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Tasha Green Cruzat Commentary: Turn down the Senate tax bill

At the end of the day, the federal tax reform debate comes down to a simple fact: Everyday working families will likely end up paying more for health care, housing, and college, so U.S. businesses can get a large tax cut. At least, those that actually pay taxes.

Combined with other tax relief measures in the bill, the Senate tax reform plan would increase the deficit by $1.4 trillion over the next ten years. Businesses would dramatically benefit from this bill which begs the questions, who will pay for all of this?

  • Perhaps it will be one of the 1.5 million Illinois children whose health insurance is covered by Medicaid or the Children’s Health Insurance Program.
  • Perhaps it will be one of the more than 40,000 Illinois children served by Head Start.
  • Perhaps it will be taken from the nearly $2 billion in federal funding received by Illinois in 2016 for housing assistance.
  • Perhaps it will be one of the nearly 300,000 Illinois students who receive a federal Pell grant for college.

In addition, the Senate bill repeals the federal deduction for state and local taxes. This measure, along with potentially severe cuts in federal funds that flow to Illinois, would only compound the serious financial condition our state still faces.

Tax decreaseCongress has three choices for dealing with any increased federal debt. It could offset the amounts in federal spending cuts, it could let sequestration—which automatically enacts federal spending cuts to reduce the deficit—kick-in, or it could amend the sequestration law and just increase the federal debt. Increasing the debt by $1.4 trillion likely puts a host of critical domestic spending programs at risk including Medicaid, child care, and low-income housing assistance. While the sequestration law may protect some programs, there will still be a great deal of pain.

Looking for a way to reduce the deficit increase, the Senate amended its bill by adding a measure to repeal the provision of the Affordable Care Act requiring most people to secure health insurance or pay a penalty.

How does that reduce the deficit? Fewer people seeking health care would mean the federal government pays out fewer subsidies. The Congressional Budget Office estimates that under this provision the number of Americans without health insurance would increase by 13 million. If you choose to continue purchasing insurance for your family, you could see your health care premium increase by 10 percent. This could effectively put health insurance out of reach for some people. Yet, if those individuals get sick and go to emergency rooms, you could still pay for their care when the hospital passes along the uninsured costs to everyone else.

The tax reform proponents use the long-held, and long-discredited, belief that tax cuts for the richest Americans will lead to a positive financial trickle-down effect for working and middle-class Americans. It probably will only make life worse for them. While some middle-class families will get some initial tax relief with the measures contained in the bill, it won’t last long. While the corporate tax cut would be permanent, those benefiting middle-class families would decrease in value and ultimately disappear at the end of 2025.

Working and middle-class families cannot be asked to bear the burden for financial relief to the most well-off businesses and individuals. Tax reform should focus on helping American families improve their standard of living and access to economic opportunities, not squeezing valuable social service programs that benefit them.

Tasha Green Cruzat
President, Voices for Illinois Children

 

 

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