The Republican Tax Plan Attacks Middle Class Kids
Today's children will absorb a massive financial risk so today's lawmakers can get a desperately needed, albeit deeply unpopular, legislative win.
Credit the American people with sniffing out a scam. After three months of Republican efforts to convince the public that their sweeping tax plan is designed to help lift the middle class, public polls show it’s horribly unpopular. How unpopular is it? Let’s just say that there have actually been two tax hikes in the last 30 years, George H.W. Bush’s “Read my lips” increase in 1990 and Bill Clinton’s Deficit Reduction Act in 1993, that were viewed more favorably than this bill. And the trickle down faithful can point to precisely no historical economic data and zero studies or audits of the GOP tax plan ⏤ all of which project a deficit explosion in the high 12 figures ⏤ to argue that it’s in the country’s economic self-interest. This is what happens when people with an almost-religious conviction that businesses make decisions based on tax rates rather than consumer behavior are allowed to write laws. These economics stripped of the truism, supply equals demand, that soon-to-be unemployed teachers teach middle schoolers.
Will the Trump tax cut put money in the pockets of middle-class parents? In the short term, yes, but the costs that come with that money and scheduled tax hikes make it an almost comically bad deal. The plan as a whole is grossly skewed toward taxpayers who make over $200,000, a group that will accrue over half the tax benefits, and strips away support for schools in and healthcare in a way that increases pressure and risk on middle-income earners trying to provide children with opportunity. And it doesn’t just do that. By eliminating the inheritance tax and providing incentives for private school education, it calcifies class division. It makes a joke of the promise that American parents make to their children, that they can do better.
The ultimate irony is that after all the outrage about growing economic inequality stirred up by Trump and Bernie Sanders, we’re now staring squarely in the face of a tax plan that’s explicitly devised to exacerbate the gap between the top 20 percent of the population and the bottom 80 percent. It levies more taxes on the poor while putting a proportionally smaller burden on the rich.
The bill is so favorable to the wealthy that even the child tax credit, which is being increased from $1,000 to $2,000 in the Senate plan ⏤ ostensibly a good thing ⏤ is now a country club privilege. Because income limits for the CTC are also going up, the credit can now be claimed by filers making up to $230,000 (increased from the current $110,000). It remains a non-refundable credit that requires you pay taxes to take advantage, which also eliminates hundreds of thousands of potential beneficiaries. The CTC has become a subsidy for the silver spoon industry.
The only thing that can be said on the subject of fairness is that the bill does at least seem determined to do some harm to everyone. Every single individual tax cut in the plan expires on December 31, 2025. Not the corporate cuts, mind you, those are permanent. Just the cuts for average Americans. Seriously, if the plan isn’t extended in ten years, individual tax rates will reset to the current levels and the American middle class will enjoy a nice healthy tax increase. In essence, today’s children absorb a massive financial risk so today’s lawmakers can get a desperately needed, albeit deeply unpopular, legislative win.
It’s hard to believe, but that’s not even the biggest problem with this tax bill. The real injustice is that while, yes, middle-class families may see a cut in their taxes initially, in the end they’re still going to get stuck holding the check when government funding cuts triggered by a growing deficit kick in and the public services so many middle and lower income Americans rely on get slashed. That’s when families will get seriously dinged because those cuts will dramatically affect state education spending. This tax bill takes direct aim America’s public schools and the middle and working class kids (read: the vast majority of American kids) who attend them.
First, reducing or eliminating the federal deduction for state and local taxes is going to make it harder for states, counties, and cities to generate revenue for schools, as many will be forced to cut revenue in order to offset the higher federal taxes their residents are now paying. As almost all K-12 public school funding comes from state and local revenue, kids will suffer very real consequences. It also undermines the public school system by creating tax-free school savings accounts that parents can use to send their children to private school, essentially incentivizing private over public education. Fine for upper-class kids, not so much for lower and middle class. Meanwhile, the House bill goes even further and sticks it to actual teachers by eliminating the $250 tax deduction for spending their own money on school supplies for the classroom. Take that, educators!
For context, you can look at two conservative states, North Carolina and Kansas, as examples of how things can go horribly wrong for public schools when legislatures pass steep tax cuts designed to “stimulate the economy.” North Carolina, which admittedly has seen neither a big economic boom nor a massive bust, is still looking at estimated at $3.5 billion in lost tax revenue this year. The Kansas school system, meanwhile, was so decimated by tax cuts and empty coffers that schools were forced to close and moderate Republican lawmakers finally had to override a governor’s veto and pass a tax increase.
And we haven’t even addressed college and graduate students ⏤ you know, the people many parents hope their children can become ⏤ whom, thanks to the tax bill treatment of tuition waivers as income, will be forced to pay taxes on tuition reimbursement, money they will never receive. The House version of the bill also eliminates the deduction for interest paid on student loans.
School funding is just the beginning. Because of a 2010 law known as the Statutory Pay-as-You-Go Act, or Paygo for short, that requires deficits be offset by spending cuts (or revenue increases), a number of federal programs would be subject to automatic budget reductions at the beginning of the new year if Congress passes this bill but doesn’t pass accompanying workaround legislation. Medicare, for example, which provides health insurance for the elderly and poor, would take the biggest hit with a four percent reduction. The Department of Agriculture’s Child Nutrition Programs would stand to lose $61 million while The Women, Infants and Children program, which provides food assistance, would shed about $1 million in funding.
While the Children’s Health Insurance Program (CHIP), which helps insure nine million children whose families make too much to qualify for Medicare, but too little to look into private options (currently in limbo awaiting renewal after expiring in September), wouldn’t be subject to automatic cuts, it could very well be on the Republican chopping block. If there’s one thing Republicans have demonstrated, it’s lukewarm support for federal programs that help those in need.
Republicans will pass this tax bill ⏤ if only because they believe the survival of their party depends on it. Sure, the two versions of the bill still need to be reconciled in conference committee, but it appears as if enough members on both sides of Capitol Hill are willing to compromise in service of saving face and saving donors’ money. Despite the plan’s lack of support from the public, they’re betting that Americans simply won’t get that upset at a tax cut, even if it never magically pays for itself as advertised. They are betting that Americans won’t blame them when kids get hurt. And, make no mistake, America’s low and middle-class kids will get hurt.
That’s not by accident. That’s by design.