President Trump wanted House passage of the tax bill by Thanksgiving and Senate passage by the end of the year. (Nov. 16, 2017) (Sign up for our free video newsletter here http://bit.ly/2n6VKPR)
The “tax cut” bill currently before the Senate helps big corporations and wealthy people but does little or nothing for the middle class (“As clock ticks on tax bill, White House signals a compromise,” Nov. 19). Some people will see a small, temporary decrease in their taxes, but that decrease may be wiped out because the bill eliminates deductions that many people use. Here is what the bill does:
It eliminates the ACA’s individual mandate, causing 13 million people to lose their health insurance, a conservative estimate because eliminating the mandate encourages younger, healthier people to forego buying health insurance. That will create a sicker, more expensive risk pool, raising premiums and making insurance unaffordable for many. Republican leadership cynically describes this as “giving people the choice not to buy health insurance.” People so choosing gamble that they won’t get sick or have an accident, but potential tax savings would be quickly wiped out by a major illness or accident.
The Senate tax bill favors the extremely wealthy while providing little or no help to the middle class. It eliminates the estate tax for people with estates over $11 million or $22 million for a couple, twice what current law allows. How many Maryland families will benefit from this tax break?
A New York Times analysis concludes that almost half of cuts in the Senate bill would go to people earning $200,000 or more; 10-15 million taxpayers earning less than $100,000 would see a tax increase. Finally, 80 percent of people who earn between $50,000 and $75,000 would be worse off. Even in Maryland, a wealthy state, the median family income is $69,272 according to the 2010 census.
Tax cut proponents argue that corporate tax cuts will spur economic growth that will generate investment, create jobs and raise wages. Cuts in corporate taxes will “trickle down” to individual taxpayers. Few economists agree that will happen because previous attempts to implement such a plan have failed. Last week, a Wall Street Journal reporter asked a group of CEO’s if tax cuts would encourage them to hire more people and raise wages. Most said no. The cuts will instead go to stock buy-backs and investors, again benefiting only the wealthy.
Corporations will get a tax cut from 35 percent to 20 percent based on faulty assumptions about economic growth. In addition, the corporate tax cut is permanent, while tax cuts for individuals are not. The Senate bill eliminates individual income tax rate cuts in 2026. Any help that bill gives middle class people in Maryland will be temporary.
The Senate bill eliminates deductions for state and local taxes and sales taxes. Maryland’s state income tax ranges from 2 percent to 5.75 percent. Maryland’s sales tax is 6 percent. Maryland property taxes average over $2,000 per year ($1,700 in Kent County) and the Senate bill eliminates deductions for those, too. Maryland was listed in the 2017 Kiplinger's “10 Most Tax-Unfriendly States for Retirees.” Might making taxes higher by eliminating those deductions discourage wealthier retirees with disposable income from retiring to Maryland?
Maryland has 740,000 people over 65 (12.3 percent). The Senate bill increases the deficit up to $1.5 trillion dollars unless Congress can cut enough other programs to compensate. One proposal cuts Medicaid, a program that supports most people in nursing homes, children and people with disabilities by $1.3 trillion. Without cuts that large in existing programs, the Senate bill will increase the deficit causing automatic, immediate cuts to Medicare of $25 billion according to the Congressional Budget Office. Will that help our senior citizens?
This bill is being rushed through with no input from 48 Democratic and Independent senators, leaving over half of the country’s citizens with no voice in the process. There have been no hearings, no expert testimony and almost no time for the agencies that advise the Senate to calculate costs and benefits. Without that information, senators cannot make an informed decision.
Republican leadership hopes to pass this bill quickly before people know what’s in it. That isn’t working either. A Quinnipiac poll taken last week found that: 61 percent think the bill favors the wealthy; 52 percent disapprove of the plan; 6 percent think it will benefit low income people; 36 percent think it will lead to more growth; 16 percent say it would decrease their taxes; 71 percent think it will either have no effect (36 percent) or will increase their taxes (35 percent).
Sens. Ben Cardin and Chris Van Hollen will vote no on this bill. However, to defeat it, at least three Republican senators must vote no as well. If you have family or friends in states represented by Republican senators, urge them to contact their senators and tell them to vote no.