October 23,2019

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Wyden Statement on Senate Floor on Overturning Trump Administration’s Harmful SALT Regulations

As Prepared for Delivery

Mr. President, the Senate today has an opportunity to overturn the Treasury Department’s terrible State and Local Tax or SALT regulations. These regulations illustrate everything that was wrong about Republicans’ 2017 tax law.

First, Republicans wrote a half-baked law that shoveled hundreds of billions of dollars at the wealthiest individuals and companies in America. While the law is projected to add more than $1.5 trillion to the national debt over the next 10 years, Donald Trump and Republicans decided to offset a small part of the tax cuts for their donors and cronies. To do so, they intentionally created financial pain for middle-class families in Democratic states by capping the SALT deduction at $10,000 for both single and married taxpayers.

This bears repeating: to give billionaires an even bigger tax cut, Republicans deliberately targeted middle-class homeowners in states like New Jersey, New York, Maryland and Oregon for tax increases. For some communities in Oregon, it’s not uncommon for property tax bills alone on modest middle-class homes to approach or exceed $10,000. And in communities in New York and New Jersey property tax bills on middle-class homes often far exceed $10,000, which I know Senators Schumer and Menendez will talk more about.

But when our Republican colleagues wrote this new cap on deductions into the law, they ignored all of the experts who said that IRS wouldn’t be able to properly administer the cap.   

That’s when the Trump Treasury Department stepped in. Without any clear authority to do so, the Treasury Department reversed a long-standing IRS position that had allowed taxpayers a full deduction for charitable contributions to state tax credit programs. In essence, the Treasury Department created a new rule out of whole cloth that extended the $10,000 cap on state and local tax deductions to also include charitable contributions to state tax credit programs.

To make matters worse, at the behest of Republicans senators, Secretary Mnuchin announced a carve out for Republican interests. Businesses using these same SALT workarounds to fund private school voucher programs would be exempt from these regulations.

So, middle-class families pay more, and businesses pay less. That’s the Republican way.

My view is the Treasury Department should not be putting its thumb on the scale on behalf of Republican interests, and it shouldn’t be using phony regulatory justifications to fix Republicans’ extraordinarily poorly drafted law. While Donald Trump certainly intended for these regulations to hurt middle-class families in Democratic states and protect Republican interests, the bad news for my Republican colleagues is that he failed miserably.

While Republicans did secure carve outs here and there, overall, the regulations are overly broad, and they hurt the majority of states by effectively eliminating the benefit of their charitable tax credit programs. These include credits that support important priorities like conservation, child care, charitable giving and access to higher education.

Let’s not forget, the 2017 Trump Tax Law was already estimated to slash overall charitable giving by as much as $20 billion a year. Now on top of that, these regulations threaten more than 100 charitable state tax credit programs in 33 states.

My Republican colleagues’ constituents will be hurt by these regulations, just like my constituents at home.

We’re talking about child care centers in Colorado and Missouri. Foster care organizations in Arizona. Historic preservation groups in Kansas. Charities in Iowa, Kentucky, and Mississippi. Conservation groups in Arkansas, Iowa, Florida, North Carolina, South Carolina and Tennessee. Rural hospitals in Georgia. Universities in Indiana, Idaho, Montana and North Dakota. Volunteer responders in Nebraska.

Now as today’s debate proceeds, you’ll be hearing a number of comments against these regulations that were submitted to the Trump administration. A hospital in Georgia that has been able to upgrade its heart monitors, a child care center in Colorado that helps parents remain in the workforce and a conservation group that has preserved more than 10,000 acres of land on Florida’s Gulf Coast. 

I would hope my Republican colleagues would put their constituents first by shielding them from these unintended consequences and supporting the Schumer-Wyden resolution.

Senate Republicans have a choice. They can choose to stick with Donald Trump and his terrible policy. Or they can choose to support important priorities in their own states like conservation, charitable giving, infrastructure and affordable housing.