Republican Tax Plan Would Benefit Large Corporations and the Rich, While Hurting Working Families Today, Tomorrow, and for Years to Come
This statement from the Center for Law and Social Policy (CLASP) can be attributed to CLASP Executive Director Olivia Golden.
Washington, D.C.—Americans believe in a society of equal opportunity—where the circumstances of your birth do not determine your future. But the tax plan unveiled by the House Ways and Means Committee yesterday would be a huge step in the opposite direction, providing little or no benefit to working families with the lowest incomes—fully a third of all families—and taking away key tax credits from children in immigrant and mixed-status families, while allowing the majority of the richest people in the country to pass their wealth onto their children without it ever having been taxed. Further, the proposal would increase the deficit by $1.5 trillion over the next 10 years—and even more after that. This would force cuts to critical programs that promote economic mobility such as Medicare, Medicaid, Supplemental Nutrition Assistance Program (SNAP), Pell grants, child care, and more.
The massive tax cuts for corporations and the wealthiest people would:
- Reduce revenues by nearly $847 billion over the next decade due to the cuts in corporate taxes, according to the Congressional Joint Committee on Taxation.
- Phase out and then eliminate the estate tax, at a cost of $172 billion. Under current law, only 0.2 percent of all estates in America are large enough to pay any estate tax. Doubling the exemption would give EACH of the largest estates a $4.4 million tax cut, enough to give 1,100 low- and moderate-income students a Pell grant to attend college.
- Create a new loophole that would allow wealthy business owners to lower their rates by a third, at a cost of $448 billion.
While the proposal includes an increase in the child tax credit (CTC), the increased amount is not refundable, so an estimated 16 million children in low-income working families would see no benefit from the increase. Instead, the largest benefits go to families making up to $230,000 a year, a significant increase over the current limit of $110,000 a year. Moreover, the proposal would take the current CTC away from children whose immigrant parents file their taxes using an Individual Taxpayer Identification Number (ITIN). This could harm as many as 5 million children of taxpaying parents, the majority of whom are US citizens, and 1 million of whom are young DREAMers. This will have devastating consequences for these children, which will compound over time, and increase child poverty in the United States. Investing in the economic security of children through the CTC rewards paying taxes, helps working families, benefits the economy, and invests in future generations.
Low- and moderate-income families will also be hurt by the spending cuts that will follow as a direct result of this tax bill. Immediately, the increased deficit would trigger automatic cuts to programs such as Medicare and the Social Services Block Grant. Moreover, Congressional Republicans have been explicit that they see this as a two-step process, meaning that if they pass these tax cuts, they will immediately turn around and propose deep cuts to health care, nutritional assistance, child care, Pell grants and more.
This Republican tax plan is a nonstarter for low-income working families. The Center for Law and Social (CLASP) urges Congress to reject it.