Nov 29, 2017

Claims that Low-Income Americans Will Be Hurt Under Tax Reform is Misleading

Post by Freedom Partners

 Tax reform opponents are seizing on a recent Congressional Budget Office (CBO) report that claims low-income Americans will be hurt by the Senate tax plan. Here are just three reasons why this claim is misleading.

First, the actual tax rate reductions in the plan would greatly benefit lower- and middle-class families, including a repeal of Obamacare’s individual mandate. The reason why the CBO now concludes that low-income Americans would be worse off under the tax plan is because low-income Americans would stop receiving phony “tax credits” for health insurance. Obamacare supporters would want to have us believe that low-income Americans are directly being handed subsidies and tax credits to purchase health insurance. In reality, tax credits and subsidies are really just a check cut directly from the government to an insurance company. Think of the implications: a bill to lower health insurance premiums would decrease Obamacare subsidies, and thus be a tax hike!

That’s the pretzel-logic tax reform opponents are using.

Secondly, you have to forget that low-income Americans are already paying billions in taxes for the privilege of not buying Obamacare. According to one analysis, 79% of those paying the fine made $50K or less annually.

Only in Washington, D.C. would not paying for a tax be considered a burden!

Finally, in order to come up with sensational headlines that tax reform will hurt low-income Americans, tax reform opponents are zeroing-in on the CBO’s phasing out of the tax cuts as part of their analysis. While, we would certainly welcome the bipartisan support needed to make the cuts permanent, no supporter of tax reform has any intention of actually letting them expire. Just like the Bush tax cuts were constantly attacked but ultimately made permanent, a more realistic way to look at this is to assume all of the tax cuts will be extended. Why? Because failing to extend them is what really hurts lower-income families.

A pro-growth tax bill will grow the economy and create well-paying jobs for all Americans – including low-income Americans. It’s a shame tax reform opponents are resorting to misleading and half-truths to argue otherwise.