The disastrous tax plan isn’t law yet
Corporations and the rich are winners in the GOP bills, but the fight goes on.
Tax reform shouldn’t add one penny to our deficit or to the tax bills of middle-class Americans. I thought that belief was shared by everyone in the Senate. It appears I was wrong.
Behind closed doors, Republicans drafted a bill that raises taxes on millions in the middle class and adds at least $1 trillion to our deficit. The bill also renews the GOP attack on the Affordable Care Act, a move that will drive up health insurance premiums in the individual market by 10% each year and will likely result in 13 million more Americans without coverage.
Refusing to hold a single hearing with outside groups, Republicans rushed their bill through the Senate in the hope Americans wouldn’t realize what it really is — a huge windfall for big corporations and the rich.
Every day, I hear from Californians worried about what this bill means for their family’s budget.
Raleigh is a middle-class retiree in Davis. He wrote that his taxes will go up nearly $4,000 a year and he can’t afford such a drastic tax increase on his fixed budget.
Mary lives in Berkeley. She said her health insurance premiums will rise because of the attack on the Affordable Care Act. The higher costs could force her to choose between buying health insurance or paying for her daughter’s college tuition.
And Carol, who lives in Sacramento, tells me her family’s taxes would go up almost $12,000 a year, making it harder for them to save for retirement.
Unfortunately, they’re not alone. Half of American households will see a tax increase. Meanwhile, billionaires and millionaires will pay less. That’s appalling.
Californians will be hurt the most by the partial elimination of the state and local tax deduction, known as the SALT deduction.
Since the national income tax was created in 1913, Americans have been able to prevent double taxation by deducting state and local taxes they have already paid. Approximately 6 million California households claimed this deduction in 2015.
This provision hurts all Californians, even those who don’t claim the deduction. Funding for critical services like schools, police and fire departments could be in jeopardy as communities try to ease the increased tax burden on families.
State and local governments won’t be the only ones feeling the squeeze. The massive trillion-dollar increase in the U.S. national deficit could later trigger cuts to vital programs.
Republicans are selling Americans a fairy tale — the false claim that these tax cuts for the rich will pay for themselves. That view isn’t shared by credible economists. According to Congress’ Joint Committee on Taxation, over the next decade, estimated growth under the plan would make up for no more than a fraction of deficit increases.
So I fear Republicans hid their true intentions.
In a few years, they’ll no doubt use the growing deficits they created as an excuse to gut Medicare, Medicaid and Social Security. Americans who rely on these programs will be victims of the Republicans’ partisan tax plan.
But one group is a clear winner in the bill. The tax rate for big corporations was cut almost in half, dropping from 35% to 20%. And they get to keep deductions taken away from ordinary people, theoretically allowing companies to drive their tax rate down further.
Think about that. A family of four can’t deduct many of the state and local taxes they pay, but a large corporation still could under the Republican bill.
The Senate bill also makes the corporate tax cuts permanent. Meanwhile, the lower tax rates for some in the middle class will disappear, over time shifting the tax burden more and more onto American families.
It’s clear who the Republicans considered a priority while writing this bill. Republicans gave a huge tax cut to corporations and the rich, and it will be paid for by middle-class families.
The fight, however, is not over. Senate and House Republicans must now reconcile the differences in their two tax bills (the House version is as disastrous for most Americans as the Senate bill).
I urge all Californians to join me in doing everything we can to defeat this legislation. Write, call or email your representatives. Tell them to reject the Republican tax plan and work on bipartisan tax reform that puts the middle class first.