The U.S. House this week passed sweeping changes to the nation’s tax laws.
Republicans argue that the provisions in the Tax Cuts and Jobs Act that would lower corporate taxes would stop the flow of companies and jobs overseas. They also say a bigger standard deduction as well as a larger deduction for having dependents would lower taxes on middle-class Americans.
Critics say its provisions would benefit the wealthy while hurting the middle class. They also say the deficit would swell, potentially forcing cuts to entitlement programs like Medicaid down the road.
Lowering tax rates would cause Americans to spend more, which will generate more taxes to lower the deficit, Republicans contend. Democrats call that analysis trickle-down economics and a failed way for lowering debt.
U.S. Rep. Cathy McMorris Rodgers, R-Wash., answered questions on the proposal, as well as the Senate’s tax plan, on Friday at a Spokesman-Review editorial board meeting.
Q: What are the tax bill’s implications to Medicare and to Medicaid and the people who depend on it?
A: I think the impact of the tax bill for America and for individuals and families is that it is fundamentally going to mean, yes, more money in your pocket. It’s going to be jobs growth, job opportunities and, ultimately, it’s going to mean increased economic activity and an increased number of people that are in the workforce that are working, that are paying taxes.
Q: But what about Medicare, people who are past their working years?
A: It’s going to mean more money in their pockets.
Q: But less Medicare?
A: No. The commitment to Medicare, the commitment to Medicaid is maintained.
Q: The Senate version of the tax bill would end the mandate in the Affordable Care Act to have health care. If the Senate is able to pass the bill and the two versions are negotiated, how would you feel about ending the mandate as part of the tax bill?
A: Our priority and what I voted for was tax relief. And it did not change any of the taxes related to Medicare or the taxes within the Affordable Care Act.
Q: Are you open to supporting a negotiated final bill that would end the Affordable Care Act’s mandate?
A: There will be a number of issues that will have to be addressed in the negotiation. First of all, we’ve got to see what the Senate can get through the Senate.
Q: The House tax bill would make tuition waivers taxable. Do you support this provision?
A: That’s one of those provisions that I prefer what the Senate is proposing – that that would not be included. That one, along with the tax-financing bonds, which has a huge impact in Eastern Washington. (Tax-financing bonds are used to finance many affordable housing and other construction projects.)
Q: The House bill would eliminate the estate tax after 2024. Do you support this provision?
A: I have supported the elimination of the estate tax. I hear from a lot of people in Eastern Washington, especially farmers, business owners, small-business owners, that that is a very difficult tax. It’s really double taxation after you built that business, built your farm, to then upon the death of somebody have to pay a huge tax upon that asset.
Q: The estate tax affects people who leave assets of more than $5 million. Does it really affect small farmers?
A: As that asset continues to get larger, what it takes to own and operate a farm, I would say yes. … I don’t believe that there’s the votes in the Senate to repeal the estate tax so I don’t believe that depending upon what the Senate does pass that this is going to be a provision that actually gets on the president’s desk.
Q: Spokane City Council President Ben Stuckart has criticized the elimination of tax credits aimed at refurbishing historic properties. Do you support this provision?
A: Within tax reform our overall goal is to bring down rates and simplify the tax code. And there are probably hundreds of different deductions and tax credits. So there’s been a long list of those that have been proposed to be eliminated. But I believe that by collapsing from seven to four brackets, bringing down those overall rates, maintaining, I think, the two most important provisions – the mortgage interest deduction and the charitable tax deduction – that hard-working men and women, those that are every day trying to do things and make ends meet, are going to benefit.
Doubling of the standard deduction, the expanded child tax credit – 46,000 families in Eastern Washington take advantage of that. They’re going to get an expanded child tax credit. I believe that that’s an overall benefit, with the money in an individual’s take-home pay, increased wages as well as job opportunities. I know there’s trade-offs, but I think the tax code has become too full of this deduction, that deduction, loopholes, whatever. We really need to simplify it.
Q: I’m reading that the tax cuts for corporations are permanant, but the tax cuts for individuals expire. Can you justify that?
A: That was what we put in the bill in order to get the score.
Q: What do you mean?
A: To get it out of the House and to show that we were within the commitment that we had made as far as paying for these tax cuts. Within the budgeting process, we have to show within a 10-year window how we’re going to ensure that we can pass these and still meet our commitments on other programs, and that’s where the decision was made to put an end date. This is one of the issues that’s expected to be addressed in conference committee with a goal of making both individual and corporate tax cuts permanent.
Q: Whose tax cuts should be permanent and whose should be temporary?
A: I want ’em all permanent.
Q: Do you agree with what the House passed?
A: I voted for it, but, ultimately, I want them all to be permanent, and I have said that from the very beginning, and I’m going to continue to work to make sure that they are.
Editor’s note: Questions and answers were edited for clarity.