Ranking Member Walz: GOP Tax Plan Puts Prosperity Of America’s Heroes At Risk
WASHINGTON, D.C. – Today, House Committee on Veterans’ Affairs Ranking Member Tim Walz (D-MN), Co-Chair of the National Guard and Reserve Components Caucus, sent the following letter to House Ways and Means Committee Chairman Kevin Brady and Ranking Member Richard Neal enumerating the many ways the GOP tax plan, H.R. 1, The Tax Cuts And Jobs Act, will put the prosperity of our active duty servicemembers, veterans, and military families at risk:
The full text of the letter is available below:
Chairman Brady and Ranking Member Neal,
I write today, as Ranking Member of the House Committee on Veterans’ Affairs and as Co-Chair of the National Guard and Reserve Components Caucus, to bring to your attention a number of provisions in the tax bill under your consideration that impact men and women currently serving in and transitioning from the United States military. Taking up tax reform in the House is a laudable effort, one that has the potential to bring lasting change to the whole of the American economy. But we cannot allow pursuit of success in that task to come at the expense of hard-working families, and especially not at the expense of those who have risked everything to serve this country. I hope you will strongly consider the following ways in which these provisions place the prosperity of America’s heroes at risk before reporting the bill out of Committee.
Sec. 1402. Exclusion of gain from sale of a principal residence.
Under this provision, one’s ability to claim exemption from capital gains on the sale of a home would be limited. To qualify for this tax break, a homeowner must have owned and lived in the home for at least five of the last eight years. However, members of the military often relocate every two or three years in service to their country, with such moves necessitating the buying and selling of homes. At the same time, this provision, coupled with changes in the mortgage interest and state and local tax deductions, are likely to lower home values, which are key vehicles for saving that many veterans and military families have come to rely upon.
Sec. 3404. Repeal of work opportunity tax credit.
The Work Opportunity Tax Credit (WOTC) is available to employers for hiring individuals from certain target groups who have consistently faced barriers to employment. According to data published by the Department of Labor, approximately 80,000 veterans were certified to work under the WOTC in FY 2014 and the current annual rate has grown to more than 100,000 WOTC veteran hires per year. It is clear this program has become more effective in leveling the playing field for veterans with significant challenges in finding work, and has helped to bring the average unemployment level among veterans below the national average. However, veterans between the ages of 18 to 34—in the prime of their working years—still struggle with unemployment at higher than national averages. Cutting the WOTC would further harm this cohort of veterans and roll back gains the overall veteran population has made in finding employment.
The legislation as currently written would also eliminate the “Hire More Heroes” provision, which was passed with widespread bipartisan support in the 114th Congress and celebrated as a “top GOP priority.” Upon the provision’s enactment into law, former Speaker John Boehner released a statement stating: “[W]e owe it to [veterans] to make sure they have every opportunity to earn a good living.” I agree this provision has been a valuable source of labor market support for transitioning and injured veterans, and I urge you to develop a solution to drive labor force participation for these veterans in the future if the credit were repealed.
Sec. 3407. Repeal of credit for expenditures to provide access to disabled individuals.
This provision eliminates the deduction small businesses receive for making their facilities accessible to persons with disabilities. According to a recent statement by Paralyzed Veterans of America (PVA) on H.R. 1, the legislation “eliminate[s] a critical tool in encouraging compliance” with the Americans with Disabilities Act. As PVA stated, it would be a shame to undermine years of hard work to make facilities across the country more accessible to people, regardless of ability. In addition, veterans make an outsized contribution to the small business community with 2.4 million veteran-owned small businesses in this country, employing 5.8 million Americans and generating $1 trillion in revenue each year. Therefore, repealing this credit will not only harm disabled veterans who are seeking jobs, it will also harm those veteran small businesses owners who are trying to do the right thing by employing disabled veterans and non-veterans alike.
Sec. 1204 Repeal of other provisions relating to education.
This provision would eliminate the deduction for interest payments on education loans. The success of the GI Bill in bringing veterans into higher education has been one of Congress’s greatest achievements on behalf of veterans. While the GI Bill often covers much of a veteran’s cost of higher education, it does not always cover everything, and veterans rely on student loans to make up the difference. This is particularly the case with veterans who are often older when they begin higher education and have more financial obligations such as providing for a family, which may require financial assistance while attending school. Eliminating this deduction will discourage veterans from pursuing higher education and diminish the overwhelming success of the GI Bill in educating our returning servicemembers so they may establish careers and firm financial footing for themselves and their families.
Sec. 1303. Repeal of deduction for certain taxes not paid or accrued in a trade or business.
This provision would make changes to the state and local tax (SALT) deduction, repealing tax breaks for payments on income and sales taxes on the state level. The SALT deduction helps state and local governments fund public services that provide widely shared benefits. For example, County Veterans Service Offices in cities throughout the country are operated locally and with local tax dollars. The offices provide assistance and technical support to veterans and their families with benefit counseling, rehabilitation referral, obtaining VA loans, applying for discharge upgrades, requesting military records, guidance on employment rights, and programming for homeless vets. Eliminating the deduction would not only increase individual taxpayer burdens, but also adversely impact local governments from raising sufficient revenue to maintain these services which are so critical to the life of a service member transitioning from the military.
The same is true for resources made available to local education agencies and public post-secondary institutions. In my home state of Minnesota, the system of state colleges and universities serve more than 10,000 student veterans on average each year. Allocations raised through state and local taxes are vital to the 37 public institutions that welcome veterans, active military and National Guard members to the classroom every day.
Like many of my colleagues in the House, I stand ready to reform our nation’s tax code and give hard-working Americans a fighting chance at prosperity. I know it is not the objective of this Committee to harm veterans and members of the military through this tax proposal. However, it should be our foremost priority to consider the unintended consequences that our decisions may have on the American people and the stability and economic opportunity of those who have served their country in uniform. I hope the Committee will take a sober look at the impact the provisions of this legislation will have on active duty and reserve service members, veterans, and military families. Thank you for your attention to this matter.
Sincerely,
Tim Walz
Ranking Member
House Committee on Veterans’ Affairs
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