The aphorism “Act in haste, repent at leisure” seems to have been customized for the current congressional consideration of the so-called tax cut bill, HR 1. The House introduced the tax reform plan on Nov. 2, considered it in committee two days later, and passed the 448-page bill on Thursday, two weeks after it was made public. Acting in such haste, before elected officials had a chance to examine the bill or hear from their constituents on how it would affect them, does a disservice to the people we are elected to represent.
A simpler tax bracket and an increased standard deduction sound promising. After all, the current tax code fits snugly in 71,000 pages. If all Missouri filers take the full deduction, that could reduce the state’s $9 billion in general revenue by an estimated $500 million to $1 billion. Less revenue coming in will most probably lead to the state making spending cuts to items like education, social services, or reduced health care benefits to Missouri’s elderly and disabled. Let’s not mention the so-called “deficit hawks” who cut domestic spending in the spirit of deficit reduction but now support a tax plan that increases the deficit by $1.5 trillion, according to the Congressional Budget Office CBO, all for the benefit of the top 1 percent earners.
This House tax reform proposal is giving me that queasy feeling of déjà vu. The Kansas state government experimented with some of these very same tax changes, and we all know the result. In 2012 the state collapsed the three individual marginal income tax rates into two rates and eliminated taxes on pass through business income - corporate structures where business owners are taxed at the individual income level.
By 2015 Kansas had such large budget shortfalls that they started slashing spending. Education, highway and infrastructure funding, children’s programs, and Medicaid reimbursement rates faced precipitous cuts. The credit rating agencies, Moody’s and S&P, downgraded the state’s credit rating twice while the cuts were in effect. The tax cuts did not deliver the promised economic growth, and the state’s legislature repealed the tax cut legislation in June 2017.
This bill repeals deductions that hardworking Missourians use, including:
▪ Deductions for interest payments on student loans and tuition expenses.
▪ Deductions for out-of-pocket medical expenses. Over 8.8 million Americans annually take this deduction, which helps provide relief for people with chronic medical conditions, children, or with family members in long term care.
▪ Deductions for older Americans and for those under 65 on permanent disability.
▪ Deductions for businesses that provide employer-sponsored child care after 2022.
▪ Deductions for teachers who spend their own money on supplies for their students.
▪ Deductions for companies which help stimulate innovative cancer drug development.
▪ Deductions for nonprofits that provide lower cost capital to health and education facilities such as hospitals and schools.
▪ The Work Opportunity Tax Credit for employers who hire individuals who face barriers to employment – such as veterans.
▪ The New Market Tax Credit which supports businesses in low-income communities rehabilitates real estate and creates jobs.
HR 1 benefits companies who ship jobs overseas. Additionally, the drastic reduction in itemization could harm the housing and nonprofit sectors, which have relied on tax deductions to encourage taxpayers to buy homes and donate to charity. Congress should encourage people to become homeowners – not put barriers in their way.
Like many Missourians, I support efforts to simplify the federal tax code. However, I strongly oppose a shift of the tax burden from corporations and the wealthiest Americans to rural America, family farmers and the middle class.
In order to fulfill the responsibilities entrusted to us by our constituents, Congress must take the time to fully examine the consequences of this proposal. Good policy is not made in haste.
Rep. Emanuel Cleaver represents Missouri’s 5th U.S. House district.