The Congressional Republican Tax Plan Is a Tax on Disability
Throughout 2017, President Donald Trump and congressional Republicans have continually taken aim at the health, well-being, and independence of Americans with disabilities. From repeated attempts to repeal the Affordable Care Act (ACA) and end Medicaid as we know it to budget proposals that slash Social Security disability benefits, disability employment services, Meals on Wheels, and more, the agenda Trump and his colleagues in Congress are pursuing would be nothing short of a disaster for people with disabilities. The latest attack comes in the form of their partisan tax plan, which passed the House on November 16 and is set to be voted on in the Senate as soon as this week.
Although they have sold the plan as a Christmas present for the middle class, under the Senate bill, a staggering 87 million* middle- and working-class families would see their taxes rise by 2027. Meanwhile, the top 0.1 percent would receive an average tax cut of $208,060. Furthermore, by repealing the Affordable Care Act’s (ACA) individual mandate, the tax plan would also undermine the individual insurance market, driving up premiums and leaving 13 million more Americans without health insurance by 2025.
While the details of the House and Senate versions of the plan differ in their details, both would be particularly devastating for people with disabilities. And in the likely event that the two chambers end up going to conference in order to finalize the bill before it becomes law, the worst of both bills could end up in the final plan.
Here are seven ways that President Trump and congressional Republicans’ tax plan is a tax on disability.
1. Eliminates the Affordable Care Act’s individual mandate
Following myriad failed attempts to repeal the Affordable Care Act, congressional Republicans have decided to squeeze their attacks on health care into their tax plan. The Senate version of the bill would repeal the ACA’s individual mandate. According to the nonpartisan Congressional Budget Office, this would drive up premiums by 10 percent in 2019 and result in 13 million fewer Americans with health insurance by 2025. The Center for American Progress has estimated that the typical middle-class family buying health insurance on the individual market would see its premiums balloon by nearly $2,000 per year, putting vital care out of reach, including for many individuals with disabilities.
2. Raises taxes on people facing high medical bills
A particularly mean-spirited provision in the House version of the tax plan would end the medical expense deduction, which enables people who have incurred very high medical bills—specifically, medical expenses that exceed 10 percent of their income for the year—to deduct those expenses from their federal income taxes. In 2015, this deduction helped 8.8 million families, offering financial relief amid crushing medical bills that would have otherwise driven people into debt.
Eliminating this deduction would be especially devastating for people with disabilities and severe illnesses, who frequently face thousands or even tens of thousands of dollars in out-of-pocket medical costs for long-term supports and services. It could put critical home- and community-based services and even life-sustaining treatments out of reach, pushing people out of their communities and into costly , isolating institutions, bankruptcy, or both.
3. Makes research on drugs for rare conditions more expensive
Another provision buried in both the House and Senate tax bills would weaken or even eliminate altogether a tax credit that encourages pharmaceutical companies to develop drugs for so-called orphan medical conditions––rare conditions such as cystic fibrosis, Lou Gehrig’s disease, and Job syndrome. This tax credit is especially important, as development of new drugs and treatments for rare conditions may not be in a pharmaceutical company’s financial interest. Its elimination could mean that people with rare diseases or health conditions may never receive life-saving treatment.
4. Makes disability accessibility more expensive for small businesses
Under current law, small businesses can claim a tax credit that helps them comply with legal requirements to improve accessibility for people with disabilities. The tax credit is equal to half of such expenses that exceed $250, up to $10,250 (for a maximum credit of $5,000). However, the House version of the tax bill would eliminate this tax credit outright, effectively raising taxes on small businesses that endeavor to open their doors to workers or customers with disabilities who need reasonable accommodations. Due to discrimination and other barriers to work—such as inaccessibility and a lack of accommodations in the workplace—people with disabilities already face labor force participation rates that are just a fraction of the national average: 20 percent versus roughly 69 percent. This comes as a separate bill currently moving through Congress would gut the very part of the Americans with Disabilities Act that mandates disability accessibility in public places.
5. Raises taxes for people with student loans
America’s total student loan debt now tops $1.4 trillion. Yet, amid this national student debt crisis, the House version of the tax bill would make it even harder for people to pay back their loans. It would eliminate a critical provision that allows borrowers to deduct up to $2,500 of the interest on their student loans each year—a policy that helped nearly 12 million Americans in 2014. Under the House plan, a borrower in the 25 percent tax bracket who owes $2,500 or more in interest on their student loans would see their taxes go up by $625 per year.
While the student loan interest deduction is not specifically targeted at people with disabilities, its elimination would add yet another barrier to higher education for those with disabilities to overcome. In 2000, 73 percent of high school graduates with disabilities enrolled in institutions of postsecondary education, compared with 84 percent of their nondisabled peers. These disparate enrollment rates exist for numerous reasons: in part, because it is expensive to have a disability; paying tuition while footing the bill for disability-related services and expenses can be cost prohibitive for many. Eliminating this important deduction would only add to the financial strain experienced by postsecondary students with disabilities, putting higher education and training even further out of reach.
6. Ends a tax credit that spurs investment in struggling communities
President Trump made saving and bringing back jobs in left-behind communities a cornerstone of his campaign. However, the House tax bill would eliminate the New Markets Tax Credit, which is dedicated to spurring investment in poor communities. Investors who qualify receive a tax credit to offset a portion of their investments in hard-hit rural or urban communities facing poverty rates of 20 percent or more. Over the years, the lion’s share of the funds paid out through the New Markets Tax Credit has benefited communities facing unemployment rates at least 1.5 times higher than the national average, poverty rates of at least 30 percent, or both.
Since people with disabilities face poverty rates that are nearly three times higher than the national average, as well as unemployment rates that are twice those of their nondisabled peers, they are likely to be especially hard hit by the elimination of this tax credit. What is more, high-poverty areas generally have higher rates of disability, in large part because poverty can limit access to health care and preventive services while simultaneously increasing an individual’s chances of living and working in an environment that may adversely affect health.
7. Leads to automatic cuts to Medicare and other critical programs for people with disabilities
On top of these direct attacks on people with disabilities, congressional Republicans’ tax plan would also quietly result in deep cuts to a whole range of programs that are critical to people with disabilities. Since the tax bills’ giveaways to millionaires and wealthy corporations are not fully paid for, they would jack up the deficit by about $1.5 trillion over the next decade, not including interest on the debt. And under the Statutory Pay-As-You Go Act, any legislation that increases the deficit triggers automatic cuts to various federal programs. In fiscal year 2018 alone, Medicare would see automatic cuts of $25 billion, and it would be slashed by more than $400 billion over 10 years.
A host of other programs would face devastating automatic cuts or even outright elimination. They include Vocational Rehabilitation Basic State Grants, which fund state programs that help people with disabilities prepare for, secure, regain, or retain employment; the Social Services Block Grant, which funds critical services for adults and children with disabilities as well as Meals on Wheels; and affordable housing programs that subsidize low-income housing and home ownership. Certain higher education programs also could lose funding, such as those that support historically black colleges and universities, Hispanic-serving institutions, and tribal colleges, as well as grants that help the children of service members who lost their lives in Iraq or Afghanistan afford college.
President Trump and congressional Republicans have made it clear whose side they are on. The House tax plan’s repeal of the estate tax on millionaires, which is just one of the many windfalls that the wealthy would receive under the bill, allows 11 major donors to the Republican Party to pocket a whopping $67.5 billion—a sum that would take the typical middle-class family more than 1 million years to earn. Meanwhile, the rest of us are left holding the bag through tax increases, higher premiums, loss of health insurance, and cuts to vital programs. And few people stand to lose more under this Robin Hood-in-reverse tax plan than those with disabilities.
Rebecca Vallas is the managing director of the Poverty to Prosperity Program at the Center for American Progress. Rebecca Cokley is a senior fellow for disability policy at the Center. Eliza Schultz is the research assistant for the Poverty to Prosperity Program at the Center.
*Authors’ note: The Center for American Progress arrived at this figure using the Tax Policy Center’s analysis of the Senate Tax Cuts and Jobs Act. Specifically, using data in Table T17-0278, multiplying the total tax units in each income group by the percent facing a tax increase yields a total of 87 million families with earnings of less than $200,000 who would receive a tax increase under the bill.
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Director, Disability Justice Initiative