The GOP Congressional Agenda
The massive Republican tax-cut plan dominated the congressional agenda and debate in the weeks before the August recess. The $792 billion compromise plan was the focus of heavy wrangling between the House and Senate and a standoff with the White House as President Clinton threatened a veto. Relief for farmers is also high on the list, and the House is expected to take up the farm emergency aid package passed by the Senate upon returning from recess.
Two-term Rep. John Thune (R-S.D.) answered your questions live online Tuesday, Aug. 10. The transcript follows:
washingtonpost.com: Good afternoon, Rep. Thune, and welcome. Can you talk to us a little bit about the past week and your impressions of the fight over the tax cut plan?
Rep. John Thune: My conversations with South Dakotans have been very positive toward the tax package when people find out what is in the bill and how it impacts them and their family. The more we have an opportunity to inform people about this bill, the more public support there will be for passage of the bill.
Sioux Falls, S.D.: While the drought facing farmers in the eastern part of the U.S. is severe, farmers and ranchers in S.D. are struggling with low crop and livestock prices and flooding in some areas. Why hasn't the House enacted any emergency relief for farmers and ranchers? When will the House do something about this ag crisis?
Rep. John Thune: The House will act on emergency farm relief when we return in September. We are working very hard to inform the congressional leadership of how serious this issue is for rural areas and I believe we will enact meaningful disaster assistance upon Congress' return to session in September.
Clinton, Ill.: Why didn't the House elect to eliminate the marriage penalty in their tax cut bill, which the Senate did in their 53-47 vote, thus avoiding making influential social and religious conservatives as Dr. Dobson upset?
Rep. John Thune: Because the Senate went farther to eliminate the marriage penalty, a number of us worked hard with the leadership in the House to see that more of the Senate provisions were included in the final package. In the end, the marriage penalty relief was increased from about $40 billion in the House bill to about $150 billion in the final bill. This may have been the most significant piece of this tax relief measure and I was pleased we improved on the House's original position.
Washington, D.C.: Congressman Thune, according to the Citizens for Tax Justice, the 60 percent of taxpayers in the middle-income quintile and below would receive less than 8 percent of the total tax cuts. Their average tax reduction would be only $138 a year, while the richest tenth of all taxpayers would receive 69 percent of the tax reductions and get an average annual tax cut of $7,600. Furthermore, the wealthiest one percent of taxpayers those making more than $301,000 would get an average tax reduction of more than $46,000 a year. How can you vote for this?
Rep. John Thune: Obviously, those who are paying more of the federal tax burden are likely to receive significant tax relief under this bill, but so will all Americans who currently pay income taxes. This bill cures a lot of bad tax policy like reducing the marriage penalty in the tax code, allowing for the deductibility of health insurance and long term care premiums, and reductions in the tax rates. This will help all taxpayers. I think every American ought to sit down and calculate how this will impact them. I believe most taxpayers will be in favor of this bill.
Jewett, N.Y.: I have a two part question:
1. After the $792 billion tax cut is vetoed by the president, how much are the Republicans willing to compromise to achieve tax relief? and
Rep. John Thune: I hope the president will hear from the American people after the August break and encourage him to sign this bill. As more Americans find out how this bill helps them and their families, they will support it. I do believe if the president were the least bit willing to negotiate that we could get a tax bill in the neighborhood of $500 billion. Let's hope he's willing to sit down with us on this issue.
Arlington, Va.: A few questions: Why has it taken so long for the marriage penalty to be done away with (well, I'm assuming it will be) and why did it ever exist in the first place?
Why do the self-employed among us have pay a self-employment tax? Shouldn't the government be encouraging people like myself? I'm not asking for a tax break, just to pay the same as everyone else?
Finally, why are people who work for companies that don't offer a 401K plan and the self-employed discriminated against in terms of retirement savings? Before I left my old company to become a freelance writer, I saved $9,000 a year tax free in my 401K. Now, I'm only able to save $2,000 a year tax free. Will this inequality EVER be rectified?
Rep. John Thune: We have been fighting for several years now do do away with this bad tax policy which penalizes people for being married. We should not have laws that discourage marriage, the marriage penalty does just that. I believe this ought to be the centerpiece of any bill the president signs into law, and I will fight to retain the current provision which starts us down the road toward elimination of this burdensome penalty. It's high time it finally gets done and I don't know why it hasn't happened earlier.
Adams Morgan [Washington, D.C.]: The GOP seems put off by the accusation that its tax cuts favor the wealthy. Wouldn't it be a more progressive tax cut if you were to raise the personal deduction, instead of tinkering with the rates?
Rep. John Thune: I actually introduced legislation that would do just that. However, it was not made a part of this bill. I believe that any efforts to bring about tax reductions should be accomplished in an across-the-board way. Reducing the rates gets that done, but I do agree that raising the personal exemption would have been another method of accomplishing the across the board relief.
Sioux Falls, S.D.: Congressman, the earlier questioner asserted that a person making $301,000 would get a reduction of $46,000 in taxes under this bill. How can this be when people making that much money pay approximately $100,000 in taxes? I read that the tax cut is only a reduction of the top rate from 39% to 38%. This is a reduction of $3,000, not $46,000. What is wrong with my math or is the earlier questioner incorrect?
Rep. John Thune: It would seem to me that your arithmetic was correct. I don't know what assumptions some organizations use to arrive at their conclusions, but if you look at the rate reductions in this bill, those on the high end will receive less of a tax cut percentage-wise than those on the low end. I believe this bill includes many benefits for all payers of income taxes, regardless of income levels.
Mt. Rainier, Md.: Why is the GOP trying to advertise this tax bill as favoring the middle class? The immediate benefits are all scaled to people in the top 20 percentile. Yes, they have paid more taxes in absolute dollars, since they have so much more, but they have not paid more as a percentage of income and certainly are not penalized by a marginally progressive tax structure. The loopholes in this bill are incredible fishing gear to be exempt for the love of heaven!
Rep. John Thune: As I indicated earlier, I believe every tax payer should go through a return and calculate how this bill will impact them personally, but I believe middle income taxpayers, particularly those who are married with families, will find great value in this tax package for them and their families.
Reducing the marriage penalty is huge for families.
Minneapolis, Minn.: What is your response to the charge that the tax bill damages the long-term integrity of the Social Security and Medicare programs?
Rep. John Thune: By locking up the payroll tax in the lock box, we actually set aside more money for Social Security than does the President. We have also factored into this package room to address the structural problems with Medicare, and hopefully some type of prescription drug coverage benefit.
College Park, Md.: The best way to use the budget surplus, if it materializes, is to combine tax cuts with tax reform.
Instead of creating a new set of tax breaks that further complicate and swell the tax code, Congress should eliminate as many tax breaks as possible and then use the surplus to compensate tax payers for the loss of those breaks.
In that way, the country will end up with a simpler, easier to understand, and cheaper to run tax code. Do you agree?
Rep. John Thune: I couldn't agree with you more about the need to reform the tax code. Every time Congress touches the tax code, we make it more complicated. I hope in the next administration we will achieve meaningful tax reform that simplifies and makes the tax code more fair. Reforming the tax code will save the economy billions of dollars each year. We have to do it, but in the meantime, we need to continually look at ways to lower the tax burden on hard working Americans.
washingtonpost.com: That was our last question today for Rep. John Thune. Thanks to Rep. Thune and to all who joined us. Tune back in on Thursday at 10 a.m. EDT, when Rep. Rob Portman (R-Ohio) will join us to continue the discussion on the tax bill and fiscal issues including retirement plans.
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