Tell Congress: No giveaways for the rich!
Posted on 10/25/17 by Wendy Patton in Revenue & Budget
On Thursday, October 26, the U.S. House of Representatives is expected to pass the Senate budget resolution, clearing the path for a tax overhaul mirroring the plan announced by President Trump and GOP leadership a month ago. The Senate budget resolution would allow the tax legislation to pass rapidly with only a simple majority and without the kind of debate that such major changes warrant. It’s not a good deal for many Ohio families. Tax cuts for many middle and lower income families are minor. Their gains may be entirely wiped out as larger deficits caused by the tax plan force budget cuts to programs that help them attend college, put food on the table or access health care.
We already know the tax-cut bill would largely benefit the top 1 percent of households and profitable corporations, while increasing deficits by $1.5 trillion over the next decade. The true cost, with no budget gimmicks, could be even higher.
In Ohio, the richest 1 percent of earners – making an average of $1.5 million a year - would get an average tax cut of $56,000 a year, while a family earning an average of $74,500 might get a cut of around $410 (although almost 23 percent of the families in that income bracket might see a tax hike). The real threat to Ohio families comes from the fact that the cost of these lopsided tax cuts would be added to federal deficits, which will create enormous pressure for future cuts to subsidized student loans, health care coverage for people with disabilities and for elderly parents who have outlived their savings, and more.
Tax cuts will lead to larger deficits (claims that tax cuts pay for themselves fly in the face of decades of experience and credible, mainstream economic research). We’ve seen this movie before. Once the deficit grows, those who supported the tax cuts will likely point to government spending as the culprit. Next, they will call for the kinds of deep cuts to health coverage, food assistance, job training, transportation, education, and other critical services that have been proposed in the Trump, House and Senate budgets.
Cuts to Medicaid and Medicare health care will pay for the tax cuts.
The congressional budgets call for ending the Medicaid expansion, abolishing the Affordable Care Act and the marketplace exchanges, and dismantling the eligibility structure that allows flexible response to emergencies and recessions. In Ohio, Medicaid is the largest single insurer in the state, covering more than a quarter of all Ohioans, more than 3 million people, including 1.2 million children. The single largest category of spending is for elderly and disabled people.
The elderly will be hurt by the proposed cuts.
- Nationally, 6 million seniors receive health coverage through Medicaid. The program is the nation’s main payer for long-term care.
- The congressional budget plans would cut Medicare by nearly $500 billion over 10 years.
- The Social Services Block Grant, which provides funding for preventing elder abuse and helping seniors stay in their homes, is on the chopping block.
Families caring for family members with disabilities will be hurt.
- The Trump budget would cut tens of billions from Social Security Disability Insurance.
- The Trump and House plans would cut Social Security Income (SSI) for low-income children with disabilities. The Trump plan cuts SSI by more than $8 billion over the decade, affecting roughly a quarter of a million children. Families caring for children with disabilities face severe hardships and struggle to meet basic needs like rent, food, and health care; these cuts would make it even harder for them to get by.
Families with students would be hurt.
- The Pell grant would be cut. In Ohio, more than 221,494 students attend college with the help of a Pell grant.
- Subsidized student loans would be abolished. In Ohio, 242,240 Ohio students depend on the subsidized loan program.
- If federal aid to K-12 education is cut by the same percentage as other non-defense discretionary funding, it would be about 30 percent lower by 2027 (compared to the 2010 level in inflation-adjusted dollars).
Low-income, working families with children would be hurt.
- The congressional budget plans include deep cuts to the Supplemental Nutrition Assistance Program (SNAP) which helps low-income families put dinner on the table; 42 percent of SNAP recipients in Ohio are children.
- The House plan would cut the Earned Income Tax Credit for working families by making it much more difficult to apply.
- Both Trump and House plans would deny the Child Tax Credit to children in certain immigrant families.
Those cuts could happen as soon as next year. Call or email your congressional representative and tell her or him to:
- Stand against any tax plan that would force cuts to programs that make sure everyday Ohioans have the basics and a chance to get ahead. We need to invest in families and communities, and respond to emergencies – like the drug crisis. More tax cuts will suck resources from the services we need to combat problems in our neighborhoods, cities, and towns.
- Do not pass tax policy that makes our system even more rigged: Big tax breaks for the wealthy alongside cuts to Medicaid, SNAP, student loans, and aid to families with disabled members, makes the system even more lopsided.
- If this tax policy passes, tax cuts must be offset by closing tax loopholes and other responsible tax changes: The alternative—a tax plan that increases deficits—would cause pressure to cut important programs as soon as next year.