Davis: Tax Bill Will Win Over Voters Before November Election | WGLT

Davis: Tax Bill Will Win Over Voters Before November Election

Jan 4, 2018

Fresh off their first major legislative victory since President Donald Trump took office, Republican lawmakers went on a bit of a victory tour back home during the holiday break.

U.S. Rep. Rodney Davis, R-Taylorville, was back in the 13th Congressional District talking up the $1.5 trillion tax package, which Trump signed before Christmas.

Davis, whose district includes parts of Bloomington-Normal, joined GLT’s Sound Ideas on Wednesday for a 25-minute interview covering wide-ranging topics, including the tax bill he supported and the Republican agenda in 2018. Davis also assessed Trump’s performance in the first year of his presidency.

Here’s an excerpt from Davis’ interview with GLT’s Ryan Denham. Comments have been lightly edited for clarity and length.

GLT: As you were back in the 13th District for the holidays, what are you hearing from constituents about the tax overhaul?

I got a lot of “thank yous.” A lot of folks said, you know this is gonna be good not just for our family budget, but also good for the economy and our country.

People were still confused. There was a lot of misinformation that somehow this tax bill cut Medicare and Social Security. We had to explain to a couple folks, this tax bill doesn’t even mention Medicare of Social Security. It has nothing to do with those programs. What it does is put more money into the pockets of middle-income and lower-income families right here in Central Illinois.

You’ve emphasized the benefits that you say the middle class will see from this bill. And yet just about every study and analysis says it’s the wealthy and corporations that will see the biggest benefits. Is it one or the other? Can’t more than one thing be true here? 

When you look at the percentage of tax breaks going back, money going into the pockets of families at all income levels, the highest percentage of those dollars are going to go back to middle and low-income families. The wealthy may have a higher amount come back, but that’s not as high of a percentage of that money coming back into their pockets as we focused on the middle income and lower income families. 

The Congressional Budget Office says it could add $1.5 trillion to the national debt over the next decade. What are your concerns there? 

Obviously we’re always concerned about debt and deficits. We need to make sure that do everything we can to restrain spending in Washington and reprioritize how Washington spends money, so we can do it more wisely. But doing that because a Congressional Budget Office that is not infallible—and I can give you plenty of examples, one being the Farm Bill of 2014, where they were $81 billion off their prediction—that’s a big discrepancy. And when the Congressional Budget Office looks at our tax bill, they don’t take into consideration the sustained economic growth that many economists say we can get by reforming our tax code not only on the individual side but also on the corporate side, so we can make sure American companies are more competitive in the marketplace. 

Economics believe we can see sustained growth—you listen to Stephen Moore, a noted economist and a University of Illinois graduate—he says sustained growth of 4 percent is not out of the question. That’s more than double what we saw over the last eight years, when we saw an average of 1.7 percent economic growth. 

Republicans have argued the bill will pay for itself, through economic growth. The state of Kansas tried something similar in 2012. Gov. Sam Brownback pushed a dramatic tax cut plan through the legislature. Theoretically a “shot of adrenaline” to the Kansas economy, but the opposite happened. Last year, the Republican-controlled state Legislature voted to roll back the tax cuts, but Kansas is still dealing with the aftermath of this bold experiment. The experience in Kansas suggests that tax cuts do not pay for themselves over the long run. Why is this time different? 

There’s a big difference between a state tax code and the federal tax code. That’s why we feel we’ve put together a very well-balanced approach that’s going to give us the economic growth to be able to reduce the debt-to-GDP ratio and allow for that $1.5 trillion projection to be overcome by more money coming into the federal coffers because of increased economic activity. 

We’re going to see a shot in the arm due to repatriation—money that’s been held overseas by American companies, trillions of dollars, that will now be incentivized for those companies to bring that back into our economy, and that’s going to help us sustain this economic growth. And we’re encouraging companies to invest here in America. 

You’re seeing them invest in their employees right now. At AT&T, 10,000 workers in Illinois are getting a $1,000 bonus they didn’t expect because AT&T and many other companies want to re-invest in their employees and in growing their companies right here in Illinois. 

So you look at some provisions that Gov. Brownback and the Kansas Republicans put forth a few years ago, this is why we have some different provisions in how to file as a pass-through company, for example. These are our local small businesses that make up Uptown Normal. They’re not paying taxes under the corporate rate. They’re not paying on that corporate side. They’re paying on the individual rates. If they’re an LLC or a subchapter S, or whatever they use to set their company up, they were going to be paying upwards of 40 percent because they was the highest level the individual rate we had. That was not fair. When you had corporations paying at 35 percent, but small businesses paying at 40 percent, to me that’s wrong.

We capped that at 25 percent, but you also have to prove you’re a business. Because what happened in Kansas is, you saw people like Bill Self, the basketball coach at Kansas who makes a lot of money, he turned himself into an LCC so he’d owe less in taxes. We tried to stop that from happening. 

Republicans decided to sunset nearly all the individual tax cuts to make the corporate tax cuts permanent. You’ve said Senate Democrats are to blame for the expiration dates on these individual tax cuts, in 2025. But Republicans control the agenda in Washington. Couldn’t you have just reworked the package to make the tax cuts permanent? Why put that on the Democrats? 

I wish we could have. That’s what we did in the House, we made them permanent in the House. But you have to get 60 votes in the Senate to work under what they call “regular order,” rather than the reconciliation process, that the lack of any Democrat support forced us to do. Eight Democrats could’ve joined with every Republican in the Senate to make these individual rates permanent, but they chose not to. 

… And yes, Republicans control the House, and we do everything on a majority basis. Great. If the Senate were to do things on a majority basis, then I’d blame the Republicans for not putting forth a permanent fix to the individual rates. But it takes both parties to tango in the Senate, but unfortunately Democrats didn’t even want to get on the dance floor. 

And we will have a bill when we get back to Washington, I will introduce it in the House, we will make these individual rates permanent. And I hope that our senators, Sens. Dick Durbin and Tammy Duckworth, will hopefully join Sen. Bernie Sanders, who has been supportive of making the individual rates permanent. When I get my bill over to the Senate, I hope those three lead the charge. We’ll see if the future holds whether or not the Democrats will want to do that. 

You’re up for re-election in November, as are all members of the House. How should people judge whether it’s working? 

I can’t wait to be held accountable for this tax cut for middle and lower income families in my district. Come February, when the IRS sends instructions to every payroll company and every employer to withhold less money for every employee they have, every person who gets a paycheck in America will be able to see an increase in their paycheck. They’re going to see that in February. That is something I think will have a tremendous impact on the families I serve. The average family, we estimate at least $1,200 that they’ll put back into their pockets. That’s a big deal for many families I serve. 

Let’s pivot to the rest of the Republican agenda in Congress in 2018. You’re headed back to Washington soon. You need to pass a budget. The stopgap funding runs out here in a few weeks. How do you want to see that play out, so that we avoid a shutdown, automatic cuts (sequestration)? 

This is what’s frustrating as a member of the House. We passed our appropriations bills, every single one of them. First time that’s been done since the mid-2000s. 

I would certainly hope our senators here in Illinois and senators on both sides of the aisle can take those appropriation bills up. And if they do, we don’t have to worry about any more deadlines for funding bills. I’m frankly sick and tired of spending deadlines. 

… I’m just as frustrated with the Republicans in the Senate as I am with the Democrats, when it comes to not taking up bills like this. And if Mitch McConnell has to, he ought to darn well do it on a 51-vote margin rather than waiting for this 60-vote threshold that on issues even as important as tax cuts, the Democrats in the Senate have clearly shown they want to play politics more than they want to put good policies in place. That’s how we avoid any future spending issues of this next fiscal year. It’s crucial if we want to get out of this shutdown talk every year. 

2018 is an election year: What else do you want to get done? 

First off, I want to make these tax cuts permanent for the individual side.

I also want to see us get a bipartisan infrastructure bill in place. I’ve been campaigning on investing more in infrastructure even when it wasn’t cool to do, when we didn’t have a Republican president who’s been pushing this issue too. Infrastructure is crucial. It should be the most bipartisan issue we face when it comes to major administration priorities this upcoming year.

You can also listen to GLT's full interview:

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