Action Alert

The Tax Plan: Congressional Leaders and White House Set Agenda

The Tax Plan: Congressional Leaders and White House Set Agenda
At the march for racial and economic justice during Assembly 2014 in Louisville, Ky.

The Senate has now passed its version of a tax reform bill. While all components have not been made public, what has been revealed leaves no doubt that both the Senate and the House tax bills will hurt millions of women and children.

Cuts and Tax Credits

A major element in both the House and Senate is a cut to the corporate tax rate from 35 percent to 20 percent, which proponents say would help make American companies more competitive in international markets. Corporations will also gain new, more favorable treatment of income earned abroad. Wealthy individuals, who tend to earn a disproportionate share of their income from capital, will also benefit from cuts to the corporate rate, which is largely a tax on capital.

Changes to deductions and tax credits are going to have the greatest impact on individual earners in the proposed tax bills. One major change will eliminate individuals’ ability to deduct state and local taxes. A largely positive change will be the doubling of the standard deduction to $12,000 for individuals and $24,000 for married couples. The House also plans to consolidate tax brackets, and while some lower income individuals may benefit from this, the impact on middle income workers is unclear. One big change that the House and Senate proposals handle differently is the estate tax, which only impacts the wealthiest Americans (about 5,460 estates will owe the tax this year). The Senate seeks to double the exemption amount, while the House bill also proposes to eliminate the tax altogether by 2024.

Increasing Inequality

Both bills claim to promote economic growth by decreasing the tax burden on businesses and wealthy individuals. The assumption is they will then hire more workers or raise workers’ wages, thereby encouraging spending and stimulating the economy. Historically, such predicated economic growth has rarely resulted to the degree predicted by its proponents; in fact, such policies have arguably contributed to the current extremes of wealth inequality that currently plague the U.S. Businesses often do not reinvest in ways that benefit their workers, and the wealthy tend to save their money or reinvest in capital.

tax cuts

There is no reason to believe that economic inequality would decline under the proposed tax plans. Furthermore, the elimination of certain deductions do not appear to be offset by benefit increases elsewhere, and with the Child Tax Credit’s minimum income level raised, very poor families with children are especially impacted.

Cuts in Programs

Paying for the proposed cuts threatens middle and low-income families due to cuts in benefit programs. To enact their proposals as written, Congress would have to reduce current spending in order to avoid substantially increasing the budget deficit. Many of these cuts would likely come from programs such as Medicaid, SNAP and college financial aid (e.g. Pell Grants), as well as other important programs. In addition, the Senate has proposed the repeal of the Affordable Care Act individual mandate. Eliminating the mandate is expected to cause the insurance marketplaces to function worse than they did before, and premiums to increase. This could lead to millions of Americans losing affordable medical insurance. 

Women and Children

With the possible cuts in Medicaid, SNAP, child care and job training, women and their families will be especially hard hit. In addition, cuts to health insurance programs may cause children to lose their health insurance, and with the loss in programs, poor families could be driven even deeper into poverty. And low-income college students who are trying to increase their chances for a better future are facing a reduction in grants for their education.

The true effects of the Congressional Republicans’ tax proposals as they now stand will be to further increase the already unacceptable levels of income inequality in the U.S. The likelihood of cuts to important programs in order to offset the revenue losses in the budget will undoubtedly adversely impact Americans who have less to give. As they currently stand, these bills represent a failure to combat economic inequality and unrestrained wealth, posing a danger to the already frayed safety net for those most vulnerable in our society.

Posted or updated: 11/29/2017 12:00:00 AM
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Suggested Pages:

*Action Alerts

*Economic Inequality

There is still TIME to ACT:

The Senate and House leaders will appoint members to a Conference Committee, to negotiate a final bill based upon the onerous bills passed by each chamber. Let's ACT to make sure a harmful tax bill never becomes law.

Contact your Congressional representatives and tell them you say NO to a tax bill that fails to protect women, and families, and workes, but which succeeds in filling the pockets of the wealthy.



Read More:


  • Read Chapter 163. IV. The Economic Community in The Book of Resolutions of The United Methodist Church.
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