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Why the Tax Cuts and Jobs Act Is Bad for People With Disabilities

/in /by The Arc

Legislative Timeline

House of Representatives

  • Nov. 16: House passed its version of the Tax Cuts and Jobs Act

Senate

  • Week of Nov. 27: Senate plans to vote on its version of the Tax Cuts and Jobs Act
  • 51 votes are needed to pass the legislation

Background

The Arc’s longstanding position on tax policy is that it should raise sufficient revenues to finance essential programs that help people with disabilities to live and work in the community. The Arc also supports tax policy that is fair and reduces income inequality; people with disabilities are twice as likely to experience poverty.

Unfortunately, both the House and Senate versions of the Tax Cuts and Jobs Act (H.R. 1, Senate Version) fail to meet either standard. Both bills would dramatically reduce revenue that the federal government uses to pay for critical programs. As the tax revenue decreases it will likely build pressure to cut Medicaid, Medicare, Supplemental Security Income, and other critical programs for people with disabilities to make up for lost revenue.

Why is the Tax Cuts and Jobs Act Harmful?

Congressional BudgetThe House and Senate bills reduce federal revenue by about $1.5 trillion over 10 years. Members of Congress have acknowledged that passing these tax cuts will make it easier to justify spending cuts down the road. The Congressional Budget Office (CBO) also notes that automatic spending cuts may be triggered if Congress does not act to prevent them. These automatic cuts could mean a $25 billion dollar cut to Medicare in 2018. Automatic spending cuts could also slash funds that go to states to operate critical programs such as the Vocational Rehabilitation state grant program and the Social Services Block Grant.

How Do the House and Senate Bills Compare?

The Arc opposes both the House and Senate bills. The chart below is meant to explain the differences between the two bills.

In House Bill In Senate Bill
Repeal of Individual Mandate for health insurance coverage. CBO estimates 13+ million fewer people with health insurance andpremium hikes of 10% in the insurance marketplace. The individual mandate helps ensure that enough healthy people purchase health insurance to keep insurance affordable. x
Repeal of the medical expense deduction. Nearly 9 million filers claim this deduction for medical care expenses that exceed 10% of an individual’s or family’s adjusted gross income. It offsets some of the high out of pocket medical expenses that some people with disabilities incur, such as high cost prescription drugs, long term physical and occupational therapies, wheelchairs, prosthetics, and long term supports and services. x
Repeal of the Disabled Access Credit (DATC). The DATC assists small businesses in meeting obligations under the Americans with Disabilities Act (ADA). It allows small businesses (with < 31 employees and gross receipts < $1 million a year) to claim a tax credit. The credit provides 50% of eligible expenditures between $250 and $10,000 for a maximum of $5,000. x
Repeal of the Work Opportunity Tax Credit (WOTC). WOTC is available to employers for hiring individuals from certain target groups, including people with disabilities. The WOTC for people with disabilities provides a credit for up to 40% of the first $6,000 in wages, for a maximum of $2,400 for SSI beneficiaries but up to $9,600 for certain disabled veterans. x
Reduce affordable housing production under the Low-Income Housing Tax Credit (LIHTC) program. LIHTC funds the creation of affordable housing across the country. Both the House and Senate bills would make changes to the LIHTC program that would reduce the number of affordable housing units produced. Changes proposed by the Senate bill are estimated to reduce units produced by roughly 300,000 over the next 10 years. The House bill has proposed even more dramatic changes, estimated to reduce units produced by nearly 1 million over the next 10 years. x x
Reducing incentives for charitable deductions. Raising the standard deduction could reduce the number of taxpayers who itemize deductions – including charitable donations – from the current 30% to 5%. Combined with a decrease in the top marginal tax rate, the disincentive to itemize would reduce charitable giving by $4.9 billion to $13.1 billion annually. Many of the providers of services to people with disabilities are non profits that rely on charitable giving. x x
Repeal or limit Orphan Drugs Credit. Businesses can receive this credit for clinical testing expenses for certain drugs for rare diseases or conditions. It is estimated that if the orphan drug credit were repealed one-third fewer drugs addressing rare diseases would be developed in the future. x
Repeal		 x
Limit
Creation of an inadequate paid leave tax credit. The Senate bill would create a two-year employer tax credit for paid family and medical leave expenses, modeled after the Strong Families Act. As structured, this tax credit is likely to primarily subsidize companies that already offer paid leave or that would have chosen to offer new or expanded paid leave benefits without a tax credit. This means that, in addition to losing revenue, the proposal would do little to reduce current gaps in access to paid leave that particularly impact workers with disabilities and their families. x
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The 2018 Congressional Budget and Tax Cuts: What It Could Mean for People With Disabilities and What We Must Do

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The CapitolThis year’s Congressional budget process is particularly important for people with disabilities and their families. The recently-passed House and Senate fiscal year 2018 budgets set overall spending and revenue targets for the next 10 years. But beyond this basic function, Congressional budget writers have been clear that an underlying goal of the 2018 budget is to set the stage for a massive tax cut bill. The Arc is concerned that significant loss of federal revenue will result in cuts to programs for people with disabilities

The Senate passed its Budget on October 19 and the House passed the same Senate Budget a week later. House Speaker Paul Ryan (R-WI) is aiming to pass a tax cut bill before Thanksgiving that, under budget rules, can be passed by a simple majority vote in the Senate. A great deal is at stake. Here’s what it could mean for people with disabilities, and what we must do.

What is in the Congressional Budget?

Congressional BudgetThe Budget allows for up to $1.5 trillion to be added to the deficit over 10 years. Congressional committees are now drafting tax cut legislation that does not have to be paid for unless it goes above $1.5 trillion. But if the cost of tax cut legislation goes above that amount, then any amount over that could come directly from cuts to Medicaid, Medicare and many other programs that are critical for people with disabilities. The Budget assumes, but does not require, some $5 trillion in spending cuts over 10 years, as well as optimistic projections of economic growth, to make up for lost tax revenue.

What Do We Know About the Proposed Tax Cuts?

While the tax cut legislation has not yet been developed, the tax plan framework released by President Trump and key Congressional leaders in September indicates that its benefits may be heavily tilted towards wealthy individuals and corporations. Several types of taxes that it proposes to eliminate or reduce are only paid by very wealthy households, such as the estate tax that is only paid by individuals with estates worth over $5.5 million. See The Arc’s statement on the tax framework.

What Will The Arc Be Watching Out For?

At this point there are many unknowns. Here are five things that The Arc will be watching out for:

  1. Cuts To Medicaid, Medicare, Supplemental Security Income (SSI) or Other Critical Programs To Pay For Tax Cuts. The Budget instructs the Senate Finance Committee and the House Ways and Means Committees to develop legislation. In addition to taxes, the Senate Finance Committee has jurisdiction over many critical programs, including Medicaid, Medicare, SSI, Temporary Assistance for Needy Families, Child Welfare Services, Maternal & Child Health, the Social Services Block Grant, the Independent Living Program, and more. Therefore, the Committee may choose to draft a bill that cuts any of these programs and this bill could be passed with only a simple majority (51 Senators, or 50 Senators plus the Vice President) in the Senate rather than the 60 votes that are usually needed.
  2. Loss of Revenue that Sets the Stage for Cuts to Essential Programs. The Senate Finance Committee and House Ways and Means Committees could also choose to draft bills that only contain tax cuts. As noted earlier, budget rules allow for tax cuts that could increase the federal deficit by up to $1.5 trillion. Many members of Congress who favor tax cuts also favor cuts to programs such as Medicaid and Medicare. The Arc is concerned that passing a large tax reform bill that increases the deficit will make it easy to justify spending cuts down the road.
  3. What Happens with Tax Breaks.

    Tax Expenditures that Benefit
    People with Disabilities:

    • Standard deduction for people who are blind
    • Architectural and Transportation Barrier Removal Deduction
    • Disabled Access Credit
    • Work Opportunity Tax Credit
    • Impairment-Related Work Expense Deduction
    • The Low-Income Housing Tax Credit
    • Achieving a Better Life (ABLE) Tax Advantaged Savings Accounts

    For many years, supporters of tax cuts have called for the elimination of certain tax expenditures, also called tax breaks. If certain tax breaks are eliminated, the argument goes, then tax rates can be lowered for most people. In other words, getting rid of some tax breaks can pay for the desired tax cuts. However, not all tax breaks are alike. In fact, there are numerous tax expenditures, which come in the form of credits, deductions, exclusions, exemptions, preferential rates, or deferrals of tax liability. These tax expenditures presently total $1.5 trillion. The Arc will advocate to maintain expenditures that benefit people with disabilities and their families and oppose the elimination of those that only affect the most prosperous.Additionally, The Arc will work to ensure that tax provisions that could be harmful to people with disabilities are not included. For instance, we oppose education tax credits that reduce federal revenues in order to subsidize education in private schools that are not bound by the Individuals with Disabilities Education Act (IDEA) to provide needed services.

  4. US MapBasic Fairness. We expect that changes to the tax code should primarily benefit the majority of people living in the U.S., namely those with low and middle incomes. Public opinion polls show that sentiment is shared broadly. 62% of Americans actually favor increasing taxes on the wealthy, according to the most recent Wall Street Journal poll. However, this does not appear to the case in the tax reform framework, with families in the lower rungs showing only slight gains. The top 1 percent of households, however, are projected to receive 80 percent of the tax cuts by 2027. Click on the map at right to see average tax changes by income group in each state under the proposed framework.
  5. Mainstream Economics – Real Numbers and Real Issues. Tax cuts should be based on generally accepted economic theory and methodology. The Arc is concerned that controversial methods, such as dynamic scoring, will be used to overstate the economic benefits of enacting tax cuts. We also know from recent and historic examples that tax cuts have often not yielded promised results and have instead resulted in increased deficts and harmful programs cuts. The Kansas tax cuts provide a cautionary tale.

For more information, see:

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Congress Must Reauthorize CHIP Now with Bipartisan Support for Funding

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The Arc supports the House of Representatives’ bipartisan policy agreement to extend the funding for the Children’s Health Insurance Program (CHIP). CHIP is critical to providing health insurance to over 9 million children in the United States and has helped to reduce the uninsured population of children to historic low levels. It is urgent that Congress act to extend the funding for CHIP before states exhaust current funding. If the program expires, states will be forced to send notifications to families about pending loss of health insurance coverage for their children. These notifications and the potential loss of health coverage will create anxiety and concern among families who depend on CHIP for affordable health insurance coverage.

The Arc is concerned that the House is preparing to move forward with bipartisan agreement on the policy but strong disagreement on provisions for how the bill will be paid for. On principle, The Arc does not support provisions that pay for bills that hurt Medicaid or Medicare beneficiaries or beneficiaries of other important programs when extending equally critical programs. We urge the House of Representatives to continue to seek provisions with bipartisan support to pay for the CHIP funding extension. It is critical that Congress act to maintain this program and ensure that children continue to have access to the health insurance they depend on.

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President Trump Moves to Destabilize the Affordable Care Act (ACA)

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The Arc is deeply disappointed by two recent initiatives of the Trump Administration regarding the Affordable Care Act (ACA). The first is the Administration’s decision to end cost sharing reduction (CSR) payments, a decision which will be devastating to the health insurance marketplace created by the ACA. CSRs were included in the ACA to help ensure that people earning less than 250% of the federal poverty level ($60,750 for a family of four in 2017) can afford out of pocket expenses such as deductibles and co-pays. The money is provided to the insurance companies to help them offer the required affordable coverage. CSRs are different from the premium tax credits also required by the ACA to help individuals and families afford the premiums. The tax credits are available to people earning up to 400% of the federal poverty level ($97,200 for a family of four in 2017).

Health insurers urged the Trump Administration to continue the payments to help keep premium costs down and to keep health insurers selling in the marketplace. The Congressional Budget Office estimated in August that ending the CSR payments would cost taxpayers $6 billion in 2018 and $21 billion in 2020. This is because the premium tax credits would go up when premiums are raised by insurers to offset the loss of the CSR. This move is consistent with the Trump Administration’s desire to undermine the ACA by driving more insurers out of the marketplace and discouraging people from signing up for coverage.

Last week the President also signed an executive order directing federal agencies to find ways to offer health insurance products that do not comply with the consumer protections in the ACA. These protections include ending pre-existing condition exclusions, ensuring that people with health conditions do not pay more, ensuring health plans cover adequate health care services, and other protections. These changes are particularly critical to people with chronic illness and disabilities who needs these protections to have access to affordable care that meets their needs. Promoting cheap and skimpy plans will hurt people who have more health care needs. It can also draw healthier people to the inadequate plans outside of the marketplace. These changes could make health insurance more expensive in the marketplace.

The executive order also directs agencies to figure out how to allow insurance plans to be sold across state lines. Currently health insurance plans are regulated on the state level. State insurance commissions are responsible for ensuring that the insurance sold in the state is sold by reputable and financially secure companies and meet the insurance requirements in the state. This type of change would bypass the state insurance commissions in addition to allowing plans that do not include the ACA protections.

The executive order does not immediately make these policy changes but directs the agencies to find ways to do so. These policy changes are in addition to the Trump Administration’s decisions to shorten open enrollment, slash advertising about open enrollment, shut down the healthcare.gov website for periods of time during open enrollment, and slash funding for health care navigators who help people with questions. Together these actions create additional barriers to enrollment.

The newest changes in the executive order and relating to the CSRs will depress enrollment, increase costs, and be particularly harmful to people with chronic illness and disabilities. The changes do nothing to improve access to affordable health care. Instead, it is expected that people with pre-existing conditions will be paying more for less in a destabilized health insurance marketplace.

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The Arc Responds to President Trump’s Health Care Executive Order: “Extremely Dangerous for People With Disabilities”

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Washington, DC – The Arc released the following statement in response to President Trump’s Executive Order Promoting Healthcare Choice and Competition Across the United States.

“President Trump, through the new Executive Order ‘Promoting Healthcare Choice and Competition Across the United States,’ is urging his Administration to find ways to circumvent critical protections of the Affordable Care Act including pre-existing condition protections and requirements for adequate health benefits. If the agencies implement this order, it would undermine the health insurance marketplace and drive up the costs of premiums for people with chronic illnesses and disabilities. This is extremely dangerous for people with disabilities who have relied on the Affordable Care Act to receive quality and affordable health care. The Arc vehemently opposes health care policies, like this, that are detrimental to people with intellectual and developmental disabilities,” said Peter Berns, CEO of The Arc.

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National Disability Employment Month: Push for Progress

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By: Nicole Jorwic, Director of Rights Policy, The Arc of the United States.

October marks National Disability Employment Month – it’s a time to reflect on the progress of making employment for people with disabilities a reality, and to push forward on necessary changes to make that a reality for more individuals throughout the country. People with disabilities have shown their desire to work and thrive in their workplaces and communities. Employers all over the country are also recognizing the potential for people with disabilities in their workplaces and the contributions they can make to the culture of their business, and to the economy.

The Arc@Work is supporting employers large and small across the country with targeted outreach and recruitment, employer staffing solutions, and training and consultation. Much of this work is done on the ground via many of our 650 chapters nationwide.

As businesses continue to show their commitment to adding individuals with disabilities to all levels of their workforce, we must also support individuals with disabilities to develop the skills they need to find the jobs that they desire, AND to build careers in the field of their choice. Individuals with disabilities are succeeding in meaningful careers in a wide range of private businesses, government agencies and nonprofit organizations, while others are becoming entrepreneurs with their own micro-businesses.

It is important to remember why a job is so important to an individual with a disability. My brother Chris is 28 and has autism, and I asked him why getting a job is important to him. Here is his response:

“I think that a job is essential to a person with a disability because it gives us purpose, and common ground to build on with the rest of the world. All my siblings get so much of their identities from their jobs, I should have the same chance. All my brothers and sisters in disability deserve the opportunities to work in our communities, for fair pay, so that we can fulfill our destinies.”

As we work on the federal and state level to align policies and practices to make the road to employment smoother for individuals with disabilities, no matter their level of need, we must remember that a job is an essential part of what gives someone standing in their community. The value in having a response to “what do you do?” is immeasurable for individuals with disabilities across the country, including my brother Chris.

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The Arc’s Statement on House Passage of Fiscal Year (FY) 2018 Budget

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Washington, DC – Federal budgets lay out the Nation’s priorities for spending and revenue for the decade ahead. The one passed this week by the House of Representatives reflects priorities that can do real and lasting harm to people with intellectual and developmental disabilities (I/DD). Entitled “Building a Better America,” this FY 2018 budget would most benefit our wealthiest citizens and it would create a far worse America for most people with intellectual and developmental disabilities (I/DD) by prioritizing tax cuts for corporations and the wealthy over funding for critical disability programs.

The House of Representatives officially began the process of developing a budget for Fiscal Year 2018 by passing a budget resolution that includes provisions which would undermine the foundation of community living for people with I/DD for the second time this year. People with I/DD, their families, caregivers, service providers, and advocates have barely had time to rest from battling to protect Medicaid from massive cuts and fundamental restructuring based on similar language from the joint House-Senate budget resolution for FY 2017 earlier in the year.

The Senate is now working on its version of a budget resolution and, once passed, the House and Senate will have to negotiate which version to adopt or whether to jointly adopt a compromise version. Advocates will continue to oppose inclusion of language deemed harmful to people with disabilities.

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The Arc’s Statement on the Tax Reform Outline

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The outline for tax reform released by the White House and leaders from two Congressional committees this week is long on promises and short on details. What is clear, however, is that this plan will rapidly deplete our federal revenues, the very resources that pay for programs that people with disabilities rely on to live in their communities. The fiscally conservative Committee for a Responsible Federal Budget estimates that the new plan could cost the country $2.2 trillion in lost revenue over a decade. This will leave states with far fewer federal dollars to help cover the costs for services for people with disabilities. The Administration and Congressional leaders have not indicated how they intend to pay for this tax proposal, aside from eliminating some expenditures.

We cannot morally or financially afford this tax plan that overwhelmingly benefits the wealthiest of our citizens and ramps up the pressure to cut federal spending down the road. The nation will likely pay for this unfair tax plan through massive budget cuts to programs that people with disabilities and others need for survival and basic necessities.

The President and Members of Congress should now understand the backlash that follows direct attempts to cut essential programs for people with disabilities and other large constituencies. Just this week, massive grassroots opposition to cuts to the Medicaid program stopped the latest attempt to overhaul our health care system.

And now, just days later, a new assault is likely hatching on Medicaid and other vital programs that ensure the health and wellbeing of people with disabilities. This time, however, the attack is indirect and seeks to lure with false promises. But people with disabilities and their families will be paying close attention to make sure that tax cuts are not paid for by in the long run by cuts to critical programs.

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Attack on SSI: House Approves Cutting Off Basic Income for Adults With Disabilities and Seniors

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Washington, DC – Today, the U.S. House of Representatives voted 244 to 171 to revive a failed former policy that cuts off Supplemental Security Income (SSI) benefits for certain people with disabilities and seniors. The legislation targets SSI recipients with outstanding arrest warrants for alleged felonies or alleged violations of probation or parole. Federal law already prohibits payment of SSI benefits to people fleeing from law enforcement to avoid prosecution or imprisonment, and the Social Security Administration has a process in place to notify law enforcement of the whereabouts of such individuals. The original policy ended due to class action litigation.

“This bill is unjust, cruel, and unnecessary, and shows total disregard for the day to day economic struggles of most SSI beneficiaries. SSI benefits average $18 per day and are the only personal income for nearly three in five beneficiaries. Cutting off these modest SSI benefits will cause significant hardship and will only make it more difficult for people to resolve old, outstanding arrest warrants. The Senate should reject this tried and failed approach,” said T.J. Sutcliffe, Director, Income and Housing Policy.

Based on experience with the former policy, H.R. 2792 would not help law enforcement to secure arrests, but instead would target people whose cases are inactive and whom law enforcement is not pursuing. Most of the warrants in question are decades old and include warrants routinely issued when a person was unable to pay a fine or court fee, or a probation supervision fee. Many people are not even aware that a warrant was issued for them, as warrants are often not served on the individual. Some people will be swept up because of mistaken identity, or paperwork errors, which can take months or even years to resolve. Many people will face barriers to clearing their records based on the nature of their disabilities or their current circumstances, for example, an individual with Alzheimer’s in a nursing home.

Resolving an old arrest warrant can often involve significant time and expense, such as when a person has moved and lives far from the jurisdiction that issued, but never pursued, a decades-old warrant. Anecdotally, a very high percentage of people affected by the former policy were people with mental impairments, including people with intellectual disability.

The proposal uses savings from cuts to SSI under H.R. 2792 to pay for legislation to reauthorize the Maternal, Infant, and Early Childhood Home Visiting (MIECHV) program.

“Home visiting helps to improve maternal and child health and increases access to screening and early intervention for children with disabilities. Reauthorization of this valuable program should not be paid for by cutting off SSI for people with disabilities, seniors, and their families,” said Sutcliffe.

As highlighted in a fact sheet by the Consortium for Citizens with Disabilities, here are two stories of people harmed by Social Security’s former failed policy: Rosa Martinez, the lead plaintiff in one of several class action law suits brought against the policy, and a juvenile survivor of childhood abuse:

  • Mistaken Identity: Rosa Martinez, the lead plaintiff in Martinez v. Astruewas, in 2008, a 52-year old woman who received notice from SSA that she was losing her disability benefits because of a 1980 arrest warrant for a drug offense in Miami, FL. Ms. Martinez had never been to Miami, never been arrested, never used illegal drugs, and is eight inches shorter than the person identified in the warrant. Despite an obvious case of mistaken identity, Ms. Martinez was left without her sole source of income while she cleared up the error on her own, without any help from SSA. It was only after filing a lawsuit that Ms. Martinez was able to receive her benefits.
  • Juvenile Survivor of Childhood Abuse: A young man in California with intellectual disability and other mental impairments had his SSI benefits stopped because of an Ohio warrant issued when he was 12 years old and running away to escape an abusive stepfather. The 4’7” tall, 85-pound boy was charged with assault for kicking a staff member at the detention center where he was being held until his mother could pick him up. Many years later, he had no recollection of the incident.

More stories of people harmed by SSA’s former failed policy are available from Justice in Aging.

The Arc advocates for and serves people wit­­h intellectual and developmental disabilities (I/DD), including Down syndrome, autism, Fetal Alcohol Spectrum Disorders, cerebral palsy and other diagnoses. The Arc has a network of over 650 chapters across the country promoting and protecting the human rights of people with I/DD and actively supporting their full inclusion and participation in the community throughout their lifetimes and without regard to diagnosis.

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URGENT: Three-Day Medicaid STILL Matters Campaign; Get Your Story on the Record

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The Senate is set to vote next week on the Graham-Cassidy bill, this is the most dangerous of the health care proposals that have been before Congress and it is on the fast track. Like previous proposals, this bill includes the per capita caps on the Medicaid program that would end Medicaid as we know it with a trillion dollar cut over two decades, and allows states to weaken consumer insurance protections such as the ban on pre-existing condition exclusion and the essential health benefit requirement.

The latest revisions to the bill INCLUDES the devastating cuts to the Medicaid programs that over 10 million people with disabilities rely on to live and work in their communities. The process that the Senate has been using since January to repeal and replace the Affordable Care Act has been out of regular order, with no committee meetings, public input or hearings. In a pathetic attempt to make an effort, the Senate Finance Committee has scheduled ONE hearing on Monday, September 25, 2017, details are here.

HERE IS WHAT YOU CAN DO:

Because not everyone will be able to attend the hearing to make their voices heard, The Arc of the United States will be collecting your stories to submit on Monday. The time is now to take action and tell your Senators what these devastating cuts will mean to you and your family and why MEDICAID MATTERS. Take a few moments before 9 AM SUNDAY EST to tell your Medicaid story HERE. We will hand deliver all the printed messages to the Senate Finance Committee on Monday, and send them directly to your Senators. So please act NOW, e-mails must be received by 9 AM EST on Sunday to be printed.

We want to show strong support for Medicaid from all over the nation, and get your story on the record. After you submit your story be sure to take action and contact your Senators to tell them to vote no on the Graham-Cassidy bill. If you have any questions please contact Nicole Jorwic at The Arc of United States: jorwic@thearc.org.