Smith Rejects Middle Class Tax Increase
To watch a video of Rep. Smith’s remarks, click here.
Washington, D.C. – Congressman Adrian Smith (R-NE) made the following remarks on Wednesday during a hearing on Social Security reform and retirement policy before the House Ways and Means Committee.
I appreciate the opportunity to discuss ways we can help Americans plan and be ready for retirement.
I think there are many ways we can work together in this area on a bipartisan basis.
For example, RESA has broad bipartisan, bicameral support, and provides a series of solutions to improve our retirement system.
However, I have serious concerns about many of the approaches being considered in this hearing.
I appreciate Mr. Larson’s efforts to bring forward proposals to address the current shortfalls in and shortcomings of Social Security.
However, this proposal is riddled with issues and deviates from our bipartisan tradition in this area.
In particular, I’d like to focus on the low income and middle class tax increase included in this proposal.
Under the Tax Cuts and Jobs Act, a single mother with two children has zero federal income tax liability until she earns more than $53,000 per year.
Let me say that again: under TCJA a single mother with two children pays no federal income tax until her income is more than $53,000.
And yet the Social Security proposal we are discussing today would increase the taxes of a single mother earning $50,000 by $50 every year, because the economic literature tells us both the worker and employer shares of payroll taxes ultimately come out of the worker’s wages.
That’s not a static $50 either – it’s a new increase of $50 each year for the next 24 years.
That’s $50 out of her pocket the first year, $100 out of her pocket the second, $150 the third, etc. Over the course of 24 consecutive tax increases, that will add up.
By 2043, it would build to a tax increase of $1,200 for someone earning $50,000. That’s real money.
Let me say – we agree that we need to address Social Security’s solvency problem, and we need to address it soon.
But implementing a $1,200 tax increase on single moms while creating a new Social Security benefit for millionaires isn’t the way to do it.
We should empower people to make better decisions to help themselves and their own families with the money they earn.
If saving for retirement, or to buy a house, or to start a family is the best use for your money, do that.
If your kids need new clothes or sneakers, or you need a new battery for your car, or you have other needs that we, sitting here on this dais couldn’t begin to guess, keep your money and spend it on what you need.
We tried to help families do this last year with the Family Savings Act, through Universal Savings Accounts and provisions which would let families access their retirement accounts for life events like welcoming a new child into their family.
We want every one of our fellow Americans to succeed in the workforce. We want you to earn more and benefit from what you earn. We want you to save for a secure retirement. We want to have policies which empower you to make the right decisions for you.