Teamsters AFSCME, Retirees Slam GOP Plan to Hand Tax Breaks to Rich

The House Republicans’ tax cut for the rich drew slams from the nation’s largest union for public workers and a top retiree group, thanks to elimination of deductions that would help fund government services and help seniors pay their medical bills.

The Alliance for Retired Americans, AFSCME and the Teamsters joined a growing chorus of criticism of the tax plan. Meanwhile, an alliance of more than 400 groups spread over 20 states mobilized to pressure lawmakers to defeat it (see separate story).

House Ways and Means Committee Chairman Kevin Brady, R-Texas, whose tax panel will start work on the measure on November 6, released it after GOP lawmakers crafted it behind closed doors. The GOP Trump administration strongly supports it and claims it will help middle-class people save several thousand dollars each through an increased personal exemption. But House Speaker Paul Ryan, R-Wis., later trumpeted savings of $1,148.

AFSCME and ARA said it will have the exact opposite effect, because the increased personal exemption does little to offset the rising medical costs seniors shoulder which are now partially deductible, or state and local taxes, which are fully deductible.

“Exacerbating the problems they are creating, the House and the Trump administration would no longer allow Americans, including retirees, to deduct their medical expenses, including nursing home costs or out of pocket medical or dental expenses from their taxes,” ARA Executive Director David Blank said.

“Members of the Alliance for Retired Americans are already calling the Capitol Hill switchboard to protest this tragedy-in-the-making.”

“If you’re one of the more than 100 million working people who deduct state and local income taxes (SALT) from your federal taxes, you may be in for a nasty surprise,” AFSCME reported. House GOP leaders want to kill the state and local tax deduction “to pay for tax cuts for the wealthy and profitable corporations. Even more unfair is that while the deduction would disappear for working families, corporations would still get to claim it,” the union noted.

“The so-called SALT deduction has been around since the inception of the federal income tax. It prevents middle-class taxpayers from paying taxes twice on the same dollar earned – first to state or local governments and again to the federal government.”

AFSCME cited a report from the Center on Budget and Policy Priorities, a progressive think tank, to back its analysis. “Trading the SALT deduction for high-income tax cuts is a bad deal for most Americans,” the center said. Killing it “not only takes money out of working fami-lies’ wallets and gives it to the wealthy, it would also strain state and local budgets and force local governments to cut vital public services,” such as schools, firefighting and health care.

The center explained states would also have to cut services and raise taxes, while being driven deeper into debt as they lose revenues from lost itemization. And the two deductions, combined with the tax cut for the rich, would throw more of the federal tax burden onto the poorest sector of the population, it said. The entire report AFSCME cited is on the center’s website.

As the CBPP report explains, the elimination of the SALT deduction “comes as the president and congressional Republicans propose in their 10-year budget plans to shift substantial new costs to states,” AFSCME said.

“And how would they do this? By sharply cutting Medicaid and other health funding and potentially cutting federal support for state and local services such as education, transporta-tion, environmental protection and low-income housing,” according to the center’s analysis.

“The wealthy and corporations should pay their fair share of taxes, not get more tax breaks at the expense of working families,” the union declared, urging members to call their lawmakers now.

Other Center for Budget and Policy Priorities points included:

            • The tax plan’s rate cuts are more tilted to the top than the SALT deduction. “That’s part of the reason why by 2027 -- when key elements of the plan would be fully in effect -- 80 percent of the plan’s net tax cuts would go to the top 1 percent of Americans, the Tax Policy Center estimates.”

            • The Trump-GOP tax cut plans would also shift between $2.1 trillion and $3.4 trillion in costs to the states, if the states picked them up. The Center said that’s dubious and predicted states would cut programs and payments instead. Between $1.3 trillion and $1.9 trillion would come from cuts in Medicare and Medicaid, originally included in GOP legislation to repeal the Affordable Care Act. The rest would come from other non-military programs: Aid to education, housing subsidies, food stamps, Temporary Assistance to Needy Families, and the like.      

            • States that want to keep human service programs going, even at lower levels, would likely raise taxes, notably sales taxes, the Center said. Since sales taxes are the same for the rich and the poor, the poor would pay proportionately more for state and local services, while the rich – having also gotten the GOP’S tax cut – would pay proportionately less. “That would push more costs to middle- and low-income people, and make state and local tax systems even more regressive overall than they already are,” the Center’s analysis adds.

Teamsters President Jim Hoffa slammed the House tax cut for the rich as “a flashback to the 1980s when trickle-down economics was all the rage” but failed. Left unsaid: Its red ink.

“At a time when big business is already pocketing sky-high profits and the top 1 percent of earners are seeing their incomes significantly grow, it is confounding why Congress would focus on increasing their wealth at the expense of the country’s workers. Working Americans would see much-needed deductions for medical costs ended under this legislation. The bill would also cap deductions on local and state taxes as well as home mortgages, deductions that middle-class families rely on,” he said. Hoffa also pointed out the House GOP would repeal the estate tax. Calculations show repeal would send $250 billion to only the top 5,000 wealthy households.