Neal Announces Middle-Class Tax Reform Principles

Oct 25, 2017
Press Release

NEAL: “Democrats want real reform for real people.”

WASHINGTON, DC – Ways and Means Committee Ranking Member Richard Neal (D-MA) today laid out a set of principles that Democrats will be looking for in any tax reform legislation. 

The principles put forth by Democrats today outline a tax code that rewards hardworking middle-class families, small businesses and innovators, while ensuring that no one, no matter how wealthy or well-connected, can avoid paying their fair share. Democrats want to give working families a raise and create a fairer tax code that helps middle-class families with day-to-day costs like grocery bills, housing and child care. They also believe a middle-class first tax plan would help families buy their first home, send their children to college, care for ageing parents and save for a secure retirement.

“Democrats want real tax reform for real people,” said Ranking Member Neal. “This country is long overdue for real tax reform that helps middle-class families, and those striving to reach the middle class, get ahead. For decades, the middle-class in this country has watched as their wages have remained stagnant and special interest and the wealthy have gamed the system to exploit the tax code for their own narrow interest. Democrats are working to give the American people what they want: a tax code that is founded on fairness—not based on who you know or how wealthy you are.”


Democratic Principles for Tax Reform: Real Reform for Real People

Reforming the Tax Code to Provide Relief for Middle-Class Families

-Provide middle-class workers with a well-deserved “raise” to address years of income stagnation.

-Ensure that working parents are supported when taking paid family leave, including maternity and paternity leave.

-Strengthen the Earned Income Tax Credit by expanding eligibility and extending the childless workers’ credit. 

-Expand the Child Tax Credit to help middle-class families care for young children.

-Help middle-class families afford quality and safe housing, buy a first home or pay the rent.

Reforming the Tax Code to Provide Education Opportunities for Middle-Class Families

-Expand and simplify the American Opportunity Tax Credit to help students and families pay for post-secondary education.

-Provide additional tax incentives for education at vocational and professional schools.

-Help middle-class students and families pay off their student loans by excluding from income employer-provided student loan debt repayments and increasing the student loan interest deduction.

Reforming the Tax Code to Assist Middle-Class Families with the High Cost of Dependent Care

-Expand access to and increase assistance for high quality child care, including expansion of the Child Care Tax Credit.

-Help American families with the rising costs of dependent family members and the care of elderly parents.

Reforming the Tax Code to Ensure a Secure Retirement for American Families

-Make it easier for middle-class families to save for retirement, including creating automatic IRAs or 401(k) plans, and expanding the Saver’s Credit.

-Strengthen and improve benefits for Social Security and Medicare.

Putting Americans Back to Work in Good Paying Jobs

Closing the Skills Gap

A key component of competitiveness in the global economy is investment in a well-trained and skilled workforce.  A 2015 report by the Manufacturing Institute estimated that over the next decade, two million manufacturing jobs in this country could go unfilled due to the skills gap.  The New England Council reported similar results. At a time when families across the country are trying to reach and stay in the middle-class, our nation cannot afford to have factories and workers sit idle. 

-Providing a new tax credit to employers to train and hire new workers through apprenticeship programs and partnerships with community colleges and technical schools.

Expanding Infrastructure Investment and Enhancing Economic Development

We must improve our nation’s infrastructure, currently rated at a D+ by the American Society of Civil Engineers, to compete with other developed nations. That includes substantial investments to repair and enhance our nation’s roads, rail, bridges, and harbors. The new economy needs expanded broadband, energy access, and tools for smart growth to better serve individuals and businesses in our new economy. We also must continue to revitalize our urban neighborhoods and rural communities.   These win-win reforms will jump start economic growth and create thousands of good paying, middle-class jobs for hardworking Americans.  By making a significant investment in rebuilding our nation's infrastructure, we will be investing in American workers by creating jobs and financial stability for middle-class families.

-Invest revenue from tax reform to make a substantial down payment on our nation’s infrastructure needs.

-Make permanent the Build America Bonds program.

-Maintain and expand tax-exempt bond financing for infrastructure projects.

-Update current financing mechanisms for infrastructure investment.

-Leverage private investment to create public-private partnerships to ensure meaningful investment in community infrastructure.

-Make permanent the New Markets Tax Credit program and enhance the low-income housing tax credit and historic tax credit.

Strengthen the Competitiveness of American Businesses in the Global Economy

A key component of tax reform is ensuring that American businesses remain competitive in the global economy, and that we prevent American jobs from moving overseas. 

-Increase the domestic manufacturing deduction and provide additional tax incentives to manufacturers that build and hire in the United States.

-Enhance the tax incentives for companies to conduct research and development in the United States. 

-Provide tax relief and simplification to small businesses. 

-Eliminate tax provisions that encourage companies to move American jobs overseas.