The Senate Republican tax plan would provide enormous, permanent tax cuts to high-income households and corporations – all while adding at least $1.5 trillion to the deficit. And to pay for its permanent tax cuts for corporations, the bill would raise taxes on many middle-income families and repeal the Affordable Care Act’s individual mandate, increasing the number of uninsured Pennsylvanians by 505,000 and raising individual market premiums nationwide by 10 percent.
Congressional Republicans’ skewed and fiscally irresponsible tax plan would raise taxes on many middle-income families and drive up health insurance premiums to pay for permanent corporate tax cuts. The tax plan would fail Pennsylvania’s families and economy.
The House passed its bill on November 16. Senate Republicans are moving quickly to ram through their tax bill the week after Thanksgiving and work with the House to send a final bill to President Trump by the end of the year.
The Senate Plan Is an Assault on Our Health Care
Repealing the individual mandate was already rejected in the Senate as part of the GOP’s “Skinny Repeal” plan – and was opposed by governors of both parties, health insurers, physicians, patient advocates, and experts. That’s because the individual mandate is critical to keeping market coverage affordable and keeping the individual market stable.
Congressional Republicans use these savings from reducing the number of people with health coverage to give large, permanent tax cuts to profitable corporations. While they say they are using the savings to pay for tax cuts for middle-income households, they are actually increasing taxes on many middle-income households – also to pay for their permanent tax cuts for wealthy corporations.
Without the individual mandate, the Congressional Budget Office (CBO) estimates that market premiums would increase by 10 percent, costing hundreds of dollars per year for about 7 million mostly middle-income, unsubsidized individual market consumers, with premiums increasing by over $1,000 for many older people. CBO also estimates that the number of Americans without health insurance would increase by 13 million if the individual mandate were repealed.
Worse still, the Senate tax plan has the same basic flaws as the House plan:
- The Senate Republican tax plan would increase deficits. The Senate tax plan would add at least $1.4 trillion dollars to our deficits over the next decade. This would worsen the nation’s long-term fiscal outlook and could hurt the economy.
- The Senate Republican tax plan gives its biggest benefits to the wealthiest households. Nearly 28 percent of the Senate plan’s tax cuts would go to the top 5% in our state in 2019.
- The Senate Republican tax plan leaves out or harms everyone else. Even as it showers massive tax cuts on the wealthy, the Senate plan’s signature “middle class” tax cut, its Child Tax Credit (CTC) increase, provides only a token benefit ($75 or less) to 313,000 children in low-income working families in Pennsylvania.
Over time, the bill just gets worse for low- and middle-income households. While its corporate tax cuts are permanent, most of its other provisions expire – except the provisions that pay for those corporate tax cuts by raising taxes or cutting health care spending on low- and middle-income families. By 2027, the bottom 80% of people in Pennsylvania would overwhelmingly be hit with tax increases – with nearly 30% of those earning less than $148,000 facing a tax increase averaging about $100 a year.
In addition, the higher deficits that would result from the plan would ultimately have to be paid for. If the congressional budget plans are any sign, these tax cuts are likely to be paid for with cuts to programs like Medicaid, Medicare, nutrition assistance, and college aid, which would leave most low- and middle-income families worse off.