It's the week before Christmas and all through the House and Senate lawmakers are scrambling to reconcile tax legislation that they hope the president will sign into law before the year's end. Americans across the country are tormented by what this tax legislation presents and they should be. Polls indicate more than 50 percent of Americans, across party lines are not in favor of this bill. Without bipartisan support, this "conference bill" threatens to increase the national deficit by $1.4 trillion over the next 10 years. Americans wonder, how do we prohibit a "billionaires-take-all" outcome?
Without question, corporations gain tremendously from this legislation with a decrease in the corporate tax rate from 35 percent to 21 percent. The narrative from supporters suggests reducing the tax rate on corporations will motivate them to reinvest in America's economy. Economists are - at best - mixed about whether this can actually happen. There are many factors that determine where companies choose to invest, things like an educated workforce and access to capital, for examples. Companies can also relocate to take advantage of a low tax rate someplace without creating jobs. A more likely scenario is that the reduced corporate tax rate would lead to a "race to the bottom" where our tax revenue is drained while many countries continue to lower their taxes to compete. Who benefits? Only the big corporations.
Also, the extremely wealthy who were once taxed on estate inheritances beginning at $5.5 million or $11 million, if inherited by a spouse, can now inherit double before being taxed. The new threshold is $11 and $22 million respectively. There are about 70 families in Colorado for whom this matters.
Meanwhile, for the average working Coloradan and people across America who will never inherit astronomical estates, beginning in January 2018, state and local itemized deductions will be capped at $10,000. Previously there was no cap.
Still the reconciliation process has not produced all doom and gloom. The reconciliation process on the tax bill has maintained tax breaks for Colorado's large brewery industry, allowing one of the largest industries in the state to continue thriving. Additionally, there have been wins for concerned citizens that include maintaining deductions for student loan interest and out-of-pocket teacher expenses at the current limits. Further, the American Opportunity Credit, Lifetime Learning Credit, and tuition waivers for graduate students, all of which provide assistance with tuition and educational expenses, remain intact, contrary to the proposed adjustments passed in the House bill.
But let's not be fooled either. The conference bill hits Colorado communities in negative ways. First, cities along the Front Range and Western slopes that have benefited from advance refunding laws will loose this benefit under the new legislation. This tool has helped cities across Colorado to save $211 million dollars in the past four years. It is being removed to offset the cost of what this reform to the tax code will cost Americans. Thus, this is how the wins for corporations and super wealthy will cost average citizens.
Furthermore, the conference bill attacks the Affordable Care Act (ACA). It removes the individual mandate for health care coverage, which weakens the celebrated effectiveness of the ACA. This could potentially increase the number of uninsured Americans by 13 million, and leave over 200,000 Coloradans without health care coverage.
Beyond the few winners and many losers, this conference bill has brought to light grave fissures in the process for passing legislation in our country. Democracy is at stake when we don't have Senators and Representatives on both sides of the aisle willing to work collaboratively. When hundreds of pages of legislation are presented without ample time for legislators to read the document, or for constituents to understand the bill and present public feedback, our democracy is at stake.
Reform in tax legislation is absolutely necessary, but it must come with transparency, conscientiousness and a commitment to upholding democracy in America. This is not reform. It is a reward to the wealthy with lumps of coal in the stockings for average Americans.
Rev. Dr. Stephany Rose Spaulding is an Associate Professor of Women's and Ethnic Studies at UCCS and Pastor of Ebenezer Baptist Church.