Federal Tax Reform Plans Will Help the Wealthy, Lead to Program Cuts and Deepen Poverty
October 17, 2017
This column originally ran in the Courier-Journal on Oct. 17, 2017
On the heels of repeated failed attempts to pay for huge tax cuts for the wealthy by cutting health coverage for hundreds of thousands of low-income Kentuckians and millions of Americans, the Trump administration and Congress are working to pass the same kind of “Robin-hood-in-reverse” tax reform later this fall.
Despite rhetoric describing various possible tax plans as pro-worker and supportive of America’s middle class – Paul Ryan’s Better Way, President Trump’s plan released in April, the Big Six’s “Unified Framework” and language in both congressional budget resolutions – these plans have in a common a mindboggling and very expensive preference for the wealthiest Americans and largest corporations.
The plans overall would massively redistribute wealth upward, lead to cuts in programs that support millions of low- and middle-income Americans and deepen poverty and inequality.
For instance, the current version of the Senate budget resolution – which is scheduled for a vote later this month – would pave the way for $1.5 trillion in deficit-increasing tax cuts over the next decade and trillions more as long as they are offset by slashing funding for programs like Medicaid, Medicare and Social Security. Tax cuts in the “Unified Framework” released alongside the Senate budget resolution would cost $2.4 trillion over the next decade according to the nonpartisan Tax Policy Center.
An analysis of the framework by the Institute on Taxation and Economic Policy found that the average tax cut for the bottom 60 percent of Kentucky households – the three out of five of us who will make less than $56,500 in 2018 – would be $210. The 0.4 percent of Kentuckians who make more than $1 million, on the other hand, would get a 485 times larger tax cut of $96,200.
Some Kentuckians will even face a tax increase, especially upper-middle income households. Which is to say the plan doesn’t just forsake low- to middle-income Kentuckians, but anyone who is not uber-wealthy. According to the Tax Policy Center, in 10 years, the top 1 percent would receive 80 percent of the tax cuts.
As these huge tax cuts for the wealthy are financed (history shows they do not pay for themselves), the crumbs for everyone else will be dwarfed by devastating cuts to key investments in our communities. Immediately, everyday Kentuckians – from working parents and disabled kids to grandparents needing nursing home care – will feel the pain of cuts to health care, tax credits for low-income families and more. And as the full impact of tax cuts registers, trillions more will be cut from education, health care, food assistance, infrastructure, community development and more.
Congress is now focused on setting the stage for these cuts. Both the recently passed House budget resolution and the Senate’s plan are essentially vessels for reconciliation instructions the House and Senate are likely to negotiate and agree upon in order to fast-track passage of a tax cut bill. Those instructions would allow such a bill to pass with 50 rather than the 60 votes usually required.
A metaphor comes to mind: Rather than a stage, a table is being set. It’s being billed as a free lunch – a feast – for all Americans, but in fact, only the most powerful and wealthy among us are invited. The meal will be paid for by families and communities across the nation and leftovers will not be shared. The satisfaction of the guests will come at the expense of our country.