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Today, the House approved the “Tax Cuts and Jobs Act” (H.R. 1) by a vote of 227 to 205.
The bill, which was introduced on Nov. 2 and rushed through the House Ways and Means Committee last week, cuts taxes by $1.5 trillion—but it has serious implications for working families nationwide. It offers an increased standard deduction and a modest tax rate cut for middle-class families, but explodes the budget deficit with huge tax cuts for corporations and the wealthy while taking away popular tax deductions used by ordinary Americans.
Of particular concern are the elimination of the personal exemption; reduced deductions for state and local income taxes (SALT) and sales taxes; deductions for tuition assistance, tuition expenses and student loan interest; and even deductions on which school teachers depend when purchasing classroom supplies not provided for by school administrations.
With almost no debate, the bill was passed with no Democratic votes, with only a small number of Republicans defections. In fact, besides Rep. Walter Jones (R-NC), all Republican “no” votes came from the states of New York, New Jersey and California, where state and local taxes are among the highest in the nation, since H.R. 1 seeks to limit the SALT deduction to $10,000. Those members voting “no” were:
- New York: Reps. Dan Donovan, John Faso, Pete King, Elise Stefanik and Lee Zeldin
- New Jersey: Reps. Rodney Frelinghuysen, Leonard Lance, Frank LoBiondo and Chris Smith
- California: Reps. Darrell Issa, Tom McClintock and Dana Rohrabacher
Earlier this week, the independent Congressional Budget Office (CBO) estimated that the House tax bill, if adopted, would add $1.5 trillion in new deficits over a decade, triggering mandatory “sequestration” spending cuts worth $136 billion in 2018 alone, including $25 billion in Medicare cuts.
As we have seen, tax cuts do not pay for themselves, and this staggering deficit increase would need to be addressed eventually, thereby jeopardizing programs such as our CSRS and FERS pensions and our FEHBP health plans. Social Security and Medicare also would be at high risk of cuts in future proceedings, should this legislation pass.
NALC joined the chorus of opposition and sent a letter urging House members to oppose the bill.
“Adding more than $1.5 trillion to the federal deficit over the next decade through tax cuts for corporations and the wealthiest 1% is irresponsible,” NALC President Frederic Rolando wrote, “but doing so on the backs of middle class working families while risking essential health care and retirement programs is cruel.”
Click here to read President Rolando’s full letter to members of the House of Representatives.
While the House has now completed action on its tax bill, this week the Senate Finance Committee began consideration of its measure, also named the “Tax Cuts and Jobs Act.” Negotiations on this measure will resume following the Thanksgiving break with the hope of passing the bill next month.
While identical in name to the House’s bill, the Senate’s bill is shaping up to be something much worse. To satisfy arcane budget rules and to overcome a Democratic filibuster, the Senate bill would effectively increase taxes on working families by totally eliminating some deductions such as the SALT deduction. According to Congress’s own Joint Committee on Taxation, taxes would rise for every group with incomes under $75,000 a year, and for most families earning under $1 million a year.
The Senate bill also seeks to make tax cuts for corporations permanent while ending individual tax cuts in 2026.
As if that weren’t troubling enough for middle-class families, the Senate also is considering including a repeal of the Affordable Care Act’s individual mandate, a move that is estimated to leave 13 million Americans without health insurance coverage—and higher health insurance premiums for the rest of us.
The Senate still has a lot of work to do when it returns to Washington after Thanksgiving, since its tax bill will need at least 50 votes to pass the Senate. With 46 Democrats—and two Independents who will vote with Democrats— Senate Majority Leader Mitch McConnell (R-KY) has very little margin of error and can ill afford to lose Republican votes. Several key Republican senators, however, have already signaled their concern with the tax bill, which means negotiations continue.
Once work on the Senate bill is complete, the House and Senate would go to conference to iron out the differences between the two bills before sending a final measure to the White House for President Donald Trump’s signature.
In the meantime, NALC will remain actively engaged as the process continues, and we encourage letter carriers to urge their senators to oppose any tax reform bill that would negatively affect working families.