Oregonians will see real tax breaks and a faster growing economy under a new tax bill approved by Congress Dec. 20, according to Rep. Greg Walden.
Walden, who represents Oregon’s Second Congressional District, praised the bill in a conference call to Oregon media on Dec. 19, saying he received input on the initial proposal from nearly 2,000 Oregonians by email and phone calls.
“I appreciate the input. I think it made the bill better,” he said.
Walden said he was able to talk to House Ways and Means Committee Chairman Kevin Brady, R-Texas, and House Speaker Paul Ryan, R-Wisconsin, “about the issues Oregonians cared about” and make improvements to the original House bill.
“There were also issues in the Senate bill they were concerned about, and we pushed back on some of those,” Walden said. “In the end, working inside with the leaders who were writing the bill, I think we came to a much better place.”
Congress passed the Tax Cuts and Jobs Act on Dec. 20. The final House vote was 224-201, with a dozen Republicans joining the unanimous Democrats in opposition. In the Senate, the vote was 51-48 along strict party lines.
The first overhaul of the tax code in three decades, the tax bill reached bicameral compromise one month after it was introduced in November. In 1986, Congress spent a year on a tax bill that saw bipartisan support before reaching President Ronald Reagan’s desk.
Walden noted that taxpayers in his district should see tax benefits right away.
“The hard-working families in Eastern, Southern and Central Oregon, the people I represent, that earn about $50,000 a year, the median household income in the district, will receive a tax break of about $1,300,” Walden said. “Not just in 2019 but in the next several years. That adds up to $10,400 in real federal tax breaks over the next eight years for that family in Eastern Oregon.”
Republicans have promoted the bill as tax reform — particularly as a way to simplify tax filing.
“By nearly doubling the standard deduction, even fewer Oregonians will have to hire an accountant to search the 73,954 pages of the tax code to scour out to see if they qualify for any of the loopholes and deductions that are there,” Walden said.
Sixty percent of people in the district never file an itemized return, he said. By doubling the standard deduction, doubling the child tax credit and changing the tax rates in each income bracket, nine out of 10 U.S. tax filers in the future will never have to go through itemizing their taxes anymore, he said.
Many of the House Republicans who voted against the bill came from New York, New Jersey and California — states with high state and local taxes.
“One thing I heard loud and clear from Oregonians was that because of our incredibly high state income tax that they should be able to deduct that as well as property taxes,” Walden said.
The new bill allows individuals and families to deduct up to $10,000 in state and local income, property and sales taxes. The deduction for mortgage interest will continue for existing mortgages, and the deduction will be available for new mortgages on first or second homes up to $750,000. The charitable deduction was also expanded.
Walden said he also heard from Oregonians about how important the medical tax deduction was for them. The deduction was expanded for medical expenses exceeding 7.5 percent in 2017 and 2018 and 10 percent in 2019.
At the same time, the individual mandate penalty tax from the Affordable Care Act was eliminated. The nonpartisan Congressional Budget Office estimated that repealing the individual mandate would result in 4 million people losing health care coverage in 2019 and 13 million losing coverage in 2027.
The bill was also about “getting the economy to really take off as it has in the past,” Walden said. He noted few congressmen had ever been small business owners, while he and his wife, Mylene, owned radio stations in the Hood River and The Dalles for more than 20 years.
“I know what it’s like to meet a payroll. I know what it’s like to grow a business,” he said.
In addition to lowering the corporate tax rate from 35 percent to 21 percent, the bill offers significant tax relief to small businesses and doubles the estate tax exemption to $11.2 million, which should benefit many family-owned ranches, farms and businesses, Walden said.
A Senate provision that will lower excise taxes for craft beer and wineries, popular businesses in Oregon, was approved by the House.
The backbone of the Oregon economy is small businesses, farmers and ranchers — “not giant companies,” Walden said. These people will be able to afford a new pickup truck or combine or to “do the things they wouldn’t ordinarily have done, and that feeds back into the economy,” he said.
“That’s not just me saying that,” Walden said. “There are a hundred economists from Harvard, Yale and elsewhere that really believe this will stimulate growth.”
He said he talked to CEOs of large companies about the tax bill, including AT&T, which told him because of the tax bill they would invest $1 billion of their capital. That could be a large build-out in broadband if they chose to do so, he noted.
Affordable housing efforts will be boosted by retaining the low-income housing tax credit and the tax-exempt status of private-activity bonds, Walden said. The initial House version would have ended use of the bonds, which typically are used to finance public infrastructure projects, but they were retained in the conference agreement.
One concern is that the tax cuts could increase the federal deficit by an estimated $1.4 trillion over 10 years. Walden said he was confident the tax bill will stimulate the economy by at least 0.4 percent, and that growth will increase tax revenues and address the deficit.
The Joint Committee on Taxation forecast 0.8 percent growth in the economy under the Senate bill, and the Tax Policy Center estimated 0.6 percent growth under the House bill.
But the Committee for a Responsible Federal Budget said the more modest claim of 0.4 percent growth per year would cover only two-thirds of the deficit generated by the tax cuts. The group also said 0.4 percent growth was “highly unlikely to materialize as a result of tax reform alone.”
With the individual tax rate reductions set to expire in eight years, while the corporate rate cut is permanent, critics have also argued the bill primarily benefits corporations and the wealthy.
U.S. Sen. Jeff Merkley, D-Oregon, described the bill as a “bank heist.”
“While the rich gloat over their gold, middle-class Americans get coal in their stockings,” he said in a statement. “The tax scam so favors the wealthy that 83 percent of the benefits go to the richest 1 percent.”