The artwork on this note card was created by 5768 WRJ Art Calendar artist Césan d’Ornellas Levine.
After much anticipation, House Republicans published their version of tax overhaul on Thursday, November 2. With the full text coming in at 429 pages, and the summary coming in at 76, this bill is incredibly complex. While we continue to explore the bill, a few topline items have risen to our attention given their impact on the wellbeing of the most vulnerable Americans.
Deficit increase: The reconciliation instructions that set the parameters for the tax bill allow it to add up to $1.5 trillion to the deficit. This provision raises two concerns: first, studies of earlier versions of the tax bill have calculated that these plans would actually cost much more, up to $7 trillion. Drafters have yet to identify where the money will come from to cover this excess. We will oppose any attempts to pay for this difference by eliminating or cutting programs that help low- and middle-income Americans.
We are also concerned about the effect of such a massive deficit increase on funding for these same programs. This bill will increase the national debt, thus creating pressure to reduce spending. Earlier budget proposals support this contention—the House budget proposal cut non-defense spending (including mandatory and discretionary spending) by $5.8 trillion, and the Senate proposal cut this same category by $4.6 trillion over 10 years. Programs at risk include Medicare and Medicaid, the Supplemental Nutrition Assistance Program, education, refundable tax credits, and school meals. If this plan materializes, many low- and middle-income Americans could end up losing much more than they gain as a result of the tax bill.
Child tax credit (CTC): The tax bill also includes changes that would prevent the parents of millions of children from receiving the CTC, a provision the Reform Movement has strongly supported for years. The bill increases the credit per child from $1,000 to $1,600, but it also requires a work-eligible Social Security number for all filers. Currently, filers who do not have a Social Security number can use an Individual Taxpayer Identification Number (ITIN). The parents of about 3 million children would be made ineligible for the CTC if this provision is enacted. By taking away a credit that assists families with the resources they need to raise their children, this change could deeply harm millions.
Estate tax: The bill would phase out the estate tax by doubling the exemption level, and fully eliminate it after five years. The Reform Movement has staunchly supported the estate tax as an incentive for charitable giving. According to the Tax Policy Center, this piece of the plan would cost over $170 billion over the next decade. Not only does this represent a large revenue loss, but it is particularly painful as it would go to those who need it least—the current exemption level ensures that the estate tax only applies to extraordinarily large estates.
Education: The bill ends or changes several provisions that support teachers, students, and public schools. It eliminates a credit that lets teachers deduct up to $250 for money they spend on supplies for their students. It also undermines public education by ending the Coverdell Education Savings Account program and incentivize parents to invest in 529 savings accounts—intended to help parents save for public higher education—that can be used to subsidize the cost of attending private, religious schools. We are wary of any provision allowing the use of public funds for private schools, especially when that includes the government funding religious schools.
Johnson Amendment: The Johnson Amendment establishes that tax-exempt entities may not endorse or oppose candidates or parties for elected office. The Reform Movement has long advocated for the Johnson Amendment to remain in place. Unfortunately, the tax bill includes a provision that weakens the Johnson Amendment, potentially allowing tax-exempt entities, including houses of worship, to endorse candidates in statements, presentations, and teachings made during “religious services or gatherings.” The language in the bill is ambiguous, but would essentially serve as a dangerous weakening of the Johnson Amendment by leaving it up to houses of worship to determine what is construed as permissible behavior and what is not.
Environment: This plan moves up the date when an important solar tax credit will expire and ends an electric vehicle write-off which help make electric cars more affordable as they start to enter the mainstream. More urgent is the decrease to wind subsidies, a move which will discourage wind investments is likely negatively impact clean energy investment overall. At the same time, the plan leaves in place most fossil fuel subsidies, most notably the Intangible Drilling Cost deduction. Continuing to subsidize fossil fuels while cutting subsidies to clean energy further artificially tips markets to fossil fuel production, which is opposite from the direction in which energy production should be moving.
Healthcare: The bill eliminates a few healthcare related deductions that target particularly vulnerable constituencies: one for very high healthcare bills, especially long-term care, and one for drug companies working on rare diseases.
As outlined above, the House tax bill includes many provisions that threaten the programs and policies we care about most. We are still parsing through the details of the bill, and will keep you updated as we better understand more provisions. As the debate and markup process proceeds, we will make sure you have the opportunity to share these and other concerns with lawmakers, seeking to ensure that any tax bill that is passed protects the most vulnerable Americans, both today and in the future.