Today the US House Ways and Means Committee will begin its work on the House Republican tax cut bill.
House leadership continues to tout this tax proposal as a plan to boost the middle class. Yet a closer look at the bill’s details reveals that it provides an increasing share of tax cuts for the nation’s – and Montana’s – richest households while also increasing the federal deficit by $1.5 trillion over the next decade.
The share of tax cuts to the wealthiest taxpayers in Montana will grow over time due to phase-ins of tax cuts that mostly benefit the rich. The plan also includes the eventual elimination or erosion of tax credits and deductions that benefit low- and middle-income taxpayers.
For example, after five years, the bill eliminates a $300 non-child dependent credit that benefits low- and middle-income families while fully repealing the estate tax that impacts less than 1% of very large estates.
The 10-year outlook for the plan reveals that by 2027, the share of tax cuts given to the wealthiest 1% of households in Montana would grow from 34 percent in 2018 to 49 percent by 2027, for an average yearly tax cut of $50,890.
Middle-income taxpayers’ average tax cut would erode from $600 from $200. In fact, by 2027, one in six Montanans with incomes between $36,000 and $57,000 would actually face a tax hike.
Tax Cuts for the Wealthiest Could Result in Deep Cuts to Critical Services for Montanans
Equally problematic to who is benefiting, this tax plan will also result in a massive increase to the federal deficit, that will likely put pressure on federal spending cuts down the line. This budget pressure would then hit our state budget when federal programs get slashed and costs get shifted to the state and local governments. In our state, we know from experience that tax cuts will lead to larger deficits — they will not pay for themselves over the next decade.
Already-struggling families, seniors, and people with disabilities would lose more from cuts to food assistance, health care, housing assistance, and workforce development and educational opportunities than they would gain from the tax cuts outlined in this House bill.
Amidst our current budget crisis, Montana cannot afford additional budget pressure as the result of federal cuts to programs that support low- and middle-income families. Federal funds are the largest funding source for Montana at $4.5 billion or 44.7 percent of the 2019 biennium budget. Our state cannot adequately serve the people of Montana if we see federal support for children, families, and seniors begin to erode as a result of this tax plan skewed heavily to the richest taxpayers.
Our Montana Congressional Delegation should not support any tax bill that is heavily weighted to help the wealthiest, does little to support working Montana families, and swells the budget deficit.