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Who really benefits from GOP’s tax overhaul is battle point as House passes its bill

It's a big step for Republicans' tax overhaul plans: the House voted 227 to 205 to pass its version of the bill. While a new analysis suggests that the plans would increase taxes for middle and lower-income Americans, Republicans deny that idea. Lisa Desjardins reports and Judy Woodruff gets perspectives from Rep. Kevin Brady, R-Texas, and Rep. Lloyd Doggett, D-Texas.

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  • Judy Woodruff:

    Back now to our other lead story of the day, the Republican-led U.S. House of Representatives passing major legislation on taxes.

    Our Lisa Desjardins reports.

  • Lisa Desjardins:

    A big step one for Republicans’ tax overhaul plans.

  • Rep. Paul Ryan:

    This country has not rewritten its tax code since 1986. The powers of the status quo in this town are so strong, yet 227 men and women of this Congress broke through that today. That is powerful.

  • Lisa Desjardins:

    The House voted 227 to 205 to pass its version of the bill, just minutes after President Trump stopped by for a closed-door pep rally, telling Republicans to press forward.

  • President Donald Trump:

    Thank you very much, everybody. Thank you. The tax is going really well. Thank you very much.

  • Lisa Desjardins:

     Meanwhile, a Senate committee put final touches on its version of tax reform today.

  • Sen. Orrin Hatch:

    Our bill gives tax relief to individuals and families across the board.

  • Lisa Desjardins:

     The two chambers differ on some things, but, in general, Republicans stress that both plans lower most people’s tax rates and increase everyone’s basic or standard deduction. For corporations, Republicans would cut the rate to 20 percent from 35. And, overall, Republicans say all those changes will grow the economy.

  • Rep. Jeb Hensarling:

    We are on the precipice of passing a fair, flatter, simpler, more competitive tax code, one bill for 3 percent-plus economic growth.

  • Lisa Desjardins:

    But, to Republicans’ points, opponents say some of those individuals tax cuts are temporary. And many individuals will lose some big deductions, including for state and local taxes or medical bills.

    There is also concern that smaller businesses get a much smaller break than big corporations, and opponents say, rather than grow the economy, these cuts will just grow the deficit.

  • Rep. Earl Blumenauer:

    Donald Trump is the king of debt, and this monstrosity of a tax bill is fueled by increasing the national debt $2.3 trillion, cutting taxes for the wealthy financed by increased debt burden on our children and grandchildren.

  • Lisa Desjardins:

    Over all of this is the question of who in America exactly would benefit.

    A new analysis by Congress’ own Joint Committee on Taxation has found that both bills would cut taxes for most Americans, but the Senate bill would actually increase taxes for some 13 million people in the middle class, and the House bill would mean an increase for some lower-income families.

  • Rep. Nancy Pelosi:

    And that is what this bill does. It preys on the middle class and those who aspire to it. It pillages and loots the middle class. It’s a shameful piece of legislation, and the Republicans should know better.

  • Lisa Desjardins:

    But Republicans deny that.

    And, today, they were exuberant, insisting their bills will indeed cut taxes for most Americans.

  • Ways And Means Chairman Kevin Brady:

  • Rep. Kevin Brady:

    For a typical middle-income family in my district, means they will save over $2,000.

  • Lisa Desjardins:

    So what’s step two? Getting something through the Senate, and then agreeing on a final bill, all within a month.

  • Rep. Kevin Brady:

    We are committed to getting it done and delivering for the American people. Thank you.

    (APPLAUSE)

  • Lisa Desjardins:

    At the U.S. Capitol, for the PBS NewsHour, I’m Lisa Desjardins.

  • Judy Woodruff:

    And Congressman Kevin Brady joins me now.

    Chairman Brady, first of all, I guess congratulations are in order for getting it through the House.

    But my first question is, is this more about helping businesses or about helping ordinary Americans?

  • Rep. Kevin Brady:

    So, helping both.

    And, first, this is a good day for the American people. There have been a lot of skeptics for 30 years who believe Congress could never act and actually really simplify this code dramatically and get the U.S. back in the game around the world.

    Well, we took a huge step today. But it’s not the last step. In fact, we are — because, Judy, if you think about it, we’ve really stripped the tax code down to its fundamentals, and we’re rebuilding it based on what our business and families need these days, not 30 years ago.

    And so what I’m kind of eager, starting tomorrow, we’re going to pivot toward making improvements, beginning to work with the Senate as they work through their process.

  • Judy Woodruff:

    So, you know this. The bipartisan Joint Committee on Taxation has taken a look at this, and what they have concluded at this point is that while the tax cuts for corporations are permanent, the tax cuts for working and middle-income Americans between — earning between $10,000 and $70,000 a year are going to end after a few years.

  • Rep. Kevin Brady:

    Well, that’s not quite accurate, because the income brackets stay in place. The standard deduction stays in place.

    The home mortgage, charitable, all of that stays in place. In fact, the new family tax credit, which is bigger and doubles the amount of Americans who can use it, essentially stays in place. There’s one small part of it that expires in five years.

    But I will tell you, I expect, because that’s going to be hugely popular for families, I expect that to be continued, frankly, eternally.

  • Judy Woodruff:

    But you still, I think, Chairman Brady, have people looking at this and saying, yes, you’re giving taxpayers a lower rate, but you are taking away the state and local tax deductions, the medical expense deductions. You’re capping property tax deductions.

    How can people be sure they’re going to come out better here?

  • Rep. Kevin Brady:

    So, one thing a lot of people, because of all this sort of circus a bit on the media, they don’t really yet, I think, get a chance to take a hard look at this.

    And when they do, they realize, because the income rates are lower, the AMT is gone, the new family credit and standard deduction, they end up in very good places as families.

    Now, can we do better? I think the answer is yes. In fact, we continue to work with lawmakers from the high-tax states. And, again, those local governments and governors, they just brutally tax them. And, frankly, it’s just — it’s just hard to watch.

    But we think we can provide tax relief for Americans, regardless of where they live, including in these high-tax states. So we got work to do. And I’m kind of excited. You know, we pivot right to it.

  • Judy Woodruff:

    So, it sounds like you’re open to changes on that state and local tax deduction.

  • Rep. Kevin Brady:

    Well, not necessarily on state and local, but on the design of all this, because, look, if you’re either only looking at one provision, or you’re talking about just one provision, you’re missing 95 percent of this tax reform, including the simplicity, the small business on Main Street, and getting our jobs back.

    And I will tell you, for most Americans, they’d like to see our U.S. companies and jobs come back from overseas.

  • Judy Woodruff:

    A couple of other things I want to ask you about.

    The Committee for a Responsible Federal Budget, bipartisan, they have taken a look at the House bill. They are saying — and I’m quoting — “It’s based on predictions of magical economic growth that defy history and all credible analyses.”

  • Rep. Kevin Brady:

    Well, I disagree with that, for this reason. There will be strong growth.

    We know this from the Reagan and the JFK cuts as well. Growth alone won’t do it. I think you have heard me say growth will move us back in a big way towards a balanced budget, but, to finish it, to cover all of this, you have got to eliminate a lot of special interest loopholes and carve-outs and things that litter this tax code.

    That’s why we have really gone back to the fundamentals. What is a simple, fair tax code? We continue to build it. And so I think, at the end of the day, look, you can take — you can judge the House bill. But, at the end of the day, you will want to judge the final tax reform bill, because you’re going to see, I think, continued improvements going forward.

  • Judy Woodruff:

    You and your colleagues in the House were looking at doing away with the individual mandate to buy health insurance, part of Obamacare.

    In the end, you didn’t incorporate that into the bill, but could that come back?

  • Rep. Kevin Brady:

    Well, let’s watch the Senate. The Senate Finance Committee is putting it into their bill. They still have work to do through the Senate floor as well.

    So, we will wait to see if they deliver this to the conference committee. As you know, the House has repeatedly voted to eliminate the individual mandate. And, really, the tax on it — and it’s a tax — hits those modest and middle-income families who can’t afford Obamacare health care.

    And, you know, just as tax reform is about the freedom to buy — use your money the way you see fit, not Washington, the individual mandate is a little bit about or a lot about your choice to buy the Affordable Care Act products or the freedom not to.

    And so we will see how this works for it in the Senate.

  • Judy Woodruff:

    Quickly, and finally, $25 billion in automatic Medicare cuts, it is reported this will trigger. How do you defend that?

  • Rep. Kevin Brady:

    Yes, well, these are the funny budget rules in Congress.

    Here’s what I know, because our committee has oversight and jurisdiction over both Medicare and Social Security. Both of those important programs are funded by paychecks. And the more people you have working, the higher paychecks they get — and they haven’t had one in, frankly, months — years and years — you know, when you do that and get the economy going, it helps both of those programs in a big way.

  • Judy Woodruff:

    Well, we’re going to be watching all of it, and I know you are, too.

    Chairman Kevin Brady of the House Ways and Means Committee, thank you.

  • Rep. Kevin Brady:

    Thanks, Judy.

  • Judy Woodruff:

    Now for a Democratic take on the tax overhaul plan, I’m joined by Texas Congressman Lloyd Doggett. He also serves on the Ways and Means Committee.

    Congressman Doggett, thank you so much for talking with us.

    So, the chairman of that committee, Kevin Brady, just spoke with us, and he says this is going to be historic tax reform, it’s going to unleash businesses, growth, and lead to good things for Americans in the middle-income group.

  • Rep. Lloyd Doggett:

    Wish that it were so.

    You know, sometimes, I believe my Republican colleagues live in a parallel universe. The data out there from one economist after another, Goldman Sachs being one example, the Wharton School of Finance in Pennsylvania being another, say this won’t grow the economy, won’t grow jobs.

    We also have the experience of prior tax cuts that didn’t grow jobs. I believe that most of those that look at this realize there’s such a mountain of debt that is being created by this bill that it will slow economic growth, and we will see few new jobs.

    Of course, I’m concerned about those jobs that will be outsourced with the giant, gaping loophole that’s there to encourage corporations to invest abroad, instead of investing here in America.

  • Judy Woodruff:

    But what about the fact that the tax system would be simpler, fewer income tax brackets, and lower income tax rates? I mean, that — Republicans are saying that is going to be a boon to most Americans.

  • Rep. Lloyd Doggett:

    Well, it’s certainly a boon to those at the top. They’re going to see tremendous benefits.

    I thought Donald Trump had reason to come over here today and say, thank you, because estimates are that he and his family would get more than $1 billion out of this. We don’t know exactly how much, because the Republicans are still colluding to hide his tax returns.

    But, as to simplification, I mean, I think the bill is simply wrong. But I have a simplification program on higher education, legislation that I have introduced.

    The difference between my approach and Mr. Brady’s is that I would take the $17 billion savings and reinvest it in people, in higher education. He would take it and use it to pay for corporate tax cuts.

  • Judy Woodruff:

    Well, as you know, again, Congressman Doggett, what he and other Republicans are saying is that businesses right now are stalled, in a sense. They’re not creating jobs. They’re not raising salaries, as they could be, as we as the country needs them to be, and that this is legislation that’s going to be an incentive for business to do that.

  • Rep. Lloyd Doggett:

    Well, businesses are flush with cash these days.

    And I took note of the meeting that Gary Cohn had, Mr. Trump’s designated person on taxes, with corporate CEOs, and he couldn’t get them to raise their hands they would invest the money. What they said is that they will use it for stock buybacks, for exclusive compensation.

    We will see little growth from it. Our American corporations would benefit from a simplification of the corporate tax code, and lowering the statutory rate, but not with borrowed money from China or the Saudis. We ought to be closing loopholes. And very few are closed here.

    In fact, I think they made the system more complex on the multinational corporations and their investments abroad. And with that new loophole, I think they will be encouraged to build abroad, instead of to bring jobs here at home.

    Even Speaker Ryan’s own Republican Wisconsin Senator Ron Johnson — and I think you all reported on this — said that this will encourage manufacturing to stay abroad. We don’t need any more of that.

  • Judy Woodruff:

    Congressman, how can you and other Democrats be confident that you know better what business will do than Republicans do?

  • Rep. Lloyd Doggett:

    Well, you know, we would all have more insight if they had given a little more attention and public hearings on this matter than it takes time to microwave popcorn.

    (LAUGHTER)

  • Rep. Lloyd Doggett:

    We had we had no hearings. We had no Trump administration official who would come and answer questions about this.

    But I think we do have insight from the contacts that we have had with representatives of the business community and with economists from across the country that this is a job-killing bill, not a job-growing bill. It’s not a choice between keeping things the way they are today.

    There is reform that would be desirable. But this has just really degenerated into little more than a set of rewards for tax-dodgers. We don’t need a system that rewards those who won’t contribute their fair share to our national security and other vital public needs. But that’s what we’re getting out of this bill.

  • Judy Woodruff:

    Finally, Congressman, another point that Chairman Brady made was that whatever fixes that can be made, there’s an opportunity to do that in the Senate.

    In fact, he sounded as if he and others in the leadership are open to working with the Senate to make this bill more palatable.

  • Rep. Lloyd Doggett:

    Well, they have operated pretty much with a surprise jack-in-the-box kind of approach, popping out new versions of this at the last minute here.

    But what troubles me the most about the Senate — and you focused on this — is the way they undermine our health care. Some of my colleagues have an almost fanatical determination to eliminate the Affordable Care Act.

    You knock out the individual responsibilities of that act, and people with preexisting conditions, older people who are too young to qualify for Medicare, they will not be able to afford their insurance premiums, and we will see millions again without coverage.

    So that’s one of the worst provisions of the Senate bill. But there are also some other problems with it.

  • Judy Woodruff:

    We are going to have to leave it there.

  • Rep. Lloyd Doggett:

    Thank you, Judy.

  • Judy Woodruff:

    Congress Lloyd Doggett of Texas, thank — two Texans, as you pointed out.

    Thank you very much.

  • Rep. Lloyd Doggett:

    Great.

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