Affordable housing plan at risk
With Thanksgiving, Black Friday, Cyber Monday and Giving Tuesday behind us, Americans’ pocketbooks are likely suffering from all the recent activity. And although tax season feels like a figment of the distant future, Californians likely will have less disposable income to spend for coming holiday seasons if the Republican tax bill passes.
If you don’t have more money than you know what to do with, this plan asks you to pay more so that millionaires and billionaires can pay less. Presidents Ronald Reagan and George W. Bush cut taxes for the wealthy to stimulate the economy. Although these policies may have helped to end two recessions, they also laid the foundation for the extreme economic inequality, which has been growing ever since.
Rather than propose policies to close the wealth gap, the federal tax legislation uses the same Reaganomics logic, even after the International Monetary Fund (along with many well-respected economists) found that when top earners make more, it slows economic growth.
Today, the U.S. economy is growing and unemployment is the lowest it has been in almost two decades. So arguments we need cut taxes on the wealthy in order to stimulate an already growing economy fall flat.
In California, if you make less than $180,000 (like 80 percent of us), your taxes will increase by more than $100, according to the Center on Budget and Policy Priorities. Part of this increase is due to the elimination of the state and local income tax credit, which Minority Leader Nancy Pelosi said would be “devastating” for middle-class families. On the upside, if you are one of the more than 1,000 people in line to inherit a large estate in California, you won’t have to pay the estate tax, which is probably a relief because you may want to use your inheritance to redecorate grandma’s mansion.
For those without a mansion, affordable housing is an issue that is an inevitable daily conversation in California. Just two months ago, Gov. Jerry Brown signed more than a dozen bills aimed at funding and streamlining affordable-housing construction throughout the state. But this progress may be overshadowed by cuts to “private activity bonds” and the federal Housing Tax Credit program. Just last year, more than 20,000 affordable homes were built with $2.2 billion in tax credits and $6 billion in private bonds. By exterminating the publicprivate partnerships that built these homes, there will be little money or incentive left to build affordable housing in a state that desperately needs more. Even the Orange County Register (a paper that leans right of center) said, “the federal GOP tax plan would take a wrecking ball to the new [affordable housing] foundation California has put in place.”
With housing in short supply, the exodus of Californians to states with lower rents, is likely to rise. Without a workforce willing to do service industry jobs, we just might get the robot-run future many in Silicon Valley have dreamed of — but by necessity rather than ingenuity. Problem is, robots, and companies that build them, don’t pay taxes for the jobs they replace. At least not yet.
So this year I have only one thing on my Christmas list: for members of the GOP to replace the tax proposal with one that uses empathy, logic and good old-fashioned math to provide for people’s basic needs, grow the economy, and keep the debt in check. ’Tis the season for giving, so when senators vote later this week, I hope they remember everyone they represent, not just their wealthy donors and business partners.