Meeks Knocks Proposed Tax Changes
Congressman Gregory Meeks recently testified before the City Council regarding the proposals of President Bush’s Tax Reform Panel,
“It is good to have this opportunity to voice my concerns and opposition to the recommendations for changes to the tax code made by President Bush’s advisory panel on tax reform. I would like to start by commending Chairman Weprin for bringing attention to this important issue with his resolution rejecting the proposals of the Advisory Panel. There were many disputable recommendations made by the panel, but I am most concerned with the proposed elimination of the deductibility of state and local taxes to be replaced with the deduction for mortgage interest. I believe implementation of this recommendation would be fiscally disastrous for New York City.
“The question of who benefits and who loses under these proposed reforms and the extension of current tax cuts is of huge importance. In 2005 Americans will pay about $2.1 trillion in combined federal taxes, including income, payroll, and excise taxes, or about 16.8 percent of gross domestic product. The deduction of State and local taxes is the second largest itemized deduction claimed on Federal Tax returns, only the deduction of home mortgage interest is larger. I mention these figures to emphasize the magnitude of the Federal tax system and the profound impact that changes to it can have on the economy and individual taxpayers.
“Based on our current income tax system, repeal of the deduction for State and local income taxes would amount to tax increase for at least 45 million individuals at an average increase of $1,700. To make matters worse, the repeal would increase the tax obligation of homeowners and residents that live in states where they have an above average tax burden. New York fits that criterion. There is no doubt that this change will hurt the residents of large urban cities, like New York City, that have a greater need for government services.
“The tax recommendations have come at a time when the Majority party in Congress is particularly focused on making sure that Americans with incomes over $1 million hold on to the their tax breaks, while doing nothing to ensure that middle-income Americans will have relief from the unwieldy Alternative Minimum Tax. Outrageously, the House of Representatives has a tax bill that does not include AMT adjustments that would help restrain the impact of the tax. In other words, we are looking at tax cuts for the rich paid for by everyone else. This approach means higher taxes for 19 million more people in 2006. Who are the biggest losers? Under this scheme the biggest losers are middle class and working class families that have children and live in high tax areas.
“In Washington, Republicans are determined to change the tax code and cut taxes. I know that there are differences in the way the two parties view taxes. I also recognize that many times the divide between Federal, State and local government results in limited conversation across jurisdictions. I am here today, because I believe we must rise above party and government lines to push against tax policies and plans that harm our constituents.
“New York is an attraction for workers and businesses worldwide. The benefits that stem from that draw and the distinctiveness and strength of this city should easily stimulate an economic engine that puts families into a prosperous middle class. Unfortunately, that has not been the fate of too many hard working New Yorkers. Tax policies that benefit the wealthy while ensnaring the working and middle class only exacerbate that reality. I must oppose the agenda of the current Presidential Administration and Congressional Majority because it is creating a greater divide between the haves and have-nots.
“John F. Kennedy once said, “If a free society cannot help the many who are poor, it cannot save the few who are rich.” If we become too consumed with protecting the wealthy in our society, surely President Kennedy’s statement will prove to be prophetic and we will all be worse off for it.”