The tax reform bill recently passed by Washington lawmakers will be either a boon or a curse when it's signed into law, depending on which side of the aisle is doing the talking.
U.S. Rep. Rick Nolan, D-Minn., asserted the bill makes taxes worse for his constituents.
The median combined household income for the 8th District is $53,000 annually, but analysts agreed the bill would cause taxes to go up for most people with incomes under $70,000, he said.
"I think it's going to affect us in a pretty profound way," Nolan said.
Even those with incomes above $70,000 would only see a slight tax cut, Nolan added.
"At best, you're going to get enough money to buy the hubcap on a Mercedes-Benz," he said. "The super-millionaires and billionaires, they'll be buying whole cars, if not fleets of them, with their tax breaks."
In addition, the bill would hurt the more than 900,000 Minnesotans on Social Security and Medicare, Nolan said, because Republicans in Congress would reduce those programs to pay for the tax breaks.
"They've clearly linked the tax bill to what they call 'entitlement reform,'" Nolan said.
A Congressional Budget Office estimate reported the bill would increase the deficit by $1.4 trillion. During an appearance on "Good Morning America" Wednesday, Republican Speaker of the House Paul Ryan said lawmakers would "fix" the rule requiring Congress to pay for tax cuts with budget adjustments elsewhere, calling the rule "arcane."
Pete Stauber, the Republican running to unseat Nolan, said the bill would provide real relief to working families, and dismissed criticism of the new provisions.
"I'm sure that there's going to be some people who want to protect the status quo, but this is going to be middle-class tax relief that's going to allow bigger paychecks," he said.
Corporations have already come out to say they will give bonuses to employees due to passage of the bill, Stauber said.
The bill also eliminates the much-maligned "individual mandate" created as part of the Affordable Care Act in 2010. If someone did not get some form of health insurance, whether through their employer, the individual market, or Medicaid/Medicare, they would have to pay a tax penalty-but the new Republican bill gets rid of the penalty.
Nolan said eliminating the individual mandate would drive up the health care costs of people who bought health insurance. About 13 million people nationwide would drop health insurance as a result of getting rid of the mandate, he said.
"And then, who pays for their health care? You and me," Nolan said.
The gap caused by the lack of people paying for insurance would increase premiums for those people who opted to buy health insurance, he said.
Stauber called elimination of the mandate "a big win for everyone" given the added freedom of not being forced to buy insurance.
"You don't have to follow a government-mandated program if you don't want to," Stauber said.
As to the assertion repealing the mandate drives up health care costs, Stauber said it wasn't true for Minnesota. Prior to the ACA, programs such as high-risk pools helped the populace, he said.
"MinnesotaCare was a high-risk pool, very successful," Stauber said.
One provision that didn't make into the final bill would have repealed the Johnson Amendment, a rule prohibiting tax-exempt nonprofits such as churches from directly participating in political speech-endorsing or opposing a political candidate.
Asked how he felt about the amendment, Stauber said he would have to give more time to the question before he decided in favor or against.
Nolan was opposed to repealing the amendment. Most religious people believe something similar to the Bible verse in Matthew stating, "Render unto Caesar what is Caesar's, render unto God what is God's," he said-that is, separation of church and state.
"I think it would be a mistake to get all the churches in America preaching politics," he said.
Question of conformity
Now that the federal tax bill is likely to become law, state-level lawmakers face the decision of whether to move state tax law to conform with federal law.
State Sen. Carrie Ruud, R-Breezy Point, said since the bulk of the new provisions don't go into effect until 2018, she and her colleagues in St. Paul have time to figure out what to do.
One missed opportunity in the federal bill was the chance to repeal the medical device tax, which hurts medical device manufacturers in Minnesota, she said. However, the bill increases the standard deduction, giving individuals and families the chance to keep more of their earnings, she said. In addition, the bill nearly doubled the child care tax credit, and preserved the child/dependent tax credit, which helps people caring for elderly or disabled people in their homes, she said. A real estate agent in her day job, Ruud was also heartened by the preservation of the mortgage interest deduction, she said.