If H.R. 1, the recently passed House tax reform bill directly helped middle class families and small businesses, then I would be proud to come out in support of such a good piece of legislation. Good policy shouldn’t be partisan.
However, when I saw the provisions in the House bill, I could not in good conscience vote in favor of it. Ultimately, this bill provides direct relief for corporations and in return eliminates deductions that middle class families rely on. When you do the math - the pros do not outweigh the cons.
The Institute on Taxation and Economic Policy found that nearly a third of the bill’s benefits would go to the richest one percent in 2018, with that percentage rising to nearly half by 2027.
A simpler tax bracket and an increased standard deduction sound promising. After all, the current tax code fits snuggly in 71,000 pages. Most Missourians pay the state’s top income tax rate of 5.9 percent. If all filers take the full deduction, that could reduce the state’s $9 billion in general revenue by an estimated $500 million to $1 billion. Less revenue coming in will most probably lead to the state making spending cuts to items like education, social services, or reduced health care benefits to Missouri’s elderly and disabled.
Under this bill, the housing and nonprofit sectors, which have relied on tax deductions to encourage taxpayers to buy homes and donate to charity, could see dramatic negative impacts. Congress should encourage people to become homeowners – not put barriers in their way.
This House tax reform proposal is giving me an overwhelming feeling of déjà vu. The Kansas state government experimented with some of these very same tax changes, and we all know the result. In 2012, the state collapsed the three individual marginal income tax rates into two rates and eliminated taxes on pass-through business income – businesses where income is passed through to the owners and taxed at their individual tax rate.
In 2013, revenues plunged and never recovered. By 2015, Kansas had such large budget shortfalls that they started slashing spending. Education – Cut. Highway and infrastructure funding – Cut. Children’s Programs – Cut. Medicaid reimbursement rates – Cut. The credit rating agencies, Moody’s and S&P, downgraded the state’s credit rating twice while the cuts were in effect. The tax cuts did not deliver the promised economic growth, and the state’s legislature repealed the tax cut legislation in June 2017.
The goal of any tax reform plan must be to reduce the burden on the middle class and provide relief to small business owners.
I fear that the U.S. Congress is trying to follow Kansas down their yellow brick sick road, but there is no Emerald City or Wizard at the end – only a shifted tax burden.
– U.S. Rep. Emanuel Cleaver II represents the Missouri 5th District.