True tax reform should help working middle and low-income Americans. True tax reform should maintain or expand middle class tax deductions and help families climb out of poverty.
The current bills working their way through the House and Senate do none of this! Californians will be worse off as a result.
Here's what the bills will do:
- They will create a 1.5 trillion deficit, which would likely be paid for with up to a $1.7 trillion in cuts to Medicaid and Medicare.
- Middle class deductions will be eliminated. Most notably, the state and local tax deduction—along with teacher supplies deduction, student loan interest, medical expenses, and the mortgage deduction. Many, if not most, middle income earners will see a tax increase. Instead Congress could use this opportunity to expand the Earned Income Tax Credit to more working Americans, such as childless adults between the ages of 21 and 25.
- Disproportionally impact California because we have low property taxes, and higher income taxes; CA along with NY, NJ, and IL, will take a big hit with the reduction of state and local taxes deduction; (NY, NJ, IL Republican caucuses have come out against the House bill);
- Would have massive health impacts for millions of Californians by repealing the Affordable Care Act’s individual mandate that requires most Americans to have health coverage or pay a penalty. This would cause 12 million Americans (1.7 million Californians) to go without coverage and raising future premiums for everyone else as a direct result.
- 80% of the bills directly benefit corporations and the wealthy. The top corporate tax rate is reduced from 35% to 20%.
- Makes corporate tax cuts permanent while individual tax cuts would sunset in 2025.
We believe there is still time to come up with bipartisan reform that will truly drive economic growth and help families move up without busting our budget. These bills are clearer not that. We ask all California House members to come out strongly in opposition of the bill. We ask them to stand with Californians and demand better.
*Analysis from Kaiser Family Foundation, Center for Budget and Policy Priorities, U.C. Berkeley and the Congressional Budget Office.