Like you, we’ve been reading all the news about the new GOP tax proposal. Since it’s difficult to keep up with all of the changes being proposed, we’ve compiled a list of the 10 things we think are noteworthy. Plus, a call to action from Indivisible at the end.
- Higher education tax breaks targeted: There are a few different tax breaks that will be eliminated or reduced by the GOP tax plan – student loan interest deduction, tuition discounts for college workers, employer tuition and debt assistance, and elimination of Coverdell savings accounts. All of these changes make it harder for the average American to afford a college education. That’s not really what the GOP wants, or is it?
- Changes to the capital gains sale of your home: Currently married couples are protected for the first $500,000 of the profit gain of your home. While the dollar amount doesn’t change, the timeframe in which you need to own and be a resident of your home will. Long term homeowners will probably be OK, but if you are trying to work your way up the property ladder, it may get a lot more costly.
- Eliminate the medical expense deduction: Currently, tax payers can deduct medical expenses incurred for managing, treating or diagnosing a disease. The new tax proposal will eliminate that deduction. According to Forbes, this will hit the elderly particularly hard.
- Repealing the Johnson Amendment: This move is clearly controversial as the Johnson Amendment has part of the US tax code since 1954 and prohibits tax exempt organizations, like churches, from engaging in political activity. Repealing this amendment will make churches more powerful than they already are in the political process.
- A divorce tax penalty: How would this work? By changes to the tax treatment of alimony. “Currently, alimony is tax-deductible for the paying spouse and taxable to the receiving spouse. But if you get divorced after the plan is enacted, that would change: Alimony would be paid out of after-tax dollars, and would be tax-free to the recipient.” Business Insider has a breakdown of how this could impact divorcing couples.
- Classroom costs: As if North Carolina teachers aren’t struggling enough right now, the new GOP tax plan looks to make it even harder for them. Teachers would no longer be able to write off the cost of school supplies they buy for their classrooms.
- No more moving deduction: If you relocate for your job, guess what? The GOP tax plan will eliminate the moving deduction. For those desperate for a job and having to expand their geographic search area, this could really have an impact. So much for the job creation part of the tax plan.
- A $450,000 salary is middle class: Say what? Apparently that figure was rolled out as part of the GOP talking points to justify a tax cut from 39.6 to 35 percent for the middle class. It seems a tad out of touch with reality when the median US income is just under $60,000.
- Changes to taxes at the local level: These include eliminating state and local income or sales tax deduction, as well as limiting property tax deductions. What impact will this have? “Repealing it would make it more politically difficult for cash-strapped states and localities to provide vital services such as education, healthcare, and income support because the after-tax cost of paying state and local taxes will increase for residents who used to itemize.”
- Tax proposals for the “unborn child”: Desperate for conservative votes, the tax plan “allows expectant parents to designate a ‘child in utero’ as a beneficiary of a 529 plan“, the state-sponsored college savings plans many parents use to put aside money for college. Why is this significant? For the first time, it enshrines into federal law the recognition of the unborn – a key victory for anti-abortion activists.
Forbes, USA Today and NPR have good breakdowns on other changes to the tax code. With the proposal at 420 pages, we know it’s hard for the average citizen to read through it all and understand what will impact them. The cynical side of us thinks this is what they count on.
What Can I Do?
Indivisible has put together scripts for calling your senators. Here is the Republican script for calling Senators Burr and Tillis. Make those calls. There are so many unpopular changes in this bill that will have a real impact to average Americans. If we can flood them with calls, like we did with all of the proposed bills to kill the ACA, then we have a real chance of killing this too.