Special Edition on Republican Tax Plan, Including FAQs and Recap of Tax Town Halls
Dear Contra Costa Residents:
The biggest tax overhaul since 1986 is currently being jammed through Congress without serious public input or enough time for people to understand how it will affect them. Although the Republicans in the House passed their version on November 16th, and the Senate is expected to vote as early as this week, we wanted to take the time to provide you with a special edition of our weekly newsletter to provide answers to the common questions I have been asked about the plan.
REPUBLICAN TAX PLAN QUESTIONS
1) What impact will the Republican tax bill have on mortgage interest deductions?
The tax bill that passed the House of Representatives on November 16th would limit the mortgage interest deduction to the first $500,000 for new mortgages. It would maintain the mortgage interest tax deduction for existing mortgages. The tax bill currently under consideration in the Senate maintains current law, which is a $1 million threshold.
2) What are the proposed cuts to health care including Medicare and Medicaid?
The Republican tax bills threaten Americans’ health and important health programs in several different ways.
First, the House-passed bill repeals the medical expense deduction. Under current law, taxpayers may deduct qualified medical expenses that exceed 10 percent of their income. In 2014, Californians claimed more than $10 billion in deductions for medical expenses. Eliminating this deduction would be especially hard on older Americans and those dealing with long-term conditions that are expensive to treat--illnesses such as cancer and Alzheimer’s.
Second, the Senate bill repeals the individual health insurance mandate, which is a central provision of the Affordable Care Act that resulted in millions more Americans gaining health insurance.
Third, these proposed massive tax cuts to corporations and the wealthy will result in an increase in our national debt by $1.7 trillion in the coming decade. This increase must be paid for somehow, and if no other way is provided, Republicans will use this as a way to open the door to cutting Medicare, Medicaid, and Social Security.
3) What do these bills do to the deductions for state, local, and property taxes?
The House-passed tax bill makes a significant change to state and local tax deductions (SALT). Under current law, Americans can claim a deduction for the taxes they pay to state and local governments. In 2015, Californians claimed more than $112 billion in state and local tax deductions, including $4.9 billion in Contra Costa County. If enacted, the Republican bill would limit these deductions to a maximum of $10,000 for property taxes only. The Senate bill repeals state and local tax deductions entirely through 2025.
Eliminating or drastically undermining SALT will have a negative impact on expenses paid for by state and local taxes, including our public schools, police departments, infrastructure, and other public services
4) How much would the wealthy benefit?
The wealthiest Americans would benefit a great deal from the Republican tax bills now being considered in Congress. According to the non-partisan Tax Policy Center it is estimated that the wealthiest 0.1 percent of earners will recieve an average tax cut of almost $175,000 in 2018 alone. These bills are full of giveaways, tax benefits, and loopholes that help corporations and the ultra-rich get further ahead while everyone else pays the bill. These benefits are at the expense of 36 million middle class families who will see a tax increase under the House bill by 2025. The Republican tax plan is bad for the American workforce, small businesses, and our overall economy.
MARK AROUND TOWN
Over the course of a week we hosted three town halls – via telephone, Facebook Live, and in-person – on the Republican tax plan. During those events we interacted with over 3,600 residents. I want to thank each of you who participated, and I hope the discussions were informative.
Undoubtedly, the provisions included in the Republican tax plan will have real implications for many Bay Area residents, and we will continue to provide you with updates throughout the process.