Week Ending November 9, 2017
House Tax Committee Approves Harmful, Regressive, Costly Republican Tax Plan
On Thursday, the House Ways and Means Committee voted along party lines to approve the House Republican leadership tax bill, which provides huge tax giveaways to large, profitable corporations and to the wealthy, which will ultimately be paid for with cuts in public services. All Republicans on the Committee voted for the bill and all Democrats opposed it. Below are key features of the tax bill.
- The bill would eliminate the deduction for income or sales taxes paid to state and local governments, a deduction used by millions of working families who itemize their taxes. Eliminating this deduction would raise the cost of public services at the state and local level and create pressure on state and local governments to reduce services.
- The bill eliminates the deduction for interest paid on student loans and eliminates the Lifetime Learning Credit that can be used for job training. The bill eliminates a medical deduction that helps families with excessive out-of-pocket health care costs, such as long term care.
- The tax giveaways to corporations and to the wealthy will ultimately be paid for with cuts in public services. The GOP budget outlines $5 trillion in spending cuts, including $1.5 trillion in cuts to Medicaid and Medicare. Speaker Paul Ryan (R-WI) has promised to move legislation in the spring to cut entitlements such as Medicaid, Medicare and food stamps.
- The bill would kill jobs. It gives corporations a huge incentive to move jobs and operations to other countries. That’s because the bill ELIMINATES U.S. taxes on profits earned from offshore operations.
- The bill reduces the corporate tax rate on profits earned in the U.S. from 35% to 20%, without eliminating the loopholes that allow corporations to dramatically reduce their tax bills. While the statutory rate is currently 35%, the effective rate for large, profitable corporations averages about 21% according to research by the Institute on Taxation and Economic Policy.
- The individual tax cuts are skewed toward the wealthy. The higher the income, the larger the tax cut as a percentage of income. However, not all taxpayers will receive a tax cut. Fourteen percent of people with income below $54,000 will see an average tax increase of $290 by the tenth year. Nearly 3 in 10 people with incomes between $54,000 and $154,000 will pay an average of $680 to $2,090 more in taxes by the tenth year.
AFSCME strongly opposes this bill because it will eliminate the revenues needed for public services and because it fails to require corporations and the wealthy to pay their fair share of taxes. We expect the bill to be voted on by the full House next week.
Attack on Affordable Care Act Still Possible Under House Tax Bill
House GOP leaders are contemplating whether to add a provision to the tax cut bill to repeal the Affordable Care Act’s (ACA) financial penalty for failing to obtain health coverage. According to a recent estimate by the Congressional Budget Office (CBO), repeal of the ACA’s individual responsibility requirement would cause 4 million to lose their health coverage in 2019, growing to 13 million in 2027. With fewer people obtaining tax credits to pay for their health coverage, the provision would save $338 billion over ten years. House leaders would use these funds to pay for the tax bill’s tax cuts for corporations, millionaires and billionaires.
House Approves Bill Rolling Back Workers’ Rights
On Tuesday, by a vote of 242 to 181, the House passed harmful legislation (H.R. 3441) that would weaken the right to organize and the ability to enforce federal wage and hour protections for some workers. The bill narrows the definition of an employer and would affect workers where there are joint employers, which often occurs when an employer uses a staffing agency, contractors and subcontractors to carry out work. Proponents argue that the bill is aimed at clarifying a 2015 decision known as Browning Ferris Industries. In this case, the National Labor Relations Board found that employees placed through a staffing agency were also employees of Browning Ferris because the company set the hours of operation and other conditions of work and indirectly supervised the line workers. But H.R. 3441 would go further than reversing that decision and weaken rights established in the 1930's. AFSCME opposes the legislation.
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