people with high medical bills. So why does this bill hurt hard working families? So President Trump and the Republican’s can pay for give aways to the wealthiest Americans. Big corporations and billionaires will see their taxes slashed wealthy, heirs and heiresses will be allowed to dodge taxes entirely. While the top 1% of Americans receive nearly half the tax cuts. 99% of us will be stuck with a federal debt that will explode by trillions of dollars. Mr. Speaker this Republican bill is not tax reform, it is not a good bill for the middle class, it is a scam plain and simple. I oppose it and we must defeat it.
So let’s analyze, line by line, and parse the fact from the fiction, and decide who is scamming who. It will take a lot to unpack the innuendo and deliberately vague allusions to “what if” conjectures made about unspoken charges.
Mr. Speaker, I rise today in strong opposition to the Republican’s Tax Scam.
There is no real testable information here. But lets note that its an immediate appeal to emotions using a classic “name calling” technique. Not particularly persuasive for most people. Or at least I hope it would not be.
The middle class receives virtually no benefits from this bill.
Well CBS went to test that very thesis and declared it to be untrue. They had the potential tax bills from 3 households tested and found all would be reduced substantially
This bill hits middle class Minnesotan’s especially hard by dismantling the state and local tax deduction.
This one is partly true, not because of the tax bill itself, but because of the indisputable fact that Minnesota taxes are so high relative to most other states. It is the 8th highest tax state in the union. And the discrepancy has increased through the entire Dayton administration.
Now here comes the complete story. Since the Federal Tax plan now doubles the standard deduction, the only people who will see any such problem are the highest income households in Minnesota. So the reality of it is, Rep McCollum is decrying “taxes on the richest Minnesotans”, rather than the substantial savings for any lower income household.
It increases cost for college students and their families.
Well the best information on that appear to be a combination of fears that the wealthy will reduce donations and a small tax imposed on the wealthiest of private institutions endowment funds. Again. It looks like Rep McCollum is more anxious about the wealthy than she is about the average Minnesotan, she is simply twisting arguments to support her preference.
Like the House bill, the Senate legislation imposes a new 1.4 percent excise tax on the largest endowments held by private colleges. But thanks to an amendment offered Friday, the tax will apply only to endowments valued at $500,000 per full-time student. Previously, that provision would have applied to endowments valued at $250,000 per student. But although the tax will apply to only the wealthiest private institutions, higher education leaders call it a flawed idea that sets a worrying precedent.
In general the Washington Post describes benefits in almost every point for education.
It abandons adoptive parents and it punishes people with high medical bills.
These were tax deductions that were proposed to be reduced since the standard deduction was being doubled.
The best discussion of the adoption credit is here
However much it may have alleviated the financial burdens of adopting families, it appears not to have increased the number of adoptions.
Regardless, it did not make it into the bill anyway. And the same thing happened with the medical expenses deduction, the proposal was not adopted.
But the use of language “punishes people” is a great hyperbolic emotional exaggeration. Which is exactly what the next sentence proceeds to do by excessive language and posing a statement as an extreme question. An unfounded statement and
So why does this bill hurt hard working families?
So President Trump and the Republican’s can pay for give aways to the wealthiest Americans.
The blatant appeal to envy and greed aside, its an empty statement as far as information. Thus we are left to assume next lines are to be used to define this further
Big corporations and billionaires will see their taxes slashed wealthy, heirs and heiresses will be allowed to dodge taxes entirely.
“Big Corporations” must mean an allusion to the corporate tax rate. Taxing corporations is a much argued topic. What does it mean to tax a corporation, since any such “cost” to the corporation must either be passed directly onto the consumer as increased prices to compensate, or has to be absorbed and reduces competitiveness (higher price relative to competitor or foreign product) and future investment. We saw the effect of high corp tax rate here in Minnesota when Medtronic moved corporate headquarters to Ireland’s 12.5% tax rate environment to escape the US 35%
But what does reducing corporate tax rates really mean for US employees? A number of companies have already answered that question with large bonus’s attributed to the tax bill.
The Corporate Tax-Cut Dividend
Workers get a $1,000 bonus. Democrats call it ‘cruel’ and a ‘scam.’
Alas for Rep. Pelosi, the business reaction so far to the tax bill is starting to look like the ending of “It’s a Wonderful Life.” As we went to press, at least six large corporations had announced plans to do more for their employees, explicitly attributing their action to the tax bill’s business tax reforms.
Tax cut are difficult to make unless you actually cut the tax rates. It is an inescapable fact that cutting taxes will cut taxes for everyone, including the wealthy. Since they pay most of the taxes, they will see a reduction. Its a ridiculous claim to try to use. This chart of California tax rates gives some hint of that dependence and the inevitability. Its a complicated chart, which analysis goes beyond the scope here. But imagine trying to draw the red line lower, without going below zero.
The reference to heirs and heiresses must be another allusion, this time to the “death tax”
The death tax has always been problematic, because it can force sale of smaller companies. With the subsequent loss of jobs. The final plan reduced the impact on the number of households that would have to pay the death tax by increasing (doubling) the threshold for the progressive tax. But don't worry, Nancy Pelosi’s, and Donald Trump's for that matter, heirs and heiresses will still have to pay this tax, in any scenario.
While the top 1% of Americans receive nearly half the tax cuts.
This is the traditional class envy “go to” line that is a time honored appeal to greed for all. As shown before, its impossible to cut taxes without cutting the tax for “the wealthy” unless you specifically raise their taxes and violate the tax cut promise. As the tax bill progressed in committee and the normal process the “broad picture” statements were developed, the reductions curves were flattened. But since there is such a huge progressive distortion in how much the different income groups pay in taxes, refer to chart above, it will always be the case that those who pay more will get more reduction. So, as far as an age old argument its always guaranteed to be true, and thus immensely useful for demagoguery.
99% of us will be stuck with a federal debt that will explode by trillions of dollars
Ah the lure of exaggeration. The estimates are for about $1 Trillion dollars over 10 years, not "trillions" . Now personally I am logically (although perhaps not strict enforcement due to pragmatism) opposed to adding to the national debt at all, but let's address the hypocrisy here. Rep McCollum was perfectly fine with the Barack Obama debt addition of about $9 trillion, or just over $1 trillion every single year on average!
As extra bonus points, Nancy Pelosi's video claims that the Tax Bill will represent an increase for 86 million households. That 4 Pinocchio whopper is discussed here and here. Surprisingly Rep McCollum did not make that claim in this video we dissected here. The source of that statement appears to be this:
What Democrats tried to hide is that their statement is based on one part of the Tax Policy Center's analysis of the GOP bill, which focused on what would happen in 2027, after the individual tax cuts are set to expire.
Mr. Speaker this Republican bill is not tax reform, it is not a good bill for the middle class, it is a scam plain and simple
So Rep Betty McCollum’s floor speech was great theater, but really,
Who’s Scamming Who?
So to see how it will affect your taxes, here is the final test,
For a detailed study of Minnesota taxation look here: