Tax reform’s impact on the disability community

Oct 16, 2018 | Communications •

Remember this nonsense? It’s one of the many misleading headlines that defenders of the status quo used in an attempt to defeat the tax cuts Republicans ultimately delivered for the American people in the Tax Cuts & Jobs Act.

It contains  several *gems* like these:

“[Disabled people are] a group at a disadvantage that’s been targeted to raise revenue…”

“There are many parts of this act that I would characterize as kicking people when they’re down.”

“Cokley posits that the deductions targeted are not arbitrarily chosen. They are specifically aimed at undermining the social safety net that has been built over a course of decades for not only disabled people, but many of our vulnerable citizens.”

We’re still scratching our heads. That’s because with nearly ten months of tax reform good news out there, Democrats continue to lie and mislead about the bill’s impacts on a number of different communities—including the disability community. For example, the most recent jobs report found that a higher ratio of those with disabilities gained jobs than those without them.

House Republicans are committed to helping the most vulnerable in our communities, which means ensuring  people with disabilities and men, women, and children have every available opportunity to succeed. And we have the record to prove it.

For starters, tax reform has been a positive change for most Americans (90% bigger paychecks, millions have new bonuses, and unemployment is historically low), but as October is Down Syndrome Awareness Month and and National Disability Employment Month, we want to revisit a deep dive back into what Republican policies mean for the disability community. Keep scrolling to learn more, and be sure to check out Better.gop for information on how Americans are Better Off Now than they were two years ago.

WHAT TAX REFORM MEANS FOR PEOPLE WITH DISABILITIES

Before we overhauled tax reform for the first time in 1986, one of the groups that was worse-off under the old tax code was the disability community. If you had a 529 account to save for when your son or daughter goes off to college, but they develop a disability severe enough to eliminate that possibility, the tax code didn’t allow you to roll those savings over into ABLE accounts tax-free. ABLE accounts, you may remember, are designed to help families and individuals save money for expenses related to their disabilities.

Additionally, many individuals with disabilities want to work and earn a paycheck. Under the previous tax code, work was not incentivized.

October is Down Syndrome Awareness Month. Over the years, I've had the privilege of working with organizations like the…

Posted by Congressman Kevin Yoder on Monday, October 8, 2018

These limitations were addressed in the Tax Cuts & Jobs Act, which included two of the ABLE 2.0 bills.

With the ABLE Financial Planning Act, families who were saving for tuition in 529 plans can now roll over the amount to qualified ABLE accounts tax free.

With the ABLE to Work Act, an ABLE beneficiary who earns income for a job is able (pun intended) to save up to the Federal Poverty Level, which is currently $12,060, in addition to their annual contribution limit of $14,000. This will be really helpful for individuals with disabilities who want to work but cannot contribute to an employer retirement savings plan.

On top of this, the ABLE to Work Act makes ABLE account contributions eligible for what’s known as the “Saver’s Credit.”  This little-known tax credit allows individuals to take a credit of up to $2,000, or $4,000 if filing jointly, to save more money. If you’re low income, the more you save, the more credit you claim.

For those concerned about the streamlining and removal of certain tax deductions, there’s good news. The median income for the disability community is $21,572 for those age 16 and older. 94 percent of this income level takes the standard deduction. We nearly doubled that standard deduction, which means individuals with disabilities — all Americans, actually — won’t pay taxes on their first $12,000 in income. That’s a major difference.

COMMON MISCONCEPTIONS

Tax cuts that aren’t paid for will result in automatic cuts in Medicare and other programs for people with disabilities.

This has never happened. Since 2010, we’ve exempted 29 bills from these automatic cuts, known as a Statutory PAYGO, and from 2015-2016, the cuts overall were waived seven times. While we couldn’t address this directly in the tax bill due to budget reconciliation rules, we took action on this after passage.

Because the individual mandate for health insurance coverage was repealed, insurance companies will discriminate against people with disabilities and other pre-existing conditions.

This isn’t a logical cause and effect. Not being legally forced to buy health insurance is not the same thing as allowing institutionalized discrimination. In fact, the mandate and the pre-existing condition guarantee have nothing to do with each other. The pre-existing condition guarantee and lifetime limits and caps were Republican ideas in 2010 and we still protect them today.

Repealing the medical expense deduction prevents people with disabilities from getting the medicine, therapies, and equipment they need.

The final Tax Cuts & Jobs Act  maintains the medical expense deduction, and drops the adjusted gross income (AGI) cap from 10 percent to 7.5 percent in 2018.

It’s important to note, however, that the only people who itemize their taxes are people who don’t take the standard deduction — namely the wealthiest people in this country with more than $200,000 in annual income. The median income for individuals with disabilities is $21,572. Like we said earlier, 94 percent of the men and women in this income level take the standard deduction — they don’t itemize. Context is very important.

Tax cuts are skewed towards the wealthy, and families earning $10,000 to $75,000 will see their taxes increase in ten years.

This analysis is flawed because it falsely claims the repeal of the individual mandate will result in a tax hike. But that’s not true. If you make between $10,000 and $30,000 you can get a subsidy for the Obamacare exchanges. Removing the mandate means that if you choose to not get health insurance — because you are no longer forced to — you don’t have to pay the penalty on Tax Day, and you don’t get a tax credit for buying insurance. That’s not a tax hike.

NOW ABOUT MEDICAID/MEDICARE…

If anyone tells you that Republicans are trying to cut these programs, they probably have a political interest in you believing this lie. There are no plans to make cuts.

In fact, House Republicans have consistently advanced ideas to save these critical programs for current and future generations.

For example, the American Health Care Act would freeze new enrollment in Obamacare’s Medicaid expansion and grandfather in existing enrollees to ensure that the most vulnerable are prioritized over able-bodied working adults. Individuals would also have the option of transitioning into private coverage in an improved commercial market with the support of a refundable tax credit. This puts Medicaid on a sustainable budget.

As another example, the House passed the Protecting Seniors’ Access to Medicare Act (H.R. 849), which repeals the Independent Payment Advisory Board (IPAB). IPAB was going to be a board run by 15 health care professionals that put seniors’ treatment options in the hands of unelected bureaucrats. It was a serious threat to the quality of care for seniors, so the House took action. IPAB was repealed in legislation signed by President Trump in February 2018.