Middle-class Californians on losing end of tax reform
By JENNIFER MUIR BEUTHIN, Contributing Columnist
In coming days, the U.S. Senate and House of Representatives appear poised to adopt a Republican tax proposal that could have a dramatic impact on Orange County residents.
While the ultimate fate of the bills is not certain, and the details have not yet been fully disclosed, there are several issues Orange County’s middle-class and working families should consider as they weigh in with their elected representatives about the legislation.
The first: The tax plan will automatically trigger drastic cuts to Medicare, threatening care for Orange County residents. Here’s how: The proposed plan would cut taxes for millionaires, billionaires and corporations, increasing the deficit by about $1.5 trillion over the next decade. Under current Congressional rules, the same amount will be immediately and automatically cut from government spending, including $25 billion from Medicare, according to an analysis by Rob Creamer in the Huffington Post.
This is dangerous for our communities, as Baby Boomers increasingly become eligible for Medicare, leaving our County’s aging population without resources to obtain the care they need.
And these cuts to Medicare would come at a time when the federal budget plan approved by Republicans to pay for the tax plan would make additional cuts to services, including $1.3 trillion from Medicaid and other health care programs and $470 billion from Medicare over 10 years. The budget also threatens Supplemental Security Income and tax credits and financial aid to help college students, according to an analysis by Americans for Tax Fairness.
Homeowners, those with significant medical expenses, residents with student loan debt and those expecting to realize gains from investments are among those who should be concerned about a second component of the tax proposals. Drafts of the House legislation partially repeal the State and Local Tax Deduction, known as the SALT deduction, which is utilized by families who itemize their deductions on taxes. This ensures California families don’t get double-taxed by allowing us to deduct state and local property taxes and either state and local income taxes or sales taxes.
The Senate version of the tax plan would eliminate the SALT deduction all together. Reducing or eliminating the SALT deduction would raise taxes for millions of Californians, and would have the most dramatic impact on middle-income households, according to an analysis by the California Budget & Policy Center. To give an example of the magnitude of the impact: More than 40 percent of residents living in congressional districts represented by Mimi Walters, Ed Royce, Darrel Issa and Dana Rohrabacher respectively claimed a SALT deduction in 2014.
Finally, the House version of the tax bill proposes eliminating tax deductions for uninsured losses in the wake of natural disasters, such as the fires that continue to ravage our state.
There are always winners and losers when government makes big changes to how things are done. In this case, unless the House and Senate are able to address these and other serious issues, it is clear middle-class Californians will end up on the losing end of this big change. Our local elected representatives in Congress have the power to ensure that Orange County and other California taxpayers are protected from higher taxes and cuts to our services. Let’s urge them to take courageous action on behalf of their constituents and hold them accountable if they won’t.
Jennifer Muir Beuthin is general manager of the Orange County Employees Association.
Publication Date: December 14, 2017