Schumer Floor Remarks on Sen. Flake’s Retirement, the Budget and the GOP Tax Plan

Washington, D.C. – U.S. Senator Chuck Schumer today delivered remarks on the Senate floor regarding Senator Jeff Flake’s retirement and urging against the passage of the budget. Below are his remarks:

Yesterday we all learned that our colleague Senator Flake would be retiring at the end of his term. After Sen. Corker’s announcement a few weeks ago, it was another blow to this body.

Senators Flake and Corker are both men of principle, decency, and conscience.

In his address here on the floor shortly after this announcement, Senator Flake alluded to the great figures of history who toiled at these desks to remind us that our time here is only temporary.

He is certainly right. It should comfort him, however, that history will judge Senator Flake and Senator Corker as two men of the greatest conscience to have graced this chamber on either side of the aisle in a long time.

The Senate will be much poorer for their departures.

Now, on taxes.

Mr. President, last week, the Senate passed one of the worst budgets in our nation’s history.

It excuses one of the most massive expansions of the national debt, ever -- $1.5 trillion. It directs the committees to take a sledgehammer to Medicare and Medicaid, again to the tune of $1.5 trillion. And it sets up the same, awful, partisan process that Republicans used to try to jam health care through for tax cuts.

That budget is now before the House, and I hope every House member is taking a close look at it.

Republican members who come from states like New York, New Jersey, Washington, California, Pennsylvania, Virginia, Illinois, Minnesota, should pay particular attention to the issue of state and local deductibility.

No doubt the elimination of state and local affects states and congressional districts over the entire country. For instance, one of the states that gets the highest tax break from state and local is Utah.  35% of Utahans take it, because such a large percentage tithe and they don’t use the standard deduction.

If affects middle-class families in every state. The state that it has the lowest effect on, West Virginia, it still affects 17% of families. I don’t have the numbers in front of me, but my guess is in Kentucky – the home state of our presiding officer at the moment – it’s probably in the 20’s.

In many states, state and local deduction is claimed by over a third of taxpayers and amounts to tens of thousands of dollars a year in deductions. In California, 34% of taxpayers take the deduction for an average of $18,437. In New Jersey, 41% of taxpayers claim state and local with an average deduction of $17,850.

Well faced with this, some of our colleagues are looking for a compromise. They say ‘well, let’s just take away the deduction for people above 100,000, 200,000 even 400,000.’ Or they say ‘you can choose between taking the state and local deduction or the mortgage deduction.’ That one is like saying taxpayer, we’ll chop your right hand off or your left hand off, but we’re giving you the choice.

But even without the mortgage trade, a compromise doesn’t work. It doesn’t work for a few reasons. Number one, it is double taxation. You’re being taxed on paying a tax. Number two, for states like New York and particularly my upstate colleagues, it chases away businesses. Companies don’t want to locate in a place where there top executives are going to pay a lot more because they can’t deduct their taxes. And third, it lowers state income so that, whether you use the state and local deduction or not, your school board, your old building, your police your fire, will be hurt by creating a huge deficit.

So, a compromise doesn’t work here. And I’ve named some of my Republican colleagues in New York, one of them got very mad yesterday. All I’d say is this. In 1986, there was a Democratic reform bill led by Senator Bradley and Congressman Gephardt. I’ve had the same conviction, and with the same strength and velocity opposed them taking away state and local, even though they were of my own party. And we worked hard and we succeeded. Tax reform passed in 1986 with Ronald Reagan’s blessing, I supported it. It was real tax reform, where you closed loopholes and lowered rates. Not just massive tax breaks and let the deficit go up. But state and local was removed. The bill still passed.

So I would simply ask my colleagues, Republican, to oppose their party leadership when it hurts their states and their constituencies as I did back in ’86 when I was a fourth-term congress member.

Now, a few members of the New York and New Jersey delegation – a whole bunch in New York - have come out against the elimination of state and local deductibility. I salute them, they have done what they should do. In the eyes of the Founding Fathers they have represented their states and their constituents. They have not represented these hard-right corporate interests – wealthy interests – who just want their taxes reduced. 

Are the remaining members of the Republican delegation from New York and New Jersey, as well as members from Washington state, California, Pennsylvania, Virginia, Minnesota, Illinois, and all the other states, going to stand up because they know this hurts middle-class constituents? This is not a tax break for the rich, the rich have lots of other big tax breaks. And the property tax that they pay is not that much in terms of their income. I hope they will stand up like some of my courageous colleagues have in New York state and in New Jersey.

Here’s another reason we don’t want to eliminate the state and local deduction. A recent study by Price Waterhouse Coopers and the National Association of Realtors found that, under the Republican tax plan, any homeowner with an income between $50,000 and $200,000 would see an average annual tax increase of $815. But here’s the amazing part of their study: they thought home prices would fall by 10.2%.

That makes sense. When you are new homeowner or buying another home, you calculate how much is my mortgage, how much are my property taxes, what deductions will I get. If you don’t get the deduction, you have less money to pay the mortgage because you’re paying higher taxes. So the demand on homes goes down, the price new homebuyers are willing to pay is less and home prices go down. 

So my Republican colleagues, particularly those in the House who have to vote on this bill tomorrow, you’re going to hit your constituents, particularly middle-class and upper middle-class constituents, with a double whammy if you vote for this bill. They’ll pay more taxes and their home values will go down. Home values are the rock of the middle-class. That’s what people work for their whole lives. The happiness someone has when they are 45, 50 years old and pay off their mortgage and their home is theirs, is great. Why delay that? Why impede that? Why impugn that?

Are Republican congress members willing to go home and explain to their constituents – their middle-class constituents - why their taxes are going up AND their home values are going down?

Because if they’re not willing to confront that, they shouldn’t vote for it.

This budget is a betrayal of the middle-class men and women who sent these House members to Congress, who sent all of us to the Senate and the House.  For many in the middle class, it raises taxes and erodes property value. Why?  To lavish tax breaks for big corporations and the superrich.

Its main focus is to give a tax cut to corporations and the top 1%. I’d say to the average American, is your number one goal reducing taxes on corporations and the richest people in America? Well that’s the Republican Party’s number one goal. They say they must have tax reform, it’s their number one priority. And this bill, the core of it, the raison d’etre for it, is to cut taxes on big corporations and the wealthiest people. Again, to Americans, is your number one goal the same as the goal of the Republican Party here in the Senate, and in the House? To cut taxes on the richest corporations? To cut taxes on the wealthiest individuals? I don’t think so. Do you, Mr. and Mrs. American, think that that’s what Congress should be gearing up to do when it has done so little? I don’t think so. The Republican Party is making a huge mistake.

It’s not that there shouldn’t be tax reform. There should be. But real reform. Big corporations pay a real rate of 16%. If we were to lower those rates and close loopholes, we’d be doing the economy a favor. As I said, I helped pass that in 1986, once they had abandoned state and local deductibility. If it’s simply to give a huge tax cut to the wealthiest people and biggest corporations, recent polling data has shown that the vast majority of Americans are against it. They even say – a majority of Americans say – if it means a small tax break for me and a big tax break for the wealthiest, I’m not for it.

And I’d challenge my Republican colleagues -- go out there and speak plainly and honestly about their plan. Don’t hide behind talking points and fake math. This is a massive tax cut for corporations and the wealthy: defend why you think that’s a good idea! Now I know some of you truly believe - Senator from Pennsylvania, Republican, has spent his lifetime when he was at the Club for Growth advocating that cutting taxes on the biggest corporations, wealthiest individuals fuels the economy. Talk directly about it.

I hear the words “middle class” coming out of our Republican colleagues’ mouths, but not wealthy or big corporations. And let me just say: it doesn’t prove to be true. The corporate tax rate is much lower than the official tax rate. According to Goldman Sachs, our big corporations have more money than they’ve ever had and are paying a lower tax rate than they’ve ever had. And they are not creating jobs. Give me one reason why giving them a tax break will now have them start to create jobs when they are already flush with cash.

And how about the example of Kansas? And I say this particularly to my two friends – both are my friends, I see them both in the gym, I play basketball with one – my two friends the Senators from Kansas. Look at what happened to your own state, the home of Charles Koch. ‘Big tax breaks, huge tax breaks, will make Kansas the growth center of America.’ Look at what happened. They did huge tax breaks. They predicted that income would go up in the Kansas state treasury by 300 million. It went down by 700 million. They had to actually consider schools going from five to four days. And job growth? This great engine of job growth? Kansas grew last year by .2%, the American economy grew by 1.6%. It was a total flop. Kansas not only rejected the proposal by raising taxes after they had cut them so deeply, but they threw out a lot of the more conservative Republicans and there was a rebellion within the Republican Party itself.

Trading middle-class deductions for a tax cut for the rich is not a fair trade. Raising taxes on so many middle-class people so you can pay for tax cuts for the rich makes no sense. And it makes no sense particularly now when the scales are tipped already in favor of the wealthy and the powerful.

So that’s why the American people, now that they realize we are getting close here, despite all the distracting issues that the President tweets about. By the way in the Republican caucus, I heard he talked about no details in the tax plan. He just said get it done. No details. I know why. The President may not know the details, but our Republican colleagues do and they’re afraid to talk about the details in public.

The American people are learning about this plan and they don’t like what they see. In a recent Reuters/Ipsos poll, fewer than a third of all Americans supported it.

And just like healthcare, I believe that the more Americans learn about this plan, the less they’ll like it. That number – low enough as it is in support of the Trump tax plan – will get lower.

And listen to this: in the same poll, nearly two-thirds of Republicans said deficit reduction was more important than tax cuts for corporations. That’s not what the bill says. The poll also showed that three-quarters of Republicans said deficit reduction was more important than tax cuts for the rich. Again, the bill does the opposite.

As Republicans find out more about this plan, the less they’ll like it.

So as the House debates the Senate budget this week, I urge them to consider first and foremost what the plan would mean for their constituents. And I tell them: should they vote down this budget, there are a large number of Democrats, including the Minority Leader, who want to sit down with Republicans and come up with a nice, mainstream plan. Not a plan to please the thousand wealthiest families in America who have so much say over the Republican Party, and shouldn’t. But we want to work with you on a real bipartisan plan. Defeat this plan and we will - just as we promised on healthcare, and we have.