They’re relentless. As we prepared to vote on the Tax Cuts & Jobs Act, opposition continued to resort to its doomsday rhetoric. It’s not productive, it’s not realistic, and it’s scaring people to score political victories. Sad!
Does tax reform hurt women? No. Does tax reform kill thousands of people? No. Is tax reform going to make the poor pay taxes so the rich don’t have to? Where did they even get that one? Of course not!
What tax reform means is that families, workers, and small business owners will finally have a fighting chance of getting ahead, when for too long they’ve had a tax code that barely let them get by.
We recently did a deeper dive into how tax reform is actually great for women across America, so today we’re going to combat the claim above about our supposedly “sociopathic war on the disabled” (their words, not ours). Here to help us push back on this myth and explain what tax reform means for people with disabilities are House Republicans who have long been champions for the disability community — Committee on House Administration Chair Gregg Harper (R-MS) and House Republican Conference Chair Cathy McMorris Rodgers (R-WA). Here’s what they had to say:
THE STATUS QUO LEAVES PEOPLE BEHIND:
For us, helping individuals with disabilities live happy, healthy, productive lives is not just good policy, it’s personal. We have loved ones and close friends who are impacted by our work. So, it leaves us scratching our heads when we hear people say that we don’t care. We care a lot!
Here’s the problem: with the claims people are making about our work on pro-growth, pro-family tax reform, they imply that the status quo is somehow *good enough* for our country.
That’s not true in any sense.
What that status quo means is special interests and the well-connected enjoy loopholes while the rest of the country faces stagnant wages, jobs going overseas, barriers to entry, and fear on Tax Day. One of the groups that is worse-off under this current tax code: the disability community.
Right now, if you have 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 doesn’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 tax code as-is, work is not incentivized.
TAX CUTS & JOBS ACT RIGHTS THESE WRONGS
These limitations are two reasons why we’re supporting the Tax Cuts & Jobs Act — we’ve worked closely on ABLE legislation, and now two of the ABLE 2.0 bills are part of tax reform.
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.
But wait, there’s more! In addition to the provisions specifically included to help people with disabilities, the community will benefit from the reforms we’re making with every American in mind.
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. Well, we’re doubling the 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.
And entrepreneurs like Blake Pyron, a young man with Down syndrome who runs his own snow cone business, will see relief by our small business tax cuts, because we’re significantly lowering the tax rate on small businesses.
SETTING THE RECORD STRAIGHT
Since there are so many misleading statements out there, we want to respond to three of the most common misconceptions out there.
#1: Tax cuts that aren’t paid for will result in automatic cuts in Medicare and other programs for people with disabilities.
We’ve been hearing this one quite a bit. 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 cannot address this directly in the tax bill due to budget reconciliation rules, we will have the opportunity to do so after passage. [Update: We took action on this.]
#2: If the individual mandate for health insurance coverage is 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.
#3: Repealing the medical expense deduction will prevent 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.
#4: 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.
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.
OPPORTUNITY SHOULDN’T DISCRIMINATE
We want everyone in this country to be able to pursue their own unique version of the American Dream, and that opportunity extends to the disability community, as well. Our country knows the value of hard work, and defining people by their potential rather than their limitations.
Tax reform is about improving lives, and we’re excited about what these commonsense, pro-family, pro-growth reforms will mean for the people we represent.
Want to learn more specifics and join us every step of the way? Text TAX REFORM to 50589 and visit FairandSimple.gop