NC Budget and Tax Center

Senate tax bill would eliminate programs for farmers, crime victims, the elderly, and children

In this season of giving, the U.S Senate is rushing to pass a tax bill next week that would overwhelmingly benefit corporations and the richest households.

If passed, this tax plan would not only raise the tax load on millions of low- and middle-income families, it would also mean the elimination of vital programs that help many Americans get by every day.  The reason: Math.

By increasing the U.S deficit by more than $1.5 trillion over the next ten years, Congress would have to reduce spending in fiscal year 2018 alone by a total of $136 billion due to spending rules. To put this in perspective, the Congressional Budget Office (CBO) has already estimated that this tax bill would result in $25 billion in automatic cuts to Medicare in 2018.

Among the programs that could be eliminated entirely based on analysis by the Center for American Progress are:

  • “Farm Price-Support Programs. This program funds the Commodity Credit Corporation Fund, which stabilizes, supports, and protects farm income and prices; helps maintain adequate and balanced supplies of agricultural commodities; and facilitates the distribution of commodities in an orderly way.
  • Farm Security and Rural Investment Programs. These programs provide funding for critical conservation efforts on private lands, including critical wetlands, grasslands, forests, and farm and ranch lands.
  • Funds for Strengthening Markets, Income, and Supply. This program encourages the exportation of agricultural commodities and products; encourages domestic consumption of agricultural products; and re-establishes farmers’ purchasing power by making payments in connection with the normal production of any agricultural commodity for domestic consumption.
  • Commodity Assistance Program. This program provides food donations to help the elderly and low-income populations, among others.
  • Vocational Rehabilitation Basic State Grants. This program provides grants to assist states in running statewide vocational rehabilitation programs for people with disabilities in order to help them prepare for, secure, regain, or retain The program is critical to state agencies’ ability to work with disabled individuals to prepare for and engage in competitive and integrated employment and achieve economic self-sufficiency.
  • Health Care Fraud and Abuse Control Program. This program combats fraud and abuse in federal health care spending.
  • Social Services Block Grant. This funding provides states with flexible resources to help with human services such as child care, foster care, elder abuse prevention, Meals on Wheels, and more.
  • Promoting Safe and Stable Families Program. This program helps states keep children safe from maltreatment; prevents the unneeded separation of children from their families; makes the quality of care and service to children and their families better; and helps ensure permanent living situations for foster children.
  • Higher Education Programs. This provides funding for historically black colleges and universities, Hispanic-serving institutions, and tribal colleges to better serve students and increase capacity. It also includes grants to help the children of service members who lost their lives in Iraq or Afghanistan to afford college.
  • Affordable Housing Program. This program supports federal home loan bank contributions to subsidize affordable housing and homeownership.
  • Crime Victims Fund. Funding is used to support state programs that benefit crime victims, including efforts to combat violence against women, human trafficking, and child abuse and neglect.”

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center

The top 3 reasons why the Senate Tax Plan is bad for North Carolina

The U.S. Senate is planning to vote on its proposed tax bill next week. In this season of giving, a time when communities are coming together and donating their time and resources to ensure that everyone has food on the table and a roof over their heads, the proposed Senate tax plan would do just the opposite – asking low- and middle-income families to foot the bill for enormous tax cuts to high-income households and corporations.

Below is an infographic from the Budget & Tax Center that shows the top 3 reasons why this tax plan would be bad for North Carolina.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center

13% of NC households would face a tax increase under Senate GOP tax plan

A new report finds that the Senate tax plan, which was just introduced on Nov. 9, would raise taxes on some families while giving the largest share of tax cuts to wealthy Americans and foreign investors. According to the Institute on Taxation and Economic Policy, of those tax cuts that would benefit households in the U.S., more than a quarter would go to the richest 1 percent and half would go to the richest 5 percent.

The middle fifth of income earners in America, households that are literally America’s middle-class, would get just about a tenth of the tax cuts.

In North Carolina, analysis shows that 50 percent of the federal tax cuts would go to the richest 5 percent of residents, and 13 percent of households would face a tax increase, once the bill is fully implemented. Importantly, as the report states, “One might think that the richest Americans would receive the largest tax cuts simply because they have most of the income. But even when measured as a share of income, the tax cuts for the richest five percent of Americans are more generous than the tax cuts for other income groups.”

In North Carolina we also find that, between 2019 and 2027, many middle-income households would see an increase in their tax load under the Senate proposal.

Over the next 10 years, middle-income households–those with incomes between 48,000 and 82,000–in our state would be affected the most: Their share of the tax increases in the plan would nearly double, going from 7 percent in 2019 to 13 percent in 2027. This contradicts what many Republican Congressional leaders have said regarding its effort to target the middle class with tax cuts.

We have previously written that the House and the Senate in Congress are currently rushing tax legislation to pass it right around Thanksgiving and ensure President Trump has a bill on his desk around the holidays. Based on this latest analysis, it is clear that rushing to pass these flawed proposals will be no gift to everyday North Carolinians.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center

Why rushing major tax legislation is a bad idea

President Trump and Congressional leaders have unveiled a tax plan that both the Senate and House want to rush through the policy process so that the President can sign it into law around the holidays.

The House tax bill was just unveiled last week, on November 2, yet the House will vote on the bill next week. On the other side, the Senate unveiled its tax bill just yesterday, November 9, and plans to vote on it in less than two weeks.

Passing such a significant overhaul of the U.S. tax code on a short timeline is a bad idea.

Rushing to pass in less than one month the first significant overhaul of the U.S. tax code in more than 30 years will not allow for the review and consideration of all of the major pieces included. For comparison purposes, the last major policy legislation in our country, the Affordable Care Act, took nine months to become law from the time it was first introduced.

Furthermore, given that this legislation would have wide range implications in our country starting next year, it will be important to assess these potential implications and address them ahead of enactment. Overall, the proposed tax bill is made up of more than 100 special provisions with many of them having billion dollar implications to our federal budget.

While preliminary analysis shows that the tax plan will deliver the greatest share of the tax cuts to the richest 1 percent and contribute to the country’s deficit, there are many emergent impacts that need fuller examination.

For example, just yesterday estimates from the Center on Budget & Policy Priorities suggest that more than 350,000 children in North Carolina will be fully left out of the increase in the Child Tax Credit.

If our elected officials are serious about getting tax overhaul right then they need demonstrate this by ensuring there is open debate, input from key stakeholders, and time for adequate analysis.

Rushing this tax bill as it currently stands in order for the President to sign something during the holidays would be no gift to the majority of working Americans or our democratic process.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center, Trump Administration

816,000 NC kids would be left out of GOP tax bill’s Child Tax Credit proposal due to low income

House Republican leaders highlight an increase in the maximum value of the federal Child Tax Credit (CTC) as their tax bill’s signature benefit for working families, but the provision completely excludes 354,000 children in North Carolina whose parents work in low-paying jobs, according to a new report from the Washington, DC-based Center on Budget and Policy Priorities. Another 462,000 North Carolinian children in low-income working families would receive less than the full $600 increase in the credit that would be available to higher income families.

Altogether, about 816,000 North Carolinian children in working families would either be excluded entirely or only partially benefit from the increase in the CTC. A larger share of North Carolinian children are excluded or only partially benefit than in the country as a whole.

Nationally, roughly 23 million children would be partially or entirely excluded from the House Republicans’ plan, even as it newly extends the CTC to families with incomes between $150,000 and $294,000. For example, a single mom of two working full time at the minimum wage would get no benefit from the CTC expansion under the House Republican plan while a married couple earning $230,000 would receive a new $3,200 benefit.

Republican Senate leaders have suggested that they may increase the CTC further when they release their tax bill this week. Unless they revise the proposal’s basic structure, however, it would provide far larger benefits to higher income families than to families that face difficulties affording the basics.

Analysis on the Children and Top Working Parent Occupations Affected

Analysis shows that of the roughly 23 million children across America that would be partially or fully excluded from the CTC increase:

  • 8 million are children under the age 6
  • 7 million are Latino children
  • 3 million are white children
  • 6 million are African American children
  • 600,000 are Asian children

According to the report:

“The average income of working families with children that would be partially or entirely left out of the CTC increase is $22,000.  Among these working families, two-thirds include at least one parent who works full time for most of the year.”

Analysis of available data shows that the top occupations of working parents fully or partially left out of CTC proposal in house tax bill are:

  • Office and administrative support
  • Sales
  • Food preparation and serving
  • Building and grounds cleaning and maintenance
  • Construction and extraction
  • Transportation and material moving
  • Manufacturing
  • Personal care and service
  • Health care support

Based on this latest report it is clear that rushing this tax legislation without real debate, without informed analysis, and without input from key stakeholders is not the way our Congress should operate.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.