Concerns over the Republican-led tax bill moving through Congress dominated Congressman James Comer's lively and, at times, indignant town hall meeting in Hopkinsville Monday morning.
The meeting was initially scheduled for the afternoon, but Comer was due to return to Washington Monday evening to vote in conference on the tax bill. The meeting was nevertheless well-attended, filling up much of the Municipal Center Council Chamber. Many in the room expressed outrage over the tax bill in vocal and sometimes heated exchanges with the Congressman. Some in attendance were supportive of the measure and others urged civility in debate and discussion.
“I know a lot of people have expressed frustration with Congress over a lack of legislative achievement,” Comer said, pointing to failed efforts to repeal and replace the Affordable Care Act - also known as Obamacare. As for the latest ‘tax cuts bill,’ Comer said he is confident President Trump will sign it into law before Christmas break. He then expects the president to take up welfare reform and a further debate on health care.
The first question from the audience pertained to a frustration that the tax bill would give tax breaks to ‘billionaires’ and companies that would pass profits to shareholders and executives at the expense of those who would benefit from medical deduction, graduate school scholarships and write-offs for teachers who buy supplies for their classroom. This audience member suggested instead revising the tax bill to lower payroll taxes or expand earned income tax credit. Some of these concerns were reiterated by others in the room throughout the meeting.
Responding to the general frustration over the bill, Comer said, “If you look at the numbers in the first Congressional district, 80% of the people in the first district take the standard deduction. They do not itemize their taxes. 80 percent. That’s one of the highest percentages in all 435 Congressional Districts.” Following up, these numbers come from IRS reports to Congress.
Comer said the standard deduction for a married couple today (filing separately) is around $6,000. He said the current bill doubles that to around $12,000. He said a married couple earning $40,000 (which he says is the common salary for a married couple in the first district)... taking standard deduction and including mortgage interest and child tax credits (which he thinks will be included in the conference)... “they’re not going to pay any federal taxes.” The ‘bottom end’ of earners in the district, he said, will see a tax cut and so, too, will the “top 20 percent.” Comer said some of the opposition to the bill in Congress came from SALT states.
“I believe that this bill will benefit the low income people significantly in the first congressional district.” Comer said people who make a lot of money tend to pay a lot of taxes. He said what people wanted when voting for Trump was to bring jobs back to the United States. One of those factors includes reducing the regulatory burden, another was lowering the corporate tax rate to a more globally competitive level (as he said this bill does) and the third factor is renegotiating trade agreements.
Comer predicts in conference, the tax rate will end up going up some from the 20% level currently proposed. Comer said he is concerned that there won’t be enough growth to offset an increasing deficit. Analysis of the House and Senate plans have found that the deficit will increase by $1 to $1.5 trillion over a ten year period. “I’ve been a critic of the deficit… I fear the budget deficit is going to go up,” Comer said, adding that he had supported a 1% across the board cut (except military) to help offset the projected increase. “If this tax plan is implemented and we’re still operating in a huge deficit then we’re going to have to have more spending cuts,” he said.
Local hemp farmer Katie Moyer (also a Bevin appointee to a state Ag board) said she supports the tax bill as the owner of a small business. She said businesses like hers (possibly referring to pass-through entities) create most of the jobs in the state as opposed to Walmart, Amazon, etc. “My company is little-bitty, but if we can make a little bit more money, we can keep a little bit more money that we created and jobs that we created. If those people can keep a little bit more of their money and not the government, I’m fine with that,” Moyer said. She also said deficits can be fixed by reigning in ‘reckless spending.’ Comer said 85% of the businesses in Kentucky’s first district are identified as pass-throughs (S-Corps or LLCs).
Addressing concerns over savings only amounting to a possible savings of $1,000 for the average person, Comer said that’s the average amount an average tax payer pays in federal taxes in the first district. “The working class are going to get a tax cut,” Comer said.
Speaking to the greater political ideological divide, he said there are two different ways to grow - one is through more government spending, the other is through the private sector. “And I believe the private sector is the way to go,” he said, noting the economic growth over the last two quarters of Trump’s presidency is due to to confidence in the private sector. “A lot of the growth in the economy is based on the assumption, in my opinion, that this tax bill is going to pass,” he said.
Diane Wood said she is a retired IRS officer focusing on C-Corps and tax shelters. She said the rate is 34%, but the effective rate is 17% (the average large corporations actually pay). She wondered if Congress making the corporate tax rate 20% would essentially render the corporate tax paid at 3%. She said she never saw a corporate tax return of 34% due to loopholes, etc.
Comer said, “In the year I’ve been in Washington listening to complaints from companies that have gone offshore. That have taken those jobs that used to be here in these little towns and moved them to China, Taiwan and Mexico and places like that, that the corporate tax rate has been a big issue.” He said some of Kentucky’s biggest employers support the tax bill. “And that’s who I’ve listened to on the corporate tax cut standpoint,” he said.
A member of the audience expressed concern over the Senate bill’s doing away with the ‘individual mandate’ in the Affordable Care Act, which requires people to have health insurance or pay a fine. Comer said, “If you do away with the individual mandate, then you don’t have to have health insurance. It’s your decision. You can buy health insurance or you don’t buy health insurance.” The concern then expressed was that insurers won’t make enough money to cover people on Medicaid. Comer said it doesn’t matter whether insurance companies want the individual mandate as they are part of the problem.
Comer predicts the medical expense deduction will be added back in the bill in the conference period (this was eliminated in the House bill, but added back into the Senate bill). He said, however, few people in the First District claim that deduction since most people take the standard deduction. Comer said he would work to see this provision added back into the bill, but when asked whether he would vote for the bill if it isn’t added, Comer said, “I will probably vote for the bill regardless.”
On inheritance tax differences, Comer said he believes it will be in the bill, but the level of exemptions will be raised. “I think that the exemption is going to be raised to where very few farms would hit what it’s going to be.”
Local representatives of the progressive group Kentuckians for the Commonwealth, Amanda Groves, Jennifer Morrison and Lesley Garrett among others, expressed a range of concerns, and read letters from some not in attendance, over the tax bill (some mentioned above).
To these concerns, Comer said, “I don’t think we’ve been going in the right direction in America. I don’t think we’ve had anywhere near our potential growth in America for the last decade. I think that we can do better in America. I think that we can get manufacturing jobs back to Kentucky, in rural Kentucky.” He added that a majority of the ‘pockets of poverty’ are the in rural counties in the First District, which he said have been neglected by policy in Washington that favored New England states.
Paul Shay of Hopkinsville is a district manager for Save-A-Lot. He said he is excited about growth potential with trade negotiations and developing technologies. Looking at the past 20 years, he said, and “unlocking businesses” he said it’s “unbelievable” to consider what could happen in the next 20 years.
Sam Gaskins, who is running against Congressman Comer in 2018, said H.R.1180 “Working Families Flexibility Act” rolls back overtime pay for workers and harms ‘manufacturing communities’ like Hopkinsville. The bill authorizes employers to provide compensatory time off to employees in lieu of overtime pay. It also prohibits employers from intimidating or threatening employees into choosing an option. “It gives people flexibility,” Comer said. The goal, he said, is that if more businesses are starting and an employee might not be happy with where they are working then there’d be more options to find work elsewhere.
Wayne Hunt is a longtime ag farm leader in the Hopkinsville area. He said there need to be people who can build consensus, something lacking in today’s world and praised Comer for being a consensus builder. Hunt’s comments were interrupted by members of Kentuckians for the Commonwealth, which appeared to underscore Hunt’s point.
Assessing the town hall, Comer said he is sympathetic to the concerns addressed in the meeting, but said the goal of the tax bill is to simplify the code. He said some of the tax credits may be put back into the bill (medical expense deduction, student loan provisions, adoption tax credit, historic preservation tax credit), which means the corporate tax rate could go up.
