Answering 7 Misconceptions about Tax Reform and Americans with Disabilities

Dec 22, 2017 | communications •

The nonsense is unending when it comes to defenders of the status quo. What with claims of Armageddon and death sweeping our nation.

But one argument stands out as especially absurd.

Naysayers have claimed that tax reform is “waging a war on the disabled.”

Why is this so absurd? That’s what we’re here to discuss.

First and foremost, you should know that for years, the House Republican Conference Chair Cathy McMorris Rodgers, whose own son has Down syndrome, has fought to expand the rights of and opportunities for individuals with disabilities. For example, spearheading legislation which created access to tax-free savings accounts — also known as ABLE accounts — allowing individuals with disabilities and their families to better save for medical expenses. This landmark legislation was signed into law on December 19, 2014.

Under her leadership, Congress has continued to lead the charge to expand the hopes and dreams of Americans with disabilities. The latest efforts on this front are included in the Tax Cuts & Jobs Act.

You can read more about that specific legislation here.

Right now, we want to take a minute to address some of the specific falsehoods circulating about tax reform and Americans with disabilities. With the release of the final tax bill, we can assure you that the following claims are either misleading, outdated, or totally false.

Claim #1: Those tax cuts that aren’t paid for will trigger automatic cuts in Medicare and other programs for people with disabilities.

This is fearmongering. This is, of course, referring to the potential of a sequester, which in theory could block deficit-increasing tax cuts. However, this type of “PAYGO” sequester, signed into law in 2010, has never happened. Since its enactment, Congress has exempted 29 bills from this requirement and, between 2015 and 2016, PAYGO was waived seven times.

 

Claim #2: Tax cuts are skewed towards the wealthy, and according to the nonpartisan Joint Committee on Taxation, families earning $10,000 to $75,000 will see their taxes increase in ten years.

What JCT is calling a “tax increase” is just plain wrong. Their flawed research begins with their misanalysis of the individual mandate. Here’s what they got wrong. If an individual makes between $10,000 and $30,000, they’re eligible for a subsidy to buy health insurance under Obamacare. These subsidies are actually refundable tax credits (who knew?). Without an insurance mandate in place, and if that individual declines to purchase health care, two things happen. (1) They receive a tax cut because the mandate penalty no longer applies. And (2) they don’t receive the tax credits to buy health insurance. This does not equal a tax hike. It’s actually just the foregoing of a tax credit for health insurance they clearly did not want in the first place.

Now. JCT did get one thing right. Aside from its flawed analysis of the individual mandate, they did report that taxpayers in every income bracket could see their taxes reduced with the largest relief coming to those making between $20,000 and $50,000.

 

Claim #3: If the individual mandate is repealed, health insurers will discriminate against Americans with disabilities and other pre-existing conditions.

The thing is, the repeal of the individual mandate has absolutely no effect on the pre-existing condition guarantee or lifetime limits and caps. These two are completely different – and separate- things. This isn’t a logical cause and effect. Fun fact: the pre-existing condition guarantee and lifetime limits and caps were actually Republican ideas and priorities in the 2010 health care debate. They remain in place today and are here to stay.

 

Claim #4: Repeal of the medical expense deduction will hurt middle- and low-income earners who depend on them to offset high “out of pocket” medical expenses.

First off, the final tax bill retains and expands the medical expense deduction. That should be answer enough, but we’d still like to take a minute to address the false claims on how losing this deduction would hurt the average worker.

Here’s the context that tax reform opponents refused to recognize: deductions, like the medical expense deduction, are only available to people who choose to itemize. Namely the wealthiest people in this country, most of whom make more than $200,000 in annual income. So, where do individuals with disabilities fall on this spectrum? Well, only 34 percent of Americans with disabilities pay taxes. The median income for this demographic is $21,572. Under our current tax code, 94 percent of those making below $25,000 take the standard deduction. Meaning, this demographic is not itemizing and that they will actually benefit from the doubled standard deduction.

 

Claim #5: The Tax Cuts & Jobs Act reduces incentive for charitable deductions by raising the standard deduction.

Large donations make up the vast majority of charitable giving. Our tax bill does not fundamentally change the structure of the charitable deduction, and actually allows individuals to claim a deduction for gifts totaling up to 60 percent of their adjusted gross income meaning those who do give substantial amounts to charity will still have that same incentive.

 

Claim #6: Eliminating SALT would disproportionately affect people living in higher-tax states such CT, NJ, NY, & CA. People in higher tax states will end up with large tax increases; and/or states may lose public support for investing in quality public services (such as education, housing, & transportation) that benefit their constituents, including people with disabilities.

Again, context is key. The SALT deduction is only available to those taxpayers who itemize, the high earners. Americans with disabilities generally do not fall into this itemizing demographic as (1) only about 34 percent of people with disabilities pay taxes, and (2) the median income for this group is just over $21,000 which means they are taking the standard deduction (which we’ve doubled). Additionally, the final plan allows for the SALT deduction up to $10,000.

 

Claim #7: Tax Cuts & Jobs Act hurts people with disabilities by repealing the Disabled Access Credit (DATC), and the Work Opportunity Tax Credit (WOTC),

This is simply false. The Disabled Access Credit (DATC) and the Work Opportunity Tax Credit were both maintained in the final version of the Tax Cuts & Jobs Act.

Despite all the misinformation out there regarding the Tax Cuts & Jobs Act, the truth remains that this bill will create new jobs, grow paychecks, and bring fairer taxes to American workers across our country.

To find out more about the Tax Cuts & Jobs Act, visit fairandsimple.gop.