Nov 21, 2017

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5 More Reasons to Oppose the ‘Tax Reform’ Proposals

by | Nov 21, 2017

It seems that more Americans are wising up to the Congressional schemes to indefinitely lavish the country’s wealthiest corporations and individuals with hundreds of billions of dollars in tax cuts while giving some middle-class families a few morsels of tax relief for a limited time.

As mentioned in a previous CCLP blog, the plans would eliminate deductions that benefit low- and middle class families, force dramatic cuts in programs including Social Security, Medicaid and Medicare while needlessly raising the national debt by a whopping $1.5 trillion. Meanwhile, the Senate one-upped the House’s already horrible plan by adding a repeal of the Affordable Care Act’s requirement for individuals to obtain health insurance. If passed, the repeal would further destabilize the health insurance market, result in even higher premiums and leave tens of millions of Americans without coverage. As Sen. Susan Collins recently noted, the premium hikes alone will likely wipe out (or more than wipe out) any dividends from the Senate bill for most middle-class people.

Unfortunately, many Americans are struggling so much that a couple hundred dollars in tax relief for a few years sounds tempting, and that enticement factor has played well with some constituents. But in the aggregate, both proposals generously reward the richest taxpayers at the considerable expense of the poorest in the short-term, and even more so in the long-term.

As American families prepare to argue about politics and policy over Thanksgiving dinner, here are five more reasons to oppose the tax-reform proposals in their current form:

1) Despite promises that the tax relief will “trickle down” to working people, none of the tax cuts for corporations are contingent on job creation, hiring, employee training or increasing employees’ wages. It seems that many members of Congress actually believe in the fabled “trickle-down” theory that economic stimulus for the rich will benefit those in lower income brackets over time. Unfortunately, history has disproven this theory as shown by the effect of previous plans to restructure the tax code. While corporations are rewarded greatly in the latest tax-reform proposals, there are absolutely no incentives for them to invest in jobs and workers.

2) The proposals would limit the ability for middle- to low-income individuals to advance their education. For example, the Lifetime Learning Credit for individuals, a refundable tax credit of up to $2000 for tuition and supplies would be eliminated under the House version of the tax plan. Graduate student tuition waivers would count as taxable income under the House bill, and the House would eliminate the provision in employer-based tuition programs — which would count as taxable income to employees. Eliminating these credits and waivers creates a huge disincentive for most people to advance their education and career opportunities that could potentially improve their financial well-being later on.

3) Low-income single parents and people with more than two kids are likely to pay MORE taxes, not less under the plans. Both plans propose a change of filing status that would raise the bottom tax rate from 10 percent to 12 percent. They also eliminate the $4,000 per person exemption (applied to children and dependents) in favor of a temporary $300 dependent “credit.” Meanwhile, parents who pay alimony will no longer be allowed to deduct their payments on their taxes nor take advantage of child tax exemptions — likely raising their taxable income (and their taxes) when those payments exceed the newly bolstered standard deduction of $12,000 a year.

4) The House version of the tax bill eliminates the medical expense deduction, potentially forcing those with serious medical injuries into the Medicaid program or even medical bankruptcy. This deduction applies to people whose medical expenses are more than 10 percent of their adjusted gross income. More than 8.8 million people claim this deduction, with most earning $75,000 or less with a household member aged 65 or older. This deduction helps people with high medical costs, including seniors in nursing homes, people with chronic health conditions and parents with disabled children.

5) The plans would be especially hard on older Americans. For example, repealing the individual mandate, as mentioned earlier, would raise premiums by about $1,000 a year for older people, according to the Congressional Budget Office. It’s estimated the plans will result in $25 billion in Medicare cuts that would go into effect within 15 days at the end of the session to reduce spending in the 2018 fiscal year. Not to mention, the aforementioned elimination of the medical-expense deduction would also mean that assisted-living expenses and other long-term care would not be tax deductible.

University of California, Berkeley professor and former Secretary of Labor Robert Reich recently opined that if passed, the proposals would represent the largest transfer of concentrated wealth in American history. Let’s make sure these proposals don’t work their way in the tax code.

Contact your elected representatives and tell them that you favor tax reform that puts opportunity and economic stimulus for working people ahead of moneyed interests.

– By Bob Mook

Recent articles

HEALTH:
HEALTH FIRST COLORADO (MEDICAID)

To maintain health and well-being, people of all ages need access to quality health care that improves outcomes and reduces costs for the community. Health First Colorado, the state's Medicaid program, is public health insurance for low-income Coloradans who qualify. The program is funded jointly by a federal-state partnership and is administered by the Colorado Department of Health Care Policy & Financing.

Benefits of the program include behavioral health, dental services, emergency care, family planning services, hospitalization, laboratory services, maternity care, newborn care, outpatient care, prescription drugs, preventive and wellness services, primary care and rehabilitative services.

In tandem with the Affordable Care Act, Colorado expanded Medicaid eligibility in 2013 - providing hundreds of thousands of adults with incomes less than 133% FPL with health insurance for the first time increasing the health and economic well-being of these Coloradans. Most of the money for newly eligible Medicaid clients has been covered by the federal government, which will gradually decrease its contribution to 90% by 2020.

Other populations eligible for Medicaid include children, who qualify with income up to 142% FPL, pregnant women with household income under 195% FPL, and adults with dependent children with household income under 68% FPL.

Some analyses indicate that Colorado's investment in Medicaid will pay off in the long run by reducing spending on programs for the uninsured.

FOOD SECURITY:
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)

Hunger, though often invisible, affects everyone. It impacts people's physical, mental and emotional health and can be a culprit of obesity, depression, acute and chronic illnesses and other preventable medical conditions. Hunger also hinders education and productivity, not only stunting a child's overall well-being and academic achievement, but consuming an adult's ability to be a focused, industrious member of society. Even those who have never worried about having enough food experience the ripple effects of hunger, which seeps into our communities and erodes our state's economy.

Community resources like the Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, exist to ensure that families and individuals can purchase groceries, with the average benefit being about $1.40 per meal, per person.

Funding for SNAP comes from the USDA, but the administrative costs are split between local, state, and federal governments. Yet, the lack of investment in a strong, effective SNAP program impedes Colorado's progress in becoming the healthiest state in the nation and providing a better, brighter future for all. Indeed, Colorado ranks 44th in the nation for access to SNAP and lost out on more than $261 million in grocery sales due to a large access gap in SNAP enrollment.

See the Food Assistance (SNAP) Benefit Calculator to get an estimate of your eligibility for food benefits.

FOOD SECURITY:
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN (WIC)

Every child deserves the nutritional resources needed to get a healthy start on life both inside and outside the mother's womb. In particular, good nutrition and health care is critical for establishing a strong foundation that could affect a child's future physical and mental health, academic achievement and economic productivity. Likewise, the inability to access good nutrition and health care endangers the very integrity of that foundation.

The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) provides federal grants to states for supplemental foods, health care referrals, and nutrition information for low-income pregnant, breastfeeding and non-breastfeeding postpartum women and to infants and children up to age five who are found to be at nutritional risk.

Research has shown that WIC has played an important role in improving birth outcomes and containing health care costs, resulting in longer pregnancies, fewer infant deaths, a greater likelihood of receiving prenatal care, improved infant-feeding practices, and immunization rates

Financial Security:
Colorado Works

In building a foundation for self-sufficiency, some Colorado families need some extra tools to ensure they can weather challenging financial circumstances and obtain basic resources to help them and their communities reach their potential.

Colorado Works is Colorado's Temporary Assistance for Needy Families (TANF) program and provides public assistance to families in need. The Colorado Works program is designed to assist participants in becoming self-sufficient by strengthening the economic and social stability of families. The program provides monthly cash assistance and support services to eligible Colorado families.

The program is primarily funded by a federal block grant to the state. Counties also contribute about 20% of the cost.

EARLY LEARNING:
COLORADO CHILD CARE ASSISTANCE PROGRAM (CCCAP)

Child care is a must for working families. Along with ensuring that parents can work or obtain job skills training to improve their families' economic security, studies show that quality child care improves children's academic performance, career development and health outcomes.

Yet despite these proven benefits, low-income families often struggle with the cost of child care. Colorado ranks among the top 10 most expensive states in the country for center-based child care. For families with an infant, full-time enrollment at a child care center cost an average of $15,140 a year-or about three-quarters of the total income of a family of three living at the Federal Poverty Level (FPL).

The Colorado Child Care Assistance Program (CCCAP) provides child care assistance to parents who are working, searching for employment or participating in training, and parents who are enrolled in the Colorado Works Program and need child care services to support their efforts toward self-sufficiency. Most of the money for CCCAP comes from the federal Child Care and Development Fund. Each county can set their own income eligibility limit as long as it is at or above 165% of the federal poverty level and does not exceed 85% of area median income.

Unfortunately, while the need is growing, only an estimated one-quarter of all eligible children in the state are served by CCCAP. Low reimbursement rates have also resulted in fewer providers willing to accept CCCAP subsidies.