Bringing
Fairness and Rationality to our Tax Code
(from Sean Casten’s campaign)
Our federal tax code is an unfair and overly complicated
mess, and the partisan TrumpRoskam tax bill passed last year has only made
things worse. About 80 percent of its benefits are going to big corporations
and the very wealthy, while it adds $2.3 TRILLION to the federal debt. The only
way to plug a budget hole that large is by cutting or privatizing Social
Security and Medicare benefits — something that House Speaker Paul Ryan and
Peter Roskam have talked about for years. We can’t let that happen. Rather than
cutting the retirement benefits that millions of Americans have worked for and
deserve, we ought to revisit the tax bill that Roskam helped ram through the
Congress without a single Democratic
vote. And rather than rewarding corporations whose PACs contribute millions to
Roskam’s campaign fund, we ought to enact meaningful reforms with these
principles in mind:
Individual
Taxes
- Restore SALT deductions. The
Roskam tax bill capped annual deductions for state and local taxes (SALT),
including property taxes, at $10,000. This will have a disastrous impact on
many local families. In fact, the Tax Policy Center has calculated that our
Sixth District of Illinois has the 12th highest percentage of taxpayers who
claim these local tax deductions of all 435 congressional districts. The fact
that nearly half of his own constituents claim this deduction didn’t prevent
Peter Roskam from making SALT a target. In fact, the Illinois legislature is
looking for ways to “work around” the cap on SALT deductions in Roskam tax bill
to mitigate its negative impact on Illinois taxpayers. All of the suburban
Republicans in the Illinois House recently voted in favor of such an effort,
including House Republican Leader Jim Durkin.
- Restore top tax rate for millionaires.
Trickle-down doesn’t work. It never has and never will. Yet the Roskam tax bill
slashed the top rate for the wealthiest Americans, even though they’re the ones
who benefit most from his cuts in corporate and pass-through tax rates. We
should restore the top rate of 39.6 percent for those with annual incomes of $1
million or more. Not only will this restore more progressivity to our tax code;
it will help reduce the huge deficit that Roskam’s tax bill created.
-
Reverse the cut in pass-through income. The Roskam tax bill included
a huge cut in rates for business-owners who file as limited liability
corporations (LLCs). This is horribly regressive and just shifts the tax burden
from owners to workers, who aren’t eligible for this break. Already, tax
lawyers and accountants are busy trying to figure out how doctors, lawyers and
other highly paid professionals can qualify for this new tax break. It ought to
be repealed.
-
Eliminate the cap on taxes for Social Security. Currently,
only the first $127,200 in annual earnings is subject to the payroll tax for
Social Security. Everything above that amount remains untaxed. It is a very
regressive way to fund one of our most successful progressive programs.
Unsurprisingly, the Roskam tax bill left that loophole in place. Rather than
targeting Social Security and Medicare benefits for cuts to pay for a huge tax
giveaway to the very wealthy, we ought to insist they pay their fair share to
sup port those essential programs.
Corporate
Taxes
- Tie
corporate tax breaks to actual investment. The Trump-Roskam
tax bill made huge cuts in corporate tax rates on the assumption that companies
would use those savings to invest in their businesses and give pay-raises to
their workers. So far, the evidence suggests that’s not the case. Instead,
businesses have used the extra cash to buy back their stock — raising their
share prices — and to raise dividends for their stockholders, including their
executives and investors from overseas. Rather than a general cut in corporate
tax rates, we ought to target those cuts to across-the-board acceleration of
depreciation, including investment tax credits, bonus depreciation and
shortening of overall (tax) depreciation lifetimes. This will give corporations
a tax cut when they actually make a capital investment rather than Roskam’s approach of cutting overall
rates and hoping for the best.
-
Target tax credits to businesses that add jobs in targeted fields. Our
country is losing millions of good-paying jobs in the manufacturing sector, due
to foreign trade and automation. Our tax code ought to help those U.S.
companies and workers to compete. For example, companies could receive a
five-year tax credit for jobs they add in targeted sectors like manufacturing,
with rules allowing the government to recapture that revenue if the companies
don’t create and maintain the jobs they promise.
-
Consider using border taxes to make U.S. manufacturing exports more competitive. The
Roskam tax bill cut corporate tax rates to influence where businesses
incorporate. But that’s less important than where they locate their
manufacturing plants, since those plants create more jobs and a much bigger
boost to the U.S. economy. This can be better addressed through border
adjustment taxes negotiated with our trading partners than in simply slashing
corporate taxes across-the-board.