Shortly after Senate Republicans released their proposed tax plan, Rep. Cedric Richmond (D-La.), chair of the Congressional Black Caucus, blasted the plan as being designed to cripple multiple generations of Black families.
Rep. Cedric Richmond, chair of the Congressional Black Caucus, is outraged at the Senate Republicans’ tax plan proposal’s impact to Black families. (Courtesy photo)
“Massive spending cuts coupled with a repeal of economic development incentive programs like NMTC (The New Market Tax Credit) will devastate African-American communities for generations to come,” he said in a statement. “Republicans tout their proposal as a victory for middle class families, but it is insulting to offer an African-American family a few hundred dollars in tax relief while giving major corporations and Trump’s 1 percent a multi-million dollar windfall. We are facing a crisis of wealth and income disparities in America and Republicans have the audacity to propose a modern day reverse Robin Hood tax system that will only widen the gap between the haves and the have-nots.”
For Americans making more than $100,000 a year the Senate Republican tax plan will offer major benefits and tax cuts. But for poor people — those making less than 30,000, this proposed plan will make hard times even harder. The Senate Budget Committee voted Nov. 28 to approve the Tax Plan sending the measure to the full Senate for a likely vote in the coming weeks.
The Congressional Budget Office (CBO) and the Joint Committee on Taxation, non-partisan groups charged with evaluating the tax plans, say the legislation would eliminate the most important provisions of the Affordable Care Act, otherwise known as Obamacare, that offers federal tax breaks to people to supplement their health insurance payments.
The CBO also said the bill would add $1.4 trillion to the deficit over the next decade, a potential problem for Republican lawmakers worried about America’s growing debt.
The tax bill would also revise numerous provisions under current U.S. tax laws, reduce most income tax rates for individuals and modify the tax brackets. It would also increase the standard deduction and the child tax credit; and repeal deductions for personal exemptions, certain itemized deductions, and the alternative minimum tax (AMT).
Adding even more pain, these changes would take effect on January 1, 2018, and would be scheduled to expire after December 31, 2025.
In terms of “Obamacare,” the bill would also permanently repeal the penalties associated with the requirements that people must obtain health insurance coverage, which is also known as the “individual mandate.”Breaking news about economic and business issues.Top of FormBottom of Form
According to the CBO, under the Senate plan Americans earning less than $30,000 a year would be worse off by 2019. By 2021, Americans earning $40,000 or less would be net losers, and by 2027, most people earning less than $75,000 a year would be worse off.
For those making $100,000 to $500,000, the bill does subject them to larger tax cuts.
“The Tax Plan fundamentally stinks,” said Marc Morial, president and CEO of the National Urban League, in a keynote address at the Center for American Progress on Nov. 29. He called the plan “a poison pill,” that would particular hurt Blacks. “The median income for African Americans is $39,000 that means the vast majority of people in this plan will not see a tax decrease. They will see a tax increase. And because it stinks 56 percent of Americans are opposed to the plan.”
While the CBO and JCT analyses make it seem as if the poor will be losing out, Republican proponents say people making less than $30,000 are not paying taxes anyway.
The plan would:
- Create seven income tax brackets ranging from 10 percent to 38.5 percent, which is down from the current rate of 39.6 percent.
- Increase the standard deduction;
- Repeal the individual alternative minimum tax (AMT);
- Allow a 17.4 percent deduction, subject to certain limits, for qualified business income that individuals receive from pass-through entities, namely partnerships, S corporations, and sole proprietorships;
- Increase the child tax credit to $2,000, and, among other related changes, provide a new $500 credit for certain other dependents; and
- Double the exemption allowed under estate and gift taxes.