Issues / Legislation » Legislative Weekly Reports

Week Ending November 3, 2017

House Republican Leaders Release Harmful Tax Plan

On Thursday, House Republican leaders released their tax cut plan. They propose huge tax giveaways to the wealthiest 1 percent and large profitable corporations, which will ultimately be paid for by forcing cuts in Medicare, Medicaid, Social Security, education, and other vital public services. In fact, House Speaker Paul Ryan (R-WI) has promised that the House will move forward with a bill to cut such spending in order to secure votes for the deficit-increasing tax cut bill. As a result, the plan threatens services we all count on, including tens of millions of children, senior citizens, and people with disabilities. According to some projections, it would also raise taxes on millions of families earning less than $100,000 per year, hitting large families especially hard.

This GOP plan is a massive giveaway to large profitable corporations – especially multinationals that either move American jobs to other countries or use accounting tricks to book their profits overseas. First, the GOP plan would permanently reduce the federal income tax rate on corporations from 35 percent to 20 percent, which will cause a loss of about $1.5 trillion in federal revenue. Second, it would create a special new low tax rate – reduced from as high as 39.6 percent to 25 percent – for wealthy individuals with business income, such as corporate lawyers, doctors, accountants and others. However, this provision does not apply to working families earning hourly wages or annual salaries. Third, the bill reduces the federal tax rate from 35 percent to 12 percent on taxes corporations owe on $2.6 trillion in profits they already have stashed overseas. Under current law, corporations would have to pay $750 billion in taxes on these profits. But the GOP tax plan would reduce these taxes to $220 billion. Because the plan establishes a lower tax on corporate profits earned overseas compared with profits earned in America, it actually creates an incentive for these corporations to send jobs and profits from America to other countries.

This Republican leadership’s plan is also a massive giveaway to millionaires and billionaires. First, even though only two of every 1,000 estates would pay the current estate tax in 2017, this plan repeals the estate tax for six years and also raises the current exemption from $11 million to $22 million (per couple). Second, the plan eliminates the alternative minimum tax, which ensures that the wealthy do not use loopholes to avoid paying a minimum amount of federal income taxes. This change results in the loss of $695 billion in revenue over 10 years. On the other hand, the plan would increase taxes for some middle-class families. For example, it eliminates every taxpayer’s $4,000-per-person exemption that each taxpayer could currently take for themselves, their spouse, and every dependent child. As a result, the plan would hit many large families hard. The plan also eliminates individuals’ federal tax deduction for income or sales taxes paid to state or local governments. The elimination of this popular and longstanding deduction also undermines the ability of state and local governments to raise revenues to fund public services.

AFSCME is strongly opposed to the House bill. We expect the bill to be rushed through the House Ways and Means Committee without hearings. The Committee is scheduled to debate the bill the week of November 6 with action by the full House soon thereafter. Some members of Congress, including many Republicans, are concerned that the tax plan would increase the national debt. House Democratic Leader Nancy Pelosi (D-CA) said the plan would ransack middle-class benefits to help the rich and, at the same time, add trillions to the deficit.

Disaster Assistance Delayed

Congress asked the Trump administration to develop another relief package to provide Texas, Florida, Puerto Rico and the Virgin Islands with needed additional funds to address the devastation wrought by recent hurricanes. Initially, Congress had hoped to move legislation before Thanksgiving, but the administration has delayed providing its recommendations and it appears that the emergency aid package will not be ready until December. The Trump administration has also warned that additional hurricane relief should be paid for with other spending cuts, which not only breaks longstanding congressional practice but also contradicts the definition of emergency spending included in the law. In the meantime, many Puerto Rican citizens are struggling to access clean water and most do not have access to power. AFSCME opposes the delay in much needed relief and urges Congress to move quickly.

House Approves Flawed Children’s Health Insurance Reauthorization

By a vote of 242 to 174, largely along party lines, the House passed legislation which renews funding to states for the Children’s Health Insurance Program (CHIP), which had lapsed on September 30, and renews funding for Community Health Centers. Unfortunately, the bill includes a number of inadequate and harmful provisions that forced AFSCME and other labor organizations to oppose the bill. Specifically, the bill includes a provision that would cause as many as 500,000 people to lose their health coverage each year. The bill includes a cut of $6.35 billion in the Prevention and Public Health Fund that helps state and local governments track emerging diseases such as Zika, address lead poisoning and other health threats, promote vaccinations and respond to public health emergencies following natural disasters. The bill also provides insufficient relief for Puerto Rico’s Medicaid program. While the federal government picked up 100 percent of Medicaid costs related to Hurricane Katrina survivors, this bill requires Puerto Rico to pay its usual share of expenses to draw down additional federal funds. Because Hurricane Maria devastated its economy, the Commonwealth is not able to boost Medicaid spending.

The bill provides a delay in unwise Medicaid disproportionate share hospital (DSH) cuts to safety-net hospitals scheduled to take effect. Unfortunately, it requires even deeper cuts to DSH in future years. The bill also increases means testing in Medicare that undermines broad support for the program and makes it harder to address existing benefit gaps in this successful program.

Legislation in the Senate is being developed on a bipartisan basis and we are hopeful that this will lead to a final bill that does not include the inadequate and harmful provisions in the House-passed bill.

Democratic Leaders Outline A Better Deal for Workers

House and Senate Democrats stood with labor leaders this week to reveal an economic agenda to improve the lives of all working people. The agenda proposes ways that Congress can strengthen collective bargaining and other workers’ rights to help Americans achieve safe working conditions, better pay, and a secure retirement. In reaction to the Democratic leaders’ economic agenda, AFSCME Pres. Lee Saunders stated, “With working families taking it on the chin, with wages virtually flat and income inequality tearing at our national fabric, we need strong labor unions now more than ever.”

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