Five ways the GOP tax plans help wealthy whites and hurt minorities
Proposals would widen economic gulf, say civil rights and liberal groups
Republican proposals to overhaul the tax code would largely benefit wealthy white Americans and further widen the economic gulf between them and minority communities, according to policy analysts for liberal think tanks and civil rights groups.
Already, white families have nearly 10 times the median net worth of black families and more than eight times that of Hispanic families, according to the latest Federal Reserve data.
Fifteen percent of white families reported being millionaires in 2016, compared with just 2 percent of black and Hispanic families.
“All this tax bill does is further concentrate wealth in the hands of a small group of mostly white individuals,” said Danyelle Solomon, director of Progress 2050, a team at the left-leaning Center for American Progress that analyzes the impact of government policies on minority communities.
Here’s how the GOP plans would cement white wealth and hurt communities of color:
1. The estate tax
Repealing or rolling back the estate tax would almost exclusively benefit wealthy white heirs. Nine out of 10 households with assets above the estate tax threshold of $5.5 million (or $11 million per couple) are white. The House plan would phase out the estate tax, first doubling the exemption before eliminating it entirely by 2024. The Senate bill keeps the estate tax but doubles the threshold to $11 million (or $22 million per couple).
Even under the current estate tax rules, only the wealthiest 0.2 percent of Americans leave behind assets valuable enough to tax, according to the nonpartisan Tax Policy Center.
2. The corporate income tax
Slashing corporate tax rates from 35 percent to 20 percent, as both House and Senate bills plan to do by 2019, will mainly increase shareholder wealth, as there is scant evidence the extra income would trickle down to workers in the form of higher pay, Solomon said.
White families are twice as likely as black and Hispanic families to invest in the stock market, with 60 percent of whites owning stocks compared with less than one-third of blacks and Hispanics, according to recently released Fed data.
3. The qualified tuition reduction
The House plan would start to tax the tuition break graduate students receive in exchange for research or teaching assistance. Doing so would remove a key incentive for students to pursue doctoral programs and raise students’ tax bills, Solomon said.
The proposal would make it even harder for African Americans and Hispanics to improve their economic futures by enrolling in advanced degree programs — where they are already underrepresented.
4. The student loan interest deduction
The House also wants to eliminate the student loan tax deduction that allows Americans with gross income of $65,000 a year or less to deduct $2,500 in interest payments on their student loans.
Doing so would disproportionately hurt African Americans, Solomon said, because they are more likely to incur student loan debt as well as fall within the income bracket to earn the full deduction.
Nearly a third of black households reported having education loans in 2016, compared to a fifth of white and Hispanic families, according to Fed data.
5. Paying for the tax cuts
The Senate tax bill would add $1.5 trillion to the national debt over the next decade and trigger the “Pay As You Go” (paygo) rule, which requires across-the-board spending cuts to a variety of mandatory programs including Medicare.
Historically black colleges and universities, tribal colleges, child-care services and affordable housing could face funding cuts, policy analysts say.
Marc Morial, president and chief executive of the National Urban League, suggested that President Trump’s budget blueprint earlier this year provided a road map of those cuts.
Of course, working- and middle-class whites will also lose out in the GOP tax proposals.
Republican leaders have framed the tax plan as a boost for the middle class. Julia Lawless, spokeswoman for the Senate Finance Committee, said it’s unfair to “cherry pick” specific provisions in analyzing the impact of the tax plan.
“When the tax overhaul plan is reviewed in its entirety, it’s clear the plan is designed to lift middleand low-income Americans across the country,” Lawless said in a statement.
Morial disagreed. “In reality, the middle class is getting a bowl of cold grits and 7-Eleven coffee,” he said, “while the wealthy are not only getting filet mignon, but they are also getting lobster, caviar and Dom Pérignon.”