Floor Remarks by Senator Chuck Grassley of Iowa
On Senate Finance Committee Tax Priorities for the 116th Congress
Wednesday, December 12, 2018
Mr. President,
As the 115th Congress winds down, I’d like to reflect on the enactment of historic tax legislation and what’s ahead in the New Year.
In December of 2017, Congress passed, and the President signed into law, the most comprehensive reforms to the nation’s tax laws in more than three decades.
For years, both sides of the aisle talked about the need for tax reform that would provide tax simplification, tax fairness and increase America’s economic competiveness.
With the enactment of the Tax Cuts and Jobs Act, we finally made that a reality.
Significant simplification was achieved for individuals by nearly doubling the standard deduction.
This means people will be able to pay less and avoid the tedious task of itemizing their taxes.
Overall, about 90 percent of taxpayers will file their taxes by simply taking the standard deduction.
Moreover, thanks to a significantly higher alternative minimum tax (AMT) exemption,
millions of middle-class taxpayers will no longer be faced with figuring out their tax liability twice – once to calculate their regular tax liability and again to calculate it under the AMT.
It also provided tax fairness by reducing taxes across every income group.
In fact, middle-income families experience the largest tax cuts by percentage.
Additionally, the reforms made the tax code more progressive, with taxpayers earning more than $1 million shouldering a larger share of the tax burden than they did under previous law.
In addition to nearly doubling the standard deduction, tax relief was targeted at middle-class families by doubling the child tax credit from $1,000 to $2,000 per child.
It also reduces the previous 15 percent tax bracket to 12 percent and the 25 percent tax bracket to 22 percent.
As a result, a typical family of four earning $59,000 a year will see a tax cut of more than $1,600 in 2018.
A key motivation for tax reform was to boost economic growth and increase America’s global competiveness.
America’s tax code should favor American jobs, workers and businesses.
That means leveling the playing field so we’re not put at a disadvantage with other countries.
The Tax Cuts and Jobs Act brought the corporate and international tax systems into the 21st century.
And you can tell it’s already working.
Now other countries are looking at lowering their tax rates to compete with us.
This included lowering the corporate tax rate from 35 percent to 21 percent.
In one fell swoop, we went from a tax rate that was the highest in the developed world to below the world average of 23 percent.
That means global corporations will be more inclined to create jobs here, not other countries.
We also modernized America’s international tax system.
We were one of the last major countries to tax businesses on a worldwide basis.
By moving toward a more territorial system, we freed-up more than $2 trillion for investment here at home that American companies were holding overseas.
These changes to the international tax rules don’t just help U.S. companies that operate globally to compete in the worldwide marketplace, but also help them grow their businesses here at home with more jobs, better wages, and increased investment.
Just as important, we worked to ensure small businesses and pass-through entities received equitable treatment.
The new 20 percent qualified business deduction benefits pass-through businesses of all sizes, down to the smallest family farmer or corner bakery.
Enhanced expensing rules were included to help all businesses, spurring investment in new equipment and machinery.
Our efforts have contributed to a strong and growing economy.
The unemployment rate is at a half a century low. Wages are rising at the fastest rate in nearly a decade.
And workers, employers and small business owners are all more optimistic than ever.
America’s working again.
As we look forward to a new year in 2019, with a new Congress and a new majority in the House, it’s my hope that we can work in a bipartisan way to build upon this economic success.
I’ll be doing my part as the incoming chairman of the Senate Finance Committee.
And I see plenty of opportunity.
Unfortunately, I hear increasing calls from the incoming House majority pledging to erase the progress made with the tax cuts and reforms I have just outlined.
The proof of tax reform’s success is in today’s economy.
It’s in the best shape it’s been in a long time.
Why would we want to go backward – toward stagnation, pessimism and joblessness?
Of course, no major piece of legislation is perfect.
To the extent there are legitimate efforts to perfect the tax law, I’m all ears.
But to the extent these efforts would undermine the strength of the American economy for the sake of ideology – by hiking taxes and undoing important reforms to modernize the tax system and increase America’s global competitiveness – they’ll be met with stiff resistance from this senator.
Instead of playing politics, we should be focused on examining how the law is affecting individuals, families, and businesses in our respective states or districts.
And where necessary, we should work together to take action and ensure the law is fulfilling its full potential.
We should also work toward providing tax certainty for individuals and small businesses.
This would include making permanent:
I hope my colleagues in the House of Representatives join me in these efforts.
I’ve yet to hear a good reason why we shouldn’t make these and other tax relief measures permanent.
It’s the right thing to do for the economy, the right thing for job creation, and the right thing for wage growth.
I would also like to see us continue working on other important areas that we started in this Congress.
This includes improving retirement savings, bringing the IRS into the 21st century, protecting taxpayer rights, enhancing the competitiveness of U.S. businesses and encouraging research, development and innovation.
I also hope that there would be plenty of opportunity to work on a bipartisan basis on tax issues involving everything from education to renewable and alternative energy to consumer-directed health care options.
I’ve heard a lot about the desire of the new House majority to engage in oversight of the current Administration.
I will put my record of oversight up against anyone’s record.
However, I want my colleagues to know that I do not intend to engage in political fishing expeditions.
I think a person like me that’s had an equal opportunity approach to oversight, treating Republican administrations the same as Democratic administrations, speaks for itself.
So, I will not go along with efforts to weaponize the authority of tax-writing committees to access tax returns for political purposes.
Such an action would be unprecedented.
But, if Democrats are interested in doing non-partisan, good government oversight, count me in.
My hope is that in the new Congress we will be able to work to address important tax matters in a bipartisan fashion.
I am proud of my strong record of bipartisanship on the Finance and Judiciary Committees.
I intend to continue my good working relationships with my colleagues across the aisle and hopefully forge a few new ones, not only in the Senate, but also with the new majority in the House.
I yield the floor.
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