Trump-GOP Tax Reform Plan Hurts Latino Community

December 12, 2017

Now that the Senate and the House of Representatives have passed their respective versions of a tax reform bill that is now headed to Conference, here is the bottom line: Latinos, especially those in low-income and middle-class households, will be worse off.

This plan cuts taxes for large corporations and the wealthiest few at the expense of the middle class and low-income people who depend on programs and credits. The tax plan hurts or ignores many families living in poverty or those working paycheck to paycheck in an effort to give the wealthy a massive tax break.

The Tax Policy Center released an updated analysis of the House bill showing that nearly 1 in 4 American families would pay, on average, more than $2,000 in taxes by 2027 under the tax plan than they do today. Simply put, that’s not tax reform.

The Senate bill is no better. The vast majority of the benefits in the tax plan would provide tax cuts to those in the top 1%, leaving working class and middle class families behind. The Tax Policy Center’s analysis of the Senate-passed bill shows that nearly half of families would pay, on average, $150 more in taxes by 2027. According to UnidosUS, the Republican Senate bill will increase taxes on 7 in 10 Latino families just to provide a tax cut for the rich. An estimated 11.7 million Latino families earning less than $75,000 would see a tax increase by 2027.

If Republicans push through with their “wish list”, they will end up blowing a huge hole in the deficit—which they will then use as their reason to cut programs that disproportionately affect Latino families. The House and Senate tax bills are projected to add an additional $1.5 trillion to the U.S. debt, raising pressure to cut government programs.  Speaker of the House Paul Ryan (R-WI) has mentioned that “entitlement reform” will be coming up on the Republican’s agenda to reduce the “tackle the debt.”

Cuts to Health Care, Food, Housing, and Education

The Republicans’ proposed budget would drastically cut funding for key programs that help Latinos make ends meet, just to provide a tax cut to the rich. This reduced funding threatens the well-being of millions of Latinos who these programs have helped lift out of poverty.

  • Medicaid & Healthcare Cuts: According to a report from the Center on Budget and Policy Priorities, the plan, if implemented, could cut Medicaid by 47% in 2027, with some beneficiaries at risk of losing their coverage entirely. This could impact 7.4 million Latino adults and 12.2 million Latino children who rely on Medicaid for their health care coverage. UnidosUS has concluded that the$1.8 trillion in cuts to Medicaid, Medicare, and the Affordable Care Act’s subsidies under the Senate bill would impact 18 million Latinos, including 10.7 million children, who rely on Medicaid.
  • Food Assistance Cuts: The budget plan would also cut SNAP by $140 billion; a program that provides basic food aid to nearly 10 million Latinos.
  • K-12 and College Education Cuts: Just as bad, the House budget plan would cut funding for the education programs that millions of Latinos depend on. The cuts to Pell Grants and student loans would affect around 50% of Latino college students. It would also cut K-12 education funding by as much as 29% by 2027, hurting schools where a large number of disadvantaged students are predominantly students of color. This bill also fails to increase funding for the Head Start program, which currently serves more than 400,000 Latino children.
  • Housing Cuts: Housing assistance programs would also take a hit under the Trump-GOP budget plan. It is estimated that the program would serve 900,000 fewer low-income households by 2027. These cuts could impact the nearly 2 million Latinos currently receive housing assistance.

Senate Bill’s Partial Repeal of Obamacare Would Increase Healthcare Premiums:

The ACA helped 4.2 million Latinos gain coverage - bringing the uninsured rate for the community to historic lows. But Senate Republicans approved a partial repeal of the ACA,  taking hundreds of billions of dollars that are currently spent on health care for low and middle-income families in order to pay for their billions in tax cuts for the largest corporations and the wealthiest. According to the Congressional Budget Office, this would lead to 13 million less Americans with health insurance and an annual premium increase of around 10% for those who will still buy insurance on the individual marketplaces, thus jeopardizing the gains Latinos have made under the ACA. According to UnidosUS, this 10% increase in premiums equates to 7 million working and middle-class Americans paying hundreds more for their health insurance. It could also raise premiums on nearly one million Latinos who rely on health care coverage through the ACA marketplace.

Changes to the Child Tax Credit (CTC)

According to UnidosUS the Child Tax Credit (CTC) helps low-income tax payers put food on the table to buy necessities for their children. In 2015, the CTC helped lift an estimated 981,000 Latinos out of poverty, including 560,000 Latino children. The child tax credit in the House and Senate bills change the law to require those filing for this credit to have a valid Social Security Number, leaving undocumented immigrants now ineligible to receive it.  

The CTC is one of the largest, if not the largest single tax benefit for many working families, worth $1,000 per child. According to Joint Committee on Taxation estimates, requiring a valid Social Security number of at least one taxpayer to secure the child tax credit would raise $42 billion over 10 years. This is $42 billion taken away from undocumented immigrants and others who cannot secure a Social Security Number. And under the Senate bill, immigrant families would lose $23.9 billion in credits that help them pay for their basic needs.

According to a report by the Center on Budget and Policy Priorities, the House tax bill’s Child Tax Credit proposal excludes millions of children and low-income working families in every state. It cuts the CTC for immigrant families, even if the children are U.S. citizens. That leaves nearly 8.7 million Latino children fully or partially excluded from the CTC increase.

Leaves Millions Out of the Child Tax Credit (CTC)

CBPP TABLE 1

Children in Working Families Left Out of CTC Increase in GOP Tax Bill

 

Fully excluded (millions)

Partially excluded (millions)

Fully or partially excluded (millions)

Latino

3.7

5.0

8.7

White (non-Latino)

3.3

5.1

8.3

African-American (non-Latino)

2.3

2.3

4.6

Asian (non-Latino)

0.2

0.4

0.6

Other

0.7

0.7

1.4

Total

10.3

13.4

23.7

Including

 

 

 

Under age 6

3.9

4.9

8.8

In poverty

3.8

2.3

6.1

In deep poverty (below half the poverty line)

1.1

0.2

1.2

Note: Children in working families fully excluded are those that would not benefit at all from the CTC proposal; children in working families partially excluded are those that would not receive the full $600 increase per child. Source: CBPP estimates from March 2017 Current Population Survey and Tax Policy Center table T17-0228.

Leaving Small Businesses Behind

UnidosUS estimates that 90% of Latino businesses would actually receive no benefits from the proposed corporate tax reductions in the House bill. Instead, taxes for more than 1.5 million Latino-owned business would actually increase by 2023. Rather than putting together a tax plan that benefits small businesses and allowed them to create jobs and grow, Republicans have proposed a tax plan that disproportionately benefits large corporations.