The Latest Tax Cut Lie: The Senate Bill Will Hurt The Poor | Stock News & Stock Market Analysis

Tax Reform: The Senate tax bill would reduce income taxes for people at every income level — even those who don’t pay taxes. That’s the official conclusion of the Joint Committee on Taxation. So why are Monday’s headlines screaming that the tax cuts would make the poor much worse off?

“Senate GOP tax bill hurts the poor more than originally thought, CBO finds.” That’s the headline in the Washington Post describing a Congressional Budget Office report released on Sunday.

The story claims that the “Republican tax plan gives substantial tax cuts and benefits to Americans earning more than $100,000 a year, while the nation’s poorest would be worse off.” Later, the Post story talks about the bill’s “harsh impact on the poor.”

No Hidden Agenda: Get News From A Pro-Free Market, Pro-Growth Perspective

This conveniently fits with the Democrats’ evergreen talking point on tax cuts — that they benefit the rich at the expense of the poor. But is it true?

Not. At. All.

First of all, the CBO doesn’t describe the Senate bill as being “harsh” to the poor. That’s the spin put on by the reporter.

The report does, however, include a table that shows how the bill would affect federal revenues and spending by income group. And, indeed, it appears to indicate that those making less than $40,000 will take it on the chin, while those making more than $100,000 make out like bandits.

XAutoplay: On | Off But note the word “spending” above. Since this is a tax-cut bill, why is “spending” part of the calculation at all?

That’s in there because the CBO includes the spending impact of the Senate bill’s repeal of ObamaCare’s individual mandate.

And this is where things get really fishy.

As we’ve noted in this space, the much-hated ObamaCare mandate has been hugely ineffective in getting people to buy insurance. But the CBO nevertheless assumes that once the mandate is gone, millions of people will suddenly drop insurance — including millions of people who are currently getting health coverage for free through Medicaid. In fact, the CBO projects that 1 million would drop Medicaid coverage in 2019, and 5 million will do so by 2024.

(Note that the tax bill doesn’t change Medicaid eligibility or ObamaCare subsidies one iota.)

Let’s assume that the CBO is right — even though it strains credulity to the breaking point — and millions of people give up free or nearly free insurance once the mandate goes away.

Everyone gets a tax cut under the Senate bill. (Note: Data for 2027 assume all the tax cuts expire that year.)

The result would be that the government would pay less subsidy money to insurance companies. And state and federal Medicaid costs would decline. So yes, federal spending would go down, and those spending reductions would technically be concentrated in lower-income groups.

But to describe this as “harsh” treatment of the poor is to engage in blatant deception.

These are people who would have voluntarily chosen to go without insurance, and by doing so saved taxpayers money. That’s hardly the same as cutting benefits.

When Republicans demanded a distribution table that looked only the impact of the tax cuts in their tax cut bill, the result was remarkably different.

What that table (shown nearby) indicates is that everyincome group will get tax relief — including those who don’t pay taxes because of the bill’s hike in refundable tax credits.

And, by the way, none of these tables accounts for the economic boost, the new jobs and the increased income that will result from the GOP’s tax cuts.

Anyone want to claim the poor will be hurt by that?


The Coming Tax-Cut Boom

No, Republican Tax Cuts Won’t Explode The Deficit

GOP’s Loss Was A Real Wake-Up Call — Will They Answer It?

Source link

Originally posted 2019-09-19 23:34:03.


No comments.

Leave a Reply

error: Content is protected !!