The Republican tax bill would hurt underserved communities

As both houses of Congress focus on reforming our nation’s tax code, the Congressional Black Caucus (CBC) has significant concerns about some of the reforms proposed by Republicans and their impact on underserved communities represented by our members.

The decisions made by Congress affect millions of people across the country which is why it’s important for these decisions to reflect our nation’s values. This is especially true when it comes to fiscal policies, be it a tax or spending bill. When it comes to reforming our tax code and our nation’s values, the question should be: Do we as members of Congress want to improve or impede everyday Americans chances of getting ahead in an economy that still poses significant challenges for lower- and middle-income families?

{mosads}For the CBC, the answer is simple. We want to improve their chances. That is why the CBC supports tax bills that ask those at the top of the income bracket, both individuals and businesses, to pay more than those at the bottom. We want everyone to pay their fair share. Unfortunately, the Republican Party does not. The tax bill they introduced a few weeks ago reflects the bankrupt values of their party.

The Republican tax bill was crafted with the richest of the rich in mind. The bill chooses massive tax cuts for the wealthy and large businesses over helping everyday Americans and our economy. The non-partisan Penn-Wharton Budget Model concluded that the Republican tax bill will result in a $1.75 trillion loss in revenue over the first ten years of the plan and a $4.4 trillion loss in revenue over the first 22 years.

Republicans claim that economic growth stimulated by their tax bill will more than pay for the lost revenue but we know, as the Penn-Wharton Budget Model concludes, that that will not be the case. When trickle-down economics Republicans have tried before fails again and this bill explodes the nation’s deficit, Republicans will call for huge spending cuts to critical programs that everyday Americans depend on to make ends meet. In other words, they will push for fiscal policies that will further hurt the very people their tax bill hurts.

One of the many reasons why the Republican tax bill would explode the nation’s deficit is because it eliminates the estate tax, one that 99.8 percent of estates do not pay. Only the estates of the wealthiest of wealthy Americans pay this tax because so few Americans possess the dynastic wealth that the estate tax affects. Repealing the estate tax would cost our country close to $200 billion in lost revenue over the next decade. This means that Republicans have chosen to add $200 billion to our nation’s deficit in order to give a tax break to a handful of wealthy Americans.

The Republican tax bill also eliminates the Work Opportunity Tax Credit (WOTC), which helps employers hire new workers, including returning citizens, veterans, TANF and SNAP recipients and teens who want a summer job. At a time when people are struggling to pay rent and mortgages, payroll and health insurance, and tuition and student loans, the federal government shouldn’t be a part of the problem, we should be a part of the solution.

In addition to eliminating the WOTC, the bill eliminates the New Markets Tax Credit (NMTC), which, since its inception, has channeled close to $100 billion in investment and economic activity to underserved communities, including those represented by CBC members, according to a study completed in early 2017. I myself introduced a version of this tax credit when I was in the Louisiana legislature.

The NMTC has helped attract businesses and jobs to underserved communities, as well as transit oriented development which in turn helps attract more businesses and jobs. Eliminating the NMTC would bring in only $1.7 billion of revenue over ten years, which means that the repeal is of limited benefit when compared to the investment that keeping this provision on the books would generate. According to the U.S. Department of Treasury, for every federal $1 invested in the program, $8 of private sector investment is generated.

The CBC believes that the NMTC program could benefit from some updates so that more small and minority owned firms can participate in making these important investments in our communities and we will introduce legislation to promote these changes. But we don’t think the NMTC should be eliminated. This is a program that needs a scalpel not a hammer.

If Republicans want the CBC’s support on the tax bill, they will have to go back to the drawing board and draft a bill that puts everyday Americans and small business owners first instead of last. If their tax bill passes in its current form, it will be a sad day for these Americans and businesses, as well as our country’s economy.

Congressman Cedric L. Richmond is the chair of the Congressional Black Caucus. He represents the 2^nd District of Louisiana, which includes parts of New Orleans and Baton Rouge. You can follow him on Twitter at @RepRichmond and you can follow the CBC on Twitter at @OfficialCBC.