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Hatch: PATH Act Provides Critical Tax Relief and Stability for American Families and Job Creators
In a Speech on the Senate Floor, Utah Senator Says, “All of these provisions benefit American families in various regions under a number of different circumstances. Our legislation will ensure that the millions of Americans who benefit from these tax provisions will be able to rely on and plan around them well into the future.”
WASHINGTON – In a speech on the Senate floor today, Finance Committee Chairman Orrin Hatch (R-Utah) highlighted the Protecting Americans from Tax Hikes (PATH) Act of 2015, a bipartisan and bicameral bill that provides permanent tax relief for hard-working American families, college students, charities, and small businesses. The PATH Act is coauthored by House Ways and Means Committee Chairman Kevin Brady (R-Texas), and Senate Finance Committee Ranking Member Ron Wyden (D-Ore.), and includes a number of provisions to make responsible tax relief permanent, suspends an egregious Obamacare tax, and lays the path for comprehensive tax reform.
“Passing this legislation and making more tax policies permanent will provide significant tax relief for hardworking taxpayers in every walk of American life, from the middle class to military families to the working poor. It will do the same for businesses and job creators throughout our country, resulting in a healthier U.S. economy, increased growth, and more American jobs,” Hatch said. “Put simply, more permanence in the tax code will be a good thing for our country, and the PATH Act will provide just the kind of permanence we need.”
Hatch went on to call on both parties of Congress to unite around the bipartisan PATH Act.
“Both parties should be able to support the overall package we’ve put together and, without question, every one of us should welcome the positive impact this bill will have on our economy and on our future legislative efforts here in Congress,” Hatch continued. “I urge all of my colleagues to support the PATH Act and provide real tax relief at this critical time.”
The complete speech, as prepared for delivery, is below:
Mr. President, last night, after months of discussion and several weeks of intense negotiations, bipartisan leaders from both the House and Senate reached an agreement on both the substance and a procedural path forward for legislation that will provide millions of American families and businesses with much-needed tax relief and set the stage for comprehensive tax reform in the future.
The bill, which we’re calling the Protecting Americans from Tax Hikes, or PATH, Act of 2015, would make a number of temporary tax provisions permanent, putting an end to the repeated tax extenders exercise that has plagued Congress for decades and giving greater certainty to U.S. taxpayers across the board.
There are no two ways about it, Mr. President, this is a historic bill. It is actually the latest in a long line of historic bills we’ve considered in the Senate this year and it has quite a bit in common with some of the other efforts we’ve tackled in 2015.
For example, for many years now, much of what we’ve done in Congress has been dictated by the next deadline, cliff, or crisis around the corner. And, more often than not, the tendency has been to simply kick every can down the road and then give speeches about why we shouldn’t do that anymore.
This year, the Senate has worked to end the practice of governing by crisis.
Among other things, we’ve passed bipartisan legislation to repeal and replace the Medicare Sustainable Growth Rate, or SGR, formula and to provide long-term funding for highway and infrastructure projects. Both of those issues had plagued Congress for decades, with permanent or long-term fixes seemingly always out of reach, regularly demonstrating that Congress was too divided and too ineffective to reach any meaningful solutions.
The same could be said for tax extenders, which has been an almost yearly exercise in relative futility, characterized by partisan bickering as the deadlines approach with short-term extensions enacted at the last minute, leaving no one – certainly not American taxpayers – feeling any better in the end.
Yet, with the PATH Act, as with the SGR and highway funding bills, we’ve been able to reach a bipartisan agreement that would effectively end this cycle.
Now, Mr. President, we have to pass it.
According to the Joint Committee on Taxation, 52 separate tax provisions – what we typically refer to as extenders – expired at the end of 2014. That’s 52 separate provision that, on a relatively frequent basis, face expiration and require us to reach agreements on further extensions. Our bill would reduce that number down to 33 provisions, still far too many, but a significant relief in terms of the ongoing extenders pressure.
Most importantly, the bill makes permanent many of the most consequential extenders provisions – the ones that tend to drive the crisis-and-cliff mentality when it comes to tax extenders – further relieving the pressure and allowing Congress to function more effectively.
By adding more permanence to the tax code, we will allow families and businesses to better plan for the future. In addition, we will adjust the tax and revenue baseline to make conditions vastly more favorable for comprehensive tax reform in the future, a major priority for members of both parties.
Most importantly, passing this legislation and making more tax policies permanent will provide significant tax relief for hardworking taxpayers in every walk of American life, from the middle class to military families to the working poor. It will do the same for businesses and job creators throughout our country, resulting in a healthier U.S. economy, increased growth, and more American jobs.
Put simply, Mr. President, more permanence in the tax code will be a good thing for our country, and the PATH Act will provide just the kind of permanence we need.
So, let’s take a few minutes to look at some of the key provisions of this legislation. I’ll start by talking about some of the biggest priorities that my friends on the other side of the aisle brought into the recent negotiations.
As we all remember, President Obama’s so-called stimulus included provisions that made some of the biggest refundable tax credits in the tax code even more refundable, including the Earned Income Tax Credit, or EITC, and the Child Tax Credit, or CTC. These increased credits – which, when boiled down, are essentially additional cash payments made directly from the government to an individual filing a tax return – were originally designed to be temporary and have had to be extended a few times over the years.
Going into these negotiations, Democrats essentially demanded that the enhancements for the EITC and CTC, along with a partially refundable college tax credit that was also created in the stimulus, be made permanent.
As you might expect, Republicans were reluctant to go down that road, not because we don’t want to help families who benefit from these credits, but because we know that refundable credits are particularly susceptible to error, fraud, and overpayment. Those types of improper payments are well documented, particularly with regard to the EITC where, every year, we lose tens of billions of dollars to either deception or bureaucratic mistakes.
However, we opted to accept making these credits permanent because doing so allowed the negotiations to move forward. But, we did demand – and the Democrats agreed – to include significant provisions to improve program integrity with regard to these credits in order to reduce improper payments going forward. In fact, if enacted, the program integrity provisions in this bill will be the most robust improvements to address waste, fraud, and abuse in the tax code in nearly 20 years.
So, essentially, this compromise on refundable credits was the very definition of a win-win situation, particularly when you consider the other provisions have been included in this legislation as a result.
With this bill, we’ll be able to secure key incentives for economic growth. For example, the bill makes permanent Section 179 small businesses expensing, which allows small businesses – the drivers of American job creation – to grow and invest with more immediate tax benefits. This has been a top priority for many members of Congress, not to mention virtually everyone in the business community.
The PATH Act will also improve and make permanent the Research and Development Tax Credit, a vital tax provision for companies and industries that thrive on innovation and research, areas where the U.S. continues to lead the world.
Our bill also extends the term for bonus depreciation, giving more companies greater incentives to invest in assets that will help their businesses grow and expand. This, too, has been a long-term priority for the business community and many members of Congress, and, while we weren’t able to make it permanent, we did improve and extend this important tax incentive.
The bill will also make key improvements to make America more competitive on the world stage. For example, it permanently extends the active financing exception, or AFE, from subpart F income and it provides a five-year extension for the Controlled Foreign Corporation (CFC) Look-Through provision.
Both of these tax provisions give American companies – owned by American stockholders and employing American workers – a greater ability to compete internationally. This is important if, like me, you want to see U.S. companies remain U.S. companies.
In addition to these top priorities for businesses and job creators in the U.S., the PATH Act would provide significant tax relief for families.
The bill makes permanent the deduction for state and local sales tax.
It makes permanent the Low Income Military Housing Credit and the employer wage credit for active duty military employees.
And, it provides a long-term extension and an expansion of eligibility for Work Opportunity Tax Credits.
All of these provisions benefit American families in various regions under a number of different circumstances. Our legislation will ensure that the millions of Americans who benefit from these tax provisions will be able to rely on and plan around them well into the future.
Not a bad result if you ask me.
I’m not done yet, Mr. President. In addition to the many benefits we’ll provide to families and businesses, the PATH Act would also give significant tax relief to charities.
It would, for example, make sure that charitable distributions from IRAs remain tax-free on a permanent basis.
And, the charitable deduction for contributions of food inventory would also be made permanent under the bill, as would the provision that incentivizes S Corporations to make charitable contributions of property.
I’ve covered quite a bit of ground here, Mr. President, and I’m really only going through the highlights. I haven’t even gotten to the Obamacare provisions yet.
As we negotiated this legislation, the most difficult part was probably dealing with the rumor mill, which, I suppose, was not unexpected. Most of the really outrageous rumors we heard during this process dealt with provisions of the so-called Affordable Care Act.
People were claiming that Senate Republicans had agreed to bail out the Obamacare risk corridor program in order to get a deal. We heard that there was an agreement to provide tax relief to prop up the failing Obamacare exchanges.
None of these rumors were true, of course. This exercise in tax permanence was never going to be used to solidify Obamacare and Republicans never for a second considered allowing that to happen.
However, because many Democrats have begun to recognize some of the more problematic elements of the President’s health law, we agreed on the need to suspend one of the more harmful taxes imposed under Obamacare.
The bill includes a two-year moratorium on the Medical Device Tax, one of the more unpopular and poorly-drafted taxes included in the health law that has, in recent years, drawn the ire of Republicans and Democrats alike.
This moratorium is important, Mr. President, not only because it demonstrates the bipartisan opposition to the tax, but because it will help patients and consumers throughout the country who have seen their health costs go up because of the device tax.
When all is said and done, Mr. President, this legislation provides roughly $650 billion in tax relief over the next ten years for families, job creators, and others. That is real money that will help millions of people and provide real growth for our economy.
That, Mr. President, is the real value of greater permanence in our tax code and is the biggest reason we need to pass this legislation.
Now, don’t get me wrong, I don’t believe this is a perfect bill. It’s not even close to perfect.
As I’ve grown fond of saying, if we were living in the United States of Orrin Hatch, this legislation would look a lot different. But, though it pains me to admit it sometimes, that’s not where we live. Here, in the real world, any undertaking worth the effort is going to require compromise.
I know I say that a lot.
In fact, I’ve probably said something about the importance of compromise and learning the art of the doable almost every time we’ve considered a high-profile piece of legislation this year. But, that doesn’t make my arguments any less true.
This is a good bill. Period.
Anyone, if they are so inclined, could cling to the parts they don’t like and make excuses to vote no. But, taken as a whole, both parties should be able to support the overall package we’ve put together and, without question, every one of us should welcome the positive impact this bill will have on our economy and on our future legislative efforts here in Congress.
I urge all of my colleagues to support the PATH Act and provide real tax relief at this critical time.
Now, before I close, Mr. President, I just have to note that a lot of work has gone into this legislation. Every provision of this bill has had a number of champions in Congress who have worked for years to preserve and enhance them in the hopes of eventually making them permanent.
I want to acknowledge some of those efforts here today, particularly those of my colleagues on the Senate Finance Committee.
For example, the deduction for state and local sales taxes – which this bill makes permanent – has had a number of champions on both sides of the aisle. In our committee, Senators Enzi, Cornyn, Thune, and Heller have all made this issue a priority and our legislation will ensure that their work pays off.
Another one of the more significant tax provisions this bill would make permanent is the Research and Development tax credit. This has been a top priority of mine for many years. And, Senators Cornyn, Crapo, and Roberts have also played leading roles in this effort over the years.
Section 179 small business expensing will also be made permanent under this bill, and Senators Toomey, Roberts, Thune, Portman, and Isakson have all been leaders on this issue for many years.
The bill would also make permanent the accelerated fifteen-year depreciation for restaurants and retail, a provision that Senators Burr, Cornyn, Crapo, Heller, Isakson, Roberts, and Portman have all worked long and hard to keep in place.
In addition, Senator Enzi has been a big supporter of making the active financing exception, or AFE, permanent. Our bill, once again, accomplishes this goal.
On the charitable side, Senator Roberts has been a strong supporter of the S Corporation basis adjustment for charitable contributions and the charitable deduction for food inventory contributions, both of which we’ll make permanent by passing this bill.
Senator Thune has also been a leader with regard to the food inventory deduction, and he’s also worked to ensure that charitable distributions from IRA’s remain tax free, another permanent provision in the PATH Act.
Senator Heller has championed the special rules for real property contributions made for conservation purposes, yet another item that our bill makes permanent.
The deduction for teacher classroom expenses is also made permanent in this bill. Senator Burr has been a strong supporter of that provision.
In addition, the PATH Act will make the low income housing tax credit permanent, something both Senator Roberts and Senator Crapo have worked on for some time.
Senator Portman has pushed to extend the Work Opportunity Tax Credit and to expand it to include the long-term unemployed. His proposed modification is included in our bill as is an unprecedented five-year extension for the credit.
Of course, this isn’t an exhaustive list, Mr. President. For right now, I’m focusing mainly on temporary provisions that we’ll make permanent by passing the PATH Act. If I start talking about my colleagues’ efforts on the shorter-term extensions in the bill, we’d be here all day.
I do, however, also want to give credit where it is due on the Obamacare provisions.
For years now, opposition to the misguided Medical Device Tax – and that’s the most charitable description of that tax you’ll hear from me – has been gaining momentum. And, throughout that time, Senators Toomey, Burr, and Coats have worked very hard on the Finance Committee to push for a repeal. As I noted earlier, our bill would take a significant step forward in this effort by imposing a two-year moratorium on this job-killing tax.
As you can see Mr. President, the PATH Act reflects the efforts and priorities of many members of the Senate.
As the debate on this important bill begins in earnest, I am particularly grateful for the work my colleagues on the Finance Committee have put in to advance the interests of their constituents. Each of them has put a huge stamp on this legislation and, with a little luck and a handful more votes, their work will be permanently enshrined in the tax code.
There are, of course, others have also worked hard on various parts of this bill. Virtually every Senator – or, at the very least, every Senator’s constituents – has high-priority items included in this bill. That’s a big reason why it is important that we get this done for the American people.
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