West County Democrats
November 13, 2017
Neither the House nor the Senate proposed tax “reform” proposals will advance in their current form: the eventual product will, alas, be bad for many taxpayers and businesses but good for the wealthy.
Senate leader Mitch McConnell reluctantly admitted that the proposals before the Senate and the House will not provide tax cuts to “every” middle class family – despite the promises of President Trump, McConnell and other leaders. Quick reviews of the plans predict from one-fifth to one-third of middle class families will pay more under the new tax scheme. Modest income seniors with health issues are guaranteed to pay substantially more in taxes when the deduction for medical expenses is killed.
This is by design: since just 9% to 10% of American taxpayers claim a medical deduction, that line item was a less painful target than home mortgage deductions (claimed by a third of taxpayers).
In Missouri, the prediction is that working class/lower middle class families will, on average, see their federal tax bill reduced by about $2.11 per week while the top 1% of taxpayers get an $800.00 a week cut.
While media attention has focused on the $1.5 trillion the tax plan adds to the existing deficit, the painful reality is that the tax plan pays for better than $3 trillion of its costs with dramatic cuts to public benefit programs over the next decade:
Medicaid $1 trillion cut
Medicare $500 billion cut (with no reduction in prescription costs)
Food Stamps $130 billion cut
In addition, over one million housing vouchers could be cut, Pell Grants are slated for elimination, disability and unemployment pay would be reduced and virtually every non-defense line item gets trimmed.
Congress wants their tax cut plan to be their Christmas Present to President Trump. The final debacle will be passed without any Democrats’ votes.
As the tax fight builds, less attention is being paid to the real potential for a government shut-down around December 8. The short-term patch to the budget and debt ceiling may not be renewed: many Freedom Caucus Republicans are demanding additional mid-year cuts to social service expenditures as a pre-condition to keeping the government running.
Getting even less attention that the debt limit, Congress is in the process of endorsing long-term changes to environmental policy. For example, more of the Arctic National Refuge will be opened up to oil and mineral exploration and extraction, and, federal approval of new pipeline projects will give builders the equivalent of national eminent domain powers.
Like the majority of states, Missouri’s tax code is grafted on to the federal income tax rules. As a result, as noted by the Columbia Missourian last week, the federal tax cuts could reduce Missouri’s income tax yield by $500 million to $1 billion per year – a loss of up to one dollar in every nine in General Revenue!
Missouri’s Fiscal Year 2018 began on July 1st. State General Revenue through October is running below the level needed to fully fund the budget passed last May. Expect Governor Greitens, when he’s back in Missouri, to announce more trims to state spending.
The Missouri Budget Project and other educated observers believe the legislature must reduce state spending by hundreds of millions of dollars for Fiscal Year 2019 in response to the state tax cuts now in effect. Add the current year shortfall, the need for more cuts and the loss of dollars due to federal action and, well, it is inevitable that basic state functions such as support for K – 12 education will be significantly reduced.
Legislators can begin pre-filing bills for the next session on December 1st. While the majority party will provide bits of entertainment with their ideas, a few items have been telegraphed:
Pre-empting St. Louis City’s proposal to weaken marijuana laws
Requiring public schools and universities to let faculty and adult students carry guns
Bathroom choice unchangeable after birth
Eliminating Prevailing Wage
For the legislative issues archives click here.
Submitted by Glenn Koenen, WCD Member