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Editorial: Republican tax plan bad legislation

  • Anne Kille of Flemingsburg, Ky., protests the arrival of Senate Majority Leader Mitch McConnell, R-Ky., at the Lincoln Day Dinner, June 30, in Elizabethtown, Ky.  AP FILE PHOTO


Thursday, November 30, 2017

There is plenty not to like in the Republican tax plan that bestows its greatest benefits on corporations and the most wealthy Americans, while dealing a double blow to the nation’s poorest people with far smaller cuts and the likelihood of rising health insurance costs. The package also attacks public and private higher education.

As the Tax Cuts and Jobs Act hurtles toward a final vote in the Senate, we hope it is derailed by a handful of Republicans sensible enough to realize there is no true reform in this plan that also would add an estimated $1.4 trillion to the federal deficit over the next decade.

Among the most egregious elements of the first major reform of the nation’s tax code in the last three decades is making benefits for corporations permanent, while the reduction in rates for individuals and families would end in 2025 unless they are renewed by Congress.

The nonpartisan Tax Policy Center’s analysis concludes: “In general, higher-income households receive larger average tax cuts as a percentage of after-tax income, with the largest cuts as a share of income going to taxpayers in the 95th to 99th percentiles of the income distribution. On average in 2027, taxes would rise modestly for the lowest-income group, change little for middle-income groups, and decrease for higher-income groups.”

The Congressional Budget Office, which is also nonpartisan, released a report this week concluding that Americans who earn less than $30,000 a year would be worse off by 2019 if the tax plan is approved, primarily because of reduced government aid for health care.

Because the Senate bill would eliminate the requirement under the Affordable Care Act that nearly all Americans buy health insurance or pay a penalty, the cost of premiums is expected to rise. According to the Congressional Budget Office, that means four million Americans would lose health insurance by 2019 and 13 million by 2027.

This week, the University of Massachusetts expressed strong opposition to the tax plan in a letter to the state’s U.S. senators and representatives. UMass President Martin Meehan and the chancellors of the five campuses wrote that “Congress has unveiled a tax reform package … that threatens the financial stability of universities and specifically and unfairly targets college students, particularly graduate students.”

The letter concludes that both the House and Senate “versions of the tax reform legislation would have serious adverse impacts on the university, our students and our employees.”

The UMass leaders cited eight specific provisions in the tax package, including repealing the exemption for tuition waivers given to graduate students who teach or conduct research. “Approximately 5,000 graduate students at UMass face the prospect of their tax burden significantly increasing — in some cases by more than 100 percent — which could stifle research and scholarship and have a negative effect on critical workforce development in the Commonwealth.”

The tax plan also would adversely affect private colleges by imposing an excise tax on endowment income for schools with at least 500 full-time students and an endowment worth at least $250,000 per student.

In a letter to the Amherst College community last month, President Carolyn “Biddy” Martin said “early estimates suggest the impact on Amherst could be in the tens of millions of dollars over the next decade. An impact of this magnitude would hurt our ability to fund all aspects of our mission and provide the quality education we value and that current and prospective students expect.”

Amherst uses income from its $2 billion endowment to provide 50 percent of its annual operating budget and pay financial aid grants averaging nearly $50,000 a year to 56 percent of its students.

“If enacted, the proposed tax plan, in effect, would require Amherst to redirect a portion of its resources from its educational mission to federal government expenditures,” Martin wrote. “Taken in its entirety, the proposal is extraordinarily wide-ranging in its impact on the accessibility and quality of higher education for lower- and middle-income Americans.”

President Donald Trump and Republican Congressional leaders are counting on tax reform as their single legislative victory in 2017. However, a plan that increases the country’s income inequality and decreases the accessibility of affordable education is not a worthy achievement. It’s simply bad legislation.