Pascrell Op-Ed for Law360: Republicans' Tax Law: Most Reckless I've Seen in 20 Years
Washington, DC, May 29, 2018
The Republican tax bill passed into law last year is one of the most reckless pieces of legislation I’ve seen come across my desk in over 20 years in office. It further enriched the wealthy and large corporations even as income inequality continues to threaten the social fabric. It provided minimal tax relief for the middle class. It will explode our nation’s debt for years to come, displacing needed investments in things like infrastructure and education. And on top of all that, the tax law was written spitefully, targeting specific groups and regions, including citizens in my own state.
As a representative for New Jersey, my primary concern with the tax law remains its capping of the federal deduction for state and local taxes, or SALT. Already facing the highest property taxes in the country, New Jerseyans have long relied on SALT deductions for critical relief. SALT has helped many of my constituents pay bills, make college payments, stay in their homes, or pay into retirement funds.
But the Republican tax law blocked SALT beyond $10,000, despite the average deduction in my district being $18,668 per household. Independent experts estimate this will spell an average tax increase to New Jersey residents to the tune of $3,500. Middle class citizens in several other states will also face long-term tax hikes thanks to this change.
A recent study from the Joint Committee on Taxation confirms the impacts of the new SALT provisions. Check out their findings and scroll down to Table 7: despite Republicans’ best efforts to obscure their law’s effects in fog and non-sequiturs, the numbers don’t lie: middle-class taxes will rise because of the law.
The burden on my state is particularly galling. For years, New Jersey has been one of America’s foremost donor states, getting back only a fraction of every dollar it sends to the federal Treasury, while states like Alaska, Mississippi, North Dakota, and others come out far better. And despite being a donor state, the Republican tax plan slants the relationship even more firmly against us. Only now, the money vacuumed up from my constituents is being siphoned directly to those at the top.
In the run-up to passage, Republicans claimed that tax cuts would prime the employment pump and “unleash” an explosion in wages and new jobs. Their guarantees resembled similar utopian promises GOP lawmakers have made in Kansas, Louisiana, and Oklahoma in recent years that framed tax cuts as one of those miracle elixirs advertised late at night promising to solve all your ills.
Besides hammering the middle class in my state, the tax legislation has clearly done little to coax our largest corporations to raise wages or create jobs. Turns out, when you shower more wealth on the already-wealthy, it doesn’t “trickle-down” but rather further lines their pockets. According to findings by Americans for Tax Fairness, less than one in ten Fortune 500 companies have pledged to share the billions they are reaping in tax cuts with their workers. Few others have made announcements of massive crops of fresh jobs. At the same time, big companies that reaped billions have responded by laying off tens of thousands of employees.
If they’re not using their tax breaks for job creation, where are so many companies putting their new-gotten gains? Where else, but into the pockets of their shareholders and executives through bonuses and buybacks. Just this week we found out that motorcycle manufacturer Harley Davidson’s response to the tax cut was to lay off employees while announcing a dividend increase and a stock buyback valued at $700 million. In fact, stock buybacks are sky-high, at over $400 billion so far this year, as investors are raking it in since the tax bill was signed.
When you consider the yield earned by a single individual like Sheldon Adelson, whose company saw a windfall of $670 million in income from the tax bill in just the first quarter of 2018, you see why he then donated $30 million to a Republican Super PAC. Quite a bargain.
The passage of the tax law also reveals the audacious hypocrisy of Republicans’ core priorities.
After crowing loudly about President Obama’s purported disinterest in the national debt and debt being the single greatest threat to the solvency of America, the passage of the tax law demonstrated once and for all that these hosannas were pure bunk. When all is said and done, the tax law will add over $2 trillion dollars to the national debt – that’s trillion with a T.
The toxic effect of outsized debt on our future stability remains a legitimate concern. No one would question that. But Republicans’ apocalyptic visions ring hollow today after their leaders jammed these debt-busting tax cuts into law. Had debt relief truly formed a bedrock of GOP orthodoxy, the tax cuts would have been one of the last items on their agenda.
Indeed, now that the debt has ballooned, Republicans are saying we need to rein in spending. To borrow an expression from Judge Judy, Republicans went to the restaurant, they ate the steak, and now they want someone else to pick up their tab.
In this case, that someone is the already-squeezed American middle class, again, now through fiendish cuts to programs critical to the lives of our most vulnerable: children, the elderly, students, veterans, and active servicemembers. Republicans including outgoing House Speaker Paul Ryan and others have said their long-term downsizing targets remain Social Security, Medicare, and Medicaid. The future of those programs is under threat because Republicans ran up the nation’s credit card.
And their demands have gotten bolder. In early May, Office of Management and Budget Director Mick Mulvaney proposed slashing $15 billion dollars from children’s health insurance, public housing, job training, environmental protection, manufacturing, and highway funding. The total cuts make up less than one half of one percent of total 2018 government spending, demonstrating that Republicans are less interested in making real cuts, and more interesting in wrecking programs they don’t like.
From my perspective, perhaps the most audacious cut of all was the White House’s demand to take $107 million in Hurricane Sandy relief funds from my state. While the hurricane hit in 2012, the damage was catastrophic, and families and communities in New Jersey are still trying to dig themselves out. My colleagues and I take this as insult to second injury that chutzpah doesn’t even begin to cover.
And Republicans weren’t even finished. Just this week, the Treasury Department announced it would seek to block attempts by states to provide avenues to help protect our taxpayers from this targeting. New Jersey and some of our neighbors have recently passed legislative fixes allowing tax donations to local governments based on long established precedent. But now IRS plans to reverse its position? Enough is enough. If the Trump administration forces this issue, we will not back down and we will see them in court.
When the House of Representatives was voting on the Republican tax bill, a GOP member approached my colleague and told him with a smile on his face that the legislation was Republicans’ opportunity to “stick it to the Northeast.” This happened right on the floor of the House. It laid bare for me what the bill was all about: inflicting pain for the benefit of the most fortunate, and as it turns out, the amusement of others.
Passing a trillion-dollar tax cut for the wealthy signed on the backs of the middle class and the next generation wasn’t enough for its authors. Republicans also wanted to wallop the Northeast and my constituents. But this was the opening blow in a long-term war. As long as I’m in Congress, I will take the fight to anyone who targets my state so callously.