Why Congress's tax reform proposals don't work for working families
This letter was submitted to (but not published in) the Star Tribune and published in the Chicago Sun Times.
As key members in Congress try to push through their tax proposals, it is clear that these so-called tax cuts don’t amount to real cuts for the tens of thousands of low-income, working families and individuals that the Center for Economic Progress and Prepare + Prosper serve each year.
The truth is, Americans with low to middle incomes will see little benefit, and some will end up paying more. It is dishonest to blanketly refer to these proposals as tax cuts when benefits almost exclusively target the wealthiest Americans, and it is purposefully misleading to suggest that the proposals will result in meaningful tax relief for those who need it most.
For example, proponents of the tax bill are marketing the Child Tax Credit (CTC) expansion as a tax break for families. However, the Center on Budget and Policy Priorities recently estimated that, under the Senate CTC plan, a married couple with two children making $24,000 per year would receive an increased credit of just $200, while a married couple making $500,000 would get $4,000, or 20 times as much. This uneven distribution of tax benefits prompted one Brookings Institution analyst to call proposed CTC changes “a welfare check for the upper class.” Meaningfully reforming the CTC would target the families who need it most, including many in which parents are working at poverty-level wages, rather than ignoring them.
In addition to only minimal tax breaks for the bottom 80% of Americans, the proposals will, by blowing up the federal budget with a $1.5 trillion deficit, likely result in spending cuts that could endanger programs on which the most vulnerable rely. The people we serve may see minimal immediate benefits from the tax plans. However, some of the tax benefits, like the $300 dependent care credit, are temporary, and any gains from the plans will likely be offset by dangerous spending cuts down the line.
From big tickets items—such as elimination of the individual health insurance mandate under the Affordable Care Act, cuts to property tax deductions, and elimination of the estate tax—to smaller changes—including elimination of teachers’ ability to deduct supply expenses and changes that could double or triple the tax liability of graduate students—the House and Senate tax bills are too big to rush.
We need reasonable and well-thought-out reforms that help and not hurt taxpayers. Congress is on the wrong path—one that presents both a short- and long-term danger to low- and moderate- income Americans. It’s time to acknowledge that 2017 is not the year for tax reform—especially reform that could negatively impact generations to come.
Prepare + Prosper
President and CEO
Center for Economic Progress