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Pennsylvania Senator Pat Toomey On The Tax Bill
HH: Joined now by Pennsylvania Senator Pat Toomey ... and make them put it to reduction of mortgage debt or into residential real estate or something that is productive, but you would get an enormous amount of revenue, and relief for people who relied ...
PT: There has not been a lot of discussion about thatI will tell you much of our, I mean, we’ve got an interest in continuing to encourage savingsI do think that’s good policyI think capital formation is what drives the economy, and savings is what helps relieve the burden on some of our big entitlement programsBut having said that, it’s a matter of degree, and I think your idea has some meritIt’s worth thinking about.
HH: If you’ve got to find money today…
HH: I’d just encourage you to look at that, because if you make people take their retirement out, but put that into residential mortgage reduction or residential purchase, you’re actually giving them a retirement asset at a preferred rate, and you’ll raise revenue.
PT: Well, and presumably, you wouldn’t force them to take it outYou’d just make it available…
PT: …at a lower tax so that they would, or that some would….
HH: And you wouldn’t let them take, you certainly in my world wouldn’t let them take more than 25% of their retirement out, and you would require them to…
PT: Take some of that out.
HH: Yeah, something to think aboutLet’s go to the other hot buttonsSchool loan debt, my gosh, the kids out there are mad at me, because I’m telling them the standard deduction is going to be doubleThis is not a problemAm I right?
PT: Yeah, you are rightI mean, you know, we really should be moving in the direction of not favoring certain activities and special, you know, favors for preferred industriesWhat we ought to be doing is having the lowest possible rate and the strongest possible economy, and then let people do what they like with their moneyAnd some will choose to incur debt for education, and that can, for many, many people, is a very rational choiceBut you know, we should get away from the business of ever more subsidies for these activities.
HH: And I do believe that the people who are currently paying interest on student loan debt will be saved by the doubling of the standard deductionThey’re not going to notice any increase in their tax bill if you double the standard deductionHowever, graduate students being obliged to count as income their scholarships is really going to hit them hard, SenatorIs there any movement to try and find some accommodation there or another set of transition rules?
PT: Well, keep in mind a lot of graduate students who if they did have to take this as income, their income is quite a modest level, and there’s quite a lot of income that a person can earn and not pay any taxesI mean, a married couple with no children can make $24,000 dollars and pay zeroThat’s what they pay on the first $24,000 dollars just taking the standard deductionAnd then it’s a very modest rate of income tax that begins to be applied above that, and there are further ways to reduce your bill from thereSo the questions is should all forms of compensation be taxable? And I think it’s a little hard to argue that we ought to have various categories of ways in which people can be compensated, but not have to pay tax on it, because it’s not terribly fairSo I generally prefer moving in the direction of more fairness and more uniformity.
HH: I do, tooIt’s just a question of, let me spell it out for my friends in the academic worldIf their kids go to the college that they work at, and my kids are all graduatedThis is not for me.
HH: And they have made a choice with their life to forgo applying for scholarships elsewhere, and now they’re going to get taxed on the scholarship they got because they’re undergraduates enrolled at their parents’ institution, and they did not go on the hunt for a better deal, they’re screwedSo I would think at least a four year transition is equitable.
PT: That’s a reasonable, that is a very reasonable thing to grandfather people who have already made a decision and are already enrolled somewhereThat’s a very reasonable thing.
HH: Now that gets down to the child tax creditI know Senator Rubio and others want to increase itI’m kind of in favor of that, tooThat’s why I came up with my revenue idea, because you’ve got to find revenue to do thisHow much horse trading is going to go on today?
PT: We’re going to seeI don’t agree with thatI mean, we’ve already dramatically increased the child tax creditAnd you know, I understandI hear their argument, and yes, there is a social value in raising children, and it’s expensiveBut there is social value in all kinds of human activitiesAnd I don’t recommend that we have a tax credit for all of themI have three childrenYou know, I would benefit from a larger child tax creditI don’t want itI would rather have lower rates and stronger economic growthLet families have more earningsLet them be able to keep more of what they earn, and then they will decide how many children they want to have, and let that be their decisionBut I, we have been very generous with a significant increase, including increasing the portion of the child tax credit that gets paid out as a check to people who don’t pay income tax, right? It’s called the refundable aspect of this, but you know that’s a check from the Treasury to someone who’s not paying income taxes.
HH: True, true.
PT: We do it alreadyWe’re increasing it, and my good friends, Marco Rubio and Mike Lee, want to do even more of thatI’m not with them.
HH: All right, then let me use the little bit of leverage I got out of you, because you indicate sympathy for people who have relied upon previous promises in the short termThe people in high tax states just can’t walk away, SenatorThey can’t get out of California like I did, because you can put a radio studio anywhereThey can’t run awayDo they get any relief in your world for the reliance damages that they have incurred by moving somewhere years ago?
PT: Well, they get lower tax ratesThey get an increase in the amount of money that is taxed in the lower bracketsWe have made those changesMany of them have childrenThey will get the higher child tax credit that I mentioned, is in our billSo they get many forms of reliefYou know, it’s hard to have a transition for everythingI mean, you can make an argument that that, you know, that there might be some merit to thatBut you know, sometimes you do the best that you canI think the idea that the lower state and local tax jurisdictions should subsidize the folks who live on the Upper East Side of Manhattan is not defensibleNow yes, you’re rightPeople bought a home in Manhattan thinking they would be able to have this deduction, but look, this is part of lifeThe tax code does changeEverybody understands there is some risk to thatWe do have other devices in the code that lowers taxes for individuals, by the wayA lot of the folks who live on the Upper East Side of Manhattan also own pass-through companies which will have a deductionIf they have assets like stocks and bonds, which you have seen what the markets have done in response, so they have benefitted already from the expectations.
HH: There are some deductions, though, that people never want to use, the major medical deduction, if their family member, if they have to take out retirement savingsChuck Todd just brought that up to meI brought up casualty loss, if someone’s house burns downNobody wants to take those deductionsIn the conference, will there be much haggling about this? Or are we going to end up with the Senate bill being the Senate bill because the negotiations there are much harder than negotiations in the House, Senator Toomey?
PT: So my guess is that what passes will be mostly, what passes this week on the Senate floor, if we are fortunate enough to pass it, which I think we will, it will pass mostly in the form as you see it nowI don’t think there’ll be major changesBut where major changes may still occur will be in a conference between the House and the Senate.
HH: And can we wrap it up in the short term?
PT: That is…
HH: Specifically before the Alabama Senate election?
PT: Well, that is very, very much the goal, believe meAnd you know, the architecture of these bills is the sameThe big, most important features are the sameThe goals are the sameBut there are significant differences in detailWe are going to make an effort like you have never seen to get this done quickly, to resolve the differences, to negotiate what we mustI think the answer is yes that we can get this done before the end of the yearBy the way, I don’t know how that race in Alabama turns out, but the incoming Senator probably doesn’t get sworn in until sometime in JanuaryThere’s a period of time to you know, formalize the election results and certify them and all of thatSo we probably have through the end of the year before that happens, not clear whether or not we need that voteYesterday, we had every Republican voted in favor of the procedural motion to begin this process, which is a very good signIt does not guarantee that we have everyone on final passage, but a very good sign.
HH: Urgency is importantOne last question non-relatedI’ve got friends like Rick Grenell and others who are nominated, hanging aroundGermany is in a crisis, and we’re not confirming our ambassadorI approve of the Leader’s approach to always put a circuit judge up right awayBut what about Rick Grenell? What about our other ambassadors, Pat Toomey? Is the Senate going to stay there until we clear the decks of appointees?
PT: We’re trying to mow these folks down, mow our way through thisWe have, as you know, many, many hundreds of vacanciesThe President has sent quite a number of nominees, and the Democrats use their ability to drag out the clock and force us to chew upThey can force us to chew up a whole week confirming two people
HH: I hope you keep them there all Christmas until you get their consent to move, because we cannot have Germany in a crisis without an ambassadorI thank you, Senator ToomeyGood luck today, and give some thought to transition on business interestI think that’s the one Achilles’ heel in this billWe will seeThank you, Senator.
PT: Thank you.
End of interview.
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