November 8, 2017

Honorable John B. Larson
United States House of Representatives
1501 Longworth HOB
Washington, DC 20515

Dear Congressman Larson:
Thank you for opportunity to comment on the federal tax changes being considered in H.R. 1.
We appreciate your leadership in trying to set the record straight as this partisan effort is rushed
to judgment with no real input and much fiscal uncertainty.
Unfortunately, what we see so far from a national and state perspective is very troubling. Some
of the proposals to reduce taxes on corporate and pass-through business income could provide
needed economic stimulus nationally and for states like Connecticut. Unfortunately, on balance,
H.R. 1 is fundamentally flawed:


Even the low estimate of a $1.5 trillion cost is not paid for and is really massive federal tax
deficit spending. The nation has been down this road before and surely we should have
learned something from the worst economic recession in modern times.



Otherwise unaffordable tax cuts have long been part of a political strategy to “starve the
beast.” Due to its long term unfunded cost, this Republican tax plan will compel big cuts in
federal funding, such as Medicaid, that are important to states like Connecticut.



Contrary to all the talk of a “middle income tax cut,” the plan actually represents a huge
windfall to the very wealthiest federal taxpayers and is truly regressive. For our own state of
Connecticut, over 75% of the tax cut goes to the top 1% who would pay 8.5% less on
average. Everyone else would see a trivial 1.2% reduction in federal tax liability and many
will actually owe much more in federal income taxes.



As discussed more specifically below, the proposed plan shifts most of the tax cost and the
least of any tax benefit to states in the Northeast, Great Lakes and West Coast regions of
the country. Thus, Connecticut and similar states will even more disproportionately pay in
federal taxes far more than is received in federal benefits – further subsidizing regions of the
country where states make far less of a state and local tax effort.

Drilling down a bit further, several aspects of this partisan plan will hit especially hard:


Eliminating deductibility of state income tax paid is worth an estimated $8.7 billion to mostly
middle income Connecticut taxpayers.



Capping deductibility of local property tax paid at $10,000 will increase federal income taxes
for a significant proportion of Connecticut taxpayers who claim $4.9 billion.

 

Any benefit to lower and lower moderate income taxpayers from higher standard deductions
and child care credits will likely be more than offset by the shell game of imposing a higher
lowest rate bracket of 12% and replacing the current $4,050 personal exemption with a $300
deduction that is proposed to end in 5 years.



Eliminating deductibility of medical/dental expenses will be $1.6 billion hardship for
Connecticut taxpayers at all levels who are out of work and have catastrophic medical costs.



Eliminating deductibility of student loan interest only adds a further financial burden for
primarily younger taxpayers and their families already struggling with educational
indebtedness.

Sadly, these and many other significant issues of fiscal irresponsibility and tax unfairness seem
to be of no concern in the partisan rush to pass legislation before taxpayers see through the
slogans and realize the costs. Indeed, glimpses of what may be in the Republican Senate
version suggests that it will only get worse. Thank you for your efforts to speak out for our
Connecticut taxpayers and set the record straight.
Sincerely,

Kevin B. Sullivan
Commissioner