Rep. Peters Condemns GOP ‘Tax Reform’ Package That Raises Taxes Dramatically for California, Increases Deficit by $1.5 Trillion
Today, U.S. Congressman Scott Peters (CA-52) strongly opposed the tax reform bill passed on a party-line vote on the House floor today. The Tax Cuts and Jobs Act (TCJA) calls for unpaid tax cuts that will increase our national debt by at least $1.5 trillion, shrink the economy, and eliminate American jobs. This plan will raise taxes for Californians dramatically.
The bill eliminates the state and local tax (SALT) deduction, which allows people to deduct state and local property taxes up to $10,000, but not income or sales tax. Californians are among the biggest beneficiaries of this deduction, claiming 17% of all SALT deductions in the country. The bill also would reduce the tax benefits of homeownership by lowering the size of loans that qualify for deductions of mortgage interest to $500,000. In San Diego, 37% of new mortgage loans were more than the proposed cap. The proposal limits the amount of property taxes that households can deduct to $10,000 annually. Additionally, California’s affordable housing sector would take a huge hit, as the bill eliminates a federal tax program that funds a large part of San Diego’s subsidized affordable housing. The California Housing Partnership said this could cost California roughly $2.2 billion in federal investment annually and 20,000 affordable housing units a year.
Rep. Peters released the following statement:
“The American people need real, fiscally responsible tax reform that actually spurs growth,” said Rep. Scott Peters. “This week, the Committee for a Responsible Federal Budget (CRFB) showed that the House tax bill passed today will actually shrink, not grow the economy because of the drag from long-term debt and current economic conditions. Even in circumstances where tax cuts would generate some growth, tax cuts alone do not pay for themselves. According to Republican economist Greg Mankiw, tax cuts only pay for 15% to 32% of their cost. This tax plan is irresponsible, counterproductive, unsustainable, and anti-growth because increasing the national debt hurts the economy. Today, our national debt equals 77% of our gross domestic product and the CRFB estimates the cost of this bill will likely exceed the size of our economy by 2028. The long-term economic consequences of high debt levels include a dip in private investment, a rise in interest rates, and slow wage growth. American families need tax relief, but this approach will not provide it, and it shifts a huge unpaid burden of debt to our children. There is no case for unpaid tax cuts that would balloon the debt, cripple future generations, and put a drag on the American economy.”
Rep. Peters continued, “As a former tax attorney, I understand our tax code is outdated and slows economic growth with rates that are too high and loopholes that are too numerous. Our international tax system is noncompetitive, traps profits overseas, and doesn’t create U.S. tax revenues, investments, or jobs. We should work together to address these issues in a way that will help our economy and our businesses without hammering the middle class and exploding the national debt. History has shown that the only path to successful tax reform is a strong commitment to bipartisanship. Congress must come together to modernize our tax code and make taxes fairer for businesses and American families.”