NC Budget and Tax Center

Senate tax plan would eliminate health insurance coverage for millions to pay for tax cuts for richest Americans

The Senate tax bill released last week follows the same framework proposed by the U.S. House and the Trump Administration: delivering large tax cuts to the richest Americans while paving the way for cuts to schools, health care and the infrastructure that helps communities thrive.

Now, in what is perhaps the most disturbing recent development, Senate leaders have added a more explicit attack on the health care of at least 13 million Americans by placing a proposed repeal the individual mandate in the tax bill.

This is from the Center on Budget & Policy Priorities:

“The savings from eliminating the mandate would come entirely from reducing health coverage. For example, the federal government would spend less on premium tax credits because fewer people would sign up for marketplace coverage, less on Medicaid because fewer people would enroll, and less on the tax exclusion for employer-sponsored health insurance because fewer employees would enroll in job-based coverage.

These savings are what let Senate leaders make their full corporate rate cut permanent. Without repeal of the individual mandate, the long-term costs of the corporate rate cut ($171 billion in 2027 alone) would have exceeded the savings from the bill’s offsetting revenue raisers, even after Senate Republicans modified their bill to have its individual income tax cuts expire after 2025. This math problem seems to have been a key part of the motivation for adding individual mandate repeal to the bill. With savings of $53 billion in 2027, the provision pays for making about one-third (about 4.7 percentage points) of the corporate rate cut permanent. Other provisions in the bill would cover the rest of the cost.”

Late yesterday, the national AARP issued the following statement:

“The amendment to repeal the individual health coverage requirement will leave millions of Americans uninsured, destabilize the health insurance market, and lead to spikes in the cost of premiums.

The Congressional Budget Office recently confirmed that repealing the individual health coverage requirement would lead to 13 million Americans losing their health coverage, including 2 million Americans who would lose employer-sponsored coverage.

AARP urges Congress to reject this amendment, which also undermines the bipartisan health bill offered last month by Senators Lamar Alexander (R-TN) and Patty Murray (D-WA) that is intended to reduce premium spikes and stabilize the individual health insurance market.”

This is a developing story — stay tuned for updates.

NC Budget and Tax Center

Economic experts slay arguments for tax cuts

Economists with the Economic Policy Institute recently released a concise but well-resourced guide that responds to some major questions that often arise when policymakers turn to tax cuts to solve our economic challenges.

Here’s the report’s bottom line answer to the question of whether tax cuts should be a priority for policymakers:

“Tax cuts provide no durable solution to any genuine economic problem for America’s working families, but do make some genuine problems even worse.”

Check out the full piece here.

And then turn to the latest analysis from Josh Bivens of the Economic Policy Institute showing that real-world data finds no wage boost from corporate tax rate cuts.

Federal policymakers should heed the evidence, as should North Carolina policymakers who have continued to reduce the state’s corporate income tax since 2013 so that it is now the lowest in the nation. Real-world data in NC: Median wages are still below where they were when the national economic recovery began.

NC Budget and Tax Center

Federal tax changes benefit the wealthy, reduce funding for NC communities

Last week, with the release of the tax changes planned by President Trump and leaders of the US Congress, North Carolina taxpayers braced themselves for another layer of experimentation that is sure to fail our communities and our economy.

New data released today by the Institute on Taxation and Economic Policy confirms that the tax changes will primarily benefit the country’s wealthiest taxpayers, fail to target the middle class and reduce the ability to fund core public services in all 50 states.

In North Carolina, 57.6 percent of the net tax cut goes to the top 1 percent of taxpayers in the state.  While better than the national figure of 67.4 percent, it is a staggering figure signaling the failure to achieve the middle-class tax cut promised.

Here are three additional points that are important in reviewing the proposed changes at the federal level: Read more

NC Budget and Tax Center

Failed tax-cut experiment hurts NC – don’t let it hurt the country

Senator Thom Tillis is trying to sell national leaders and elites on North Carolina’s failed tax cut experiments.  His commentary in the Wall Street Journal this week cherry picks data and ignores the growing evidence that many communities and taxpayers in our state have been hurt by the approach to tax cuts that have primarily benefited the wealthy.

Most egregiously, it shows that Senator Tillis has not taken the time to monitor the way in which the choices made in 2013 have played out in his home state over the past four years.

We have.  Here is what our analysis tells us. Read more

Back to School Series

Measuring poverty shows that government programs are working

Every year when the Census Bureau releases its annual updates on the economic well-being of the nation and our state, we turn to a measure that has largely been rejected by most people as reflective of what it takes to get by today.

The poverty measure, as typically lifted up in media reports, is calculated based on the food choices of families living in the 1950s.  There are various efforts to get a more accurate sense of what it actually takes to makes end meet and avoid hardship—doubling the figure is one way that gets you to the definition of low-income in most circles, and another is developing market-based measures on the costs of the full range of goods a household needs, like the Living Income Standard.

The US Census Bureau and academic researchers have developed another tool—the Supplemental Poverty Measure. This measure includes the government programs that seek to serve low-income people that aren’t accounted for in the official poverty measure. In the U.S., this measure shows that 13.9 percent lived in poverty and that the two most significant programs working to move people out of poverty were Social Security and Refundable Tax Credits. Read more