DeSaulnier on tax proposal: more transparency, more time to vet

By Lou Fancher

​The proposed Republican federal tax bill passed in the House of Representatives on Nov. 16 is 429 pages. With hundreds of citations and economic legalese, it’s so complex even Rep. Mark DeSaulnier, D-Concord, has yet to parse out the complete ramifications for California’s taxpayers.

But the congressman Nov. 20 at a tax town hall told more than 300 people packed into the Miramonte High School auditorium he is certain of two things about the proposal: the process should be more transparent, detailed and slow enough for the bill to be fully vetted, and big money coming into federal campaigns is corrupting the process.

“Unregulated (campaign) spending is having an enormous effect on how we govern and is having an enormous, enormous effect on this policy,” he said. He quotes statistics, then adds, “Money has always been involved in politics, but it’s very extreme right now.”

Public interest in the first major tax reform since 1986 is keen, especially in California. It is among the high-tax states that will most feel the negative impact of proposed limits on deductions on federal tax returns of state and local taxes paid.

Of the country’s 435 congressional districts, he said the 11th district is number 23 on the most-impacted list. For roughly 45 percent of households in the area, the lost deductions for property taxes and student loans, or elimination of tax credits for electric vehicles, wind energy production and other changes will result on average in a $27,000 loss in total deductions.

In 1986, Ronald Reagan was president and tax reform took 11 months and bipartisan cooperation to pass.

“The bill just passed was in front of our House for a little over two weeks,” DeSaulnier said. The vote was 227-205, with all Democrat and 13 Republican representatives opposed.

The administration’s idea to rush tax reform through by Christmas break — the full Senate is expected to vote on a version the week after the Thanksgiving holiday — DeSaulnier repeatedly stated, is a mistake.

Primarily, rushing is wrong because issues like the $1.5 trillion the proposal will add to the deficit over 10 years are being overlooked or downplayed. “You can’t do this forever, even if you’re in the business of printing money,” he said.

Opening the discussion for questions, people asked if the bill would protect pensions, impact Medicare, Medicaid and Social Security, bring offshore investments back to the United States, reduce charitable donation deductions and more. Overall, DeSaulnier was pessimistic or suggested more analysis was needed to provide factual answers.

Asked whether or not the tax overhaul would result in the “trickle down” benefits promised by its proponents, DeSaulnier responded with impassioned replies.

He said trickle down theories related to cutting corporate taxes are “historical fantasy” and not supported by research. The single largest threats to democracy, in addition to continued income inequality, he said arise from the process’ lack of careful examination, independent analysis, robust conversations about the facts, and “morally reprehensible” components, like changes related to health care coverage.

“Why hide, why not have town halls?” he asked. “A balanced social contract with the community is an obligation.”

A question from an estate tax professional about the bill’s elimination of the step-up basis used for calculating the value of inherited property had DeSaunier admitting he was unaware of the matter. The practice allows an inherited home or other item’s value at the time of death (instead of time of original purchase) to determine the capital gains taxes owed.

In Lamorinda, where property values have appreciated significantly, the man suggested the change would affect many local residents who inherit property. “That’s the reason you don’t pass this kind of legislation without time to understand all of the elements,” DeSaulnier warned.

The solutions to reducing partisanship and preventing a bill with negative consequences “hiding in the weeds” DeSaulnier said was for everyone to participate.

“The only way to change this is for people to be engaged. If enough people in Congress hear from you, then hopefully they will be responsive to you. In order for this red versus blue approach (to end) people in Congress have to hear from people all over the country.”
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And citizens must vote. “Sixty-three million registered voters chose not to vote in the last election. That’s an ‘F.’ We have to get more people registered to vote and get out and participate. Tell them to vote. If you know anybody who’s eligible to vote and who’s not registered, give them a lecture.”