Donald Trump and congressional Republicans made a lot of promises about their $1.5 trillion tax giveaway that passed in December. They said millions and millions of workers would get wage hikes or bonuses. But it didn’t work out that way – only 4% of the nation’s 148 million employees got more money from their bosses.
Not surprisingly, it’s the wealthy that have reaped the benefits. About two-thirds of the tax cuts are going to the richest households this year and nearly 83% are going to the richest households by 2027 when the law is fully implemented.
Of course, it’s hardly news that the rich are getting richer and everyone else is being left behind, but what do these new tax breaks really mean for families in North Carolina? A new report from Americans for Tax Fairness and Health Care for America Now provides some answers. It finds that the tax bill isn’t just unfair and skewed to benefit Wall Street corporations and the richest 1%, but that the cost of these giveaways will be shifted to the rest of us in new and destructive ways.
Consider the following findings:
- The richest 1% of North Carolina taxpayers—people with an average income of at least $530,930—will receive 26% of the state’s total tax cut.
- The bottom 60% of taxpayers—people with income less than $60,570–will get just 13% of the tax cuts.
- The average tax cut for the richest 1% is $44,760, while the average tax benefit for the lower 60% of North Carolinians is $360—about a dollar a day.
- Repeal of a key provision of the Affordable Care Act in the tax law will increase the number of uninsured people in North Carolina by more than 400,000 and drive up premiums by as much as $2,510 annually for some ACA enrollees.
The tax law is paid for in part with cuts to health care—partial repeal of the ACA that will result in millions more uninsured people and higher premiums for some families. But those aren’t the only cuts we’ll see because of the new law. Because most of the tax giveaway is not yet paid for, the Congressional Budget Office (CBO) says it will add $1.9 trillion to federal deficits in the coming decade.
In response, not surprisingly, President Trump and Republicans are already proposing big cuts in programs that North Carolina families depend on, including:
- North Carolina could lose health coverage because of the proposal to fully repeal the Affordable Care Act. Women, people over 50 and people with pre-existing conditions would lose important protections that stop insurance companies from charging them more. Seniors could also face higher costs for prescription drugs because of a key provision in the ACA that gives seniors in Part D a discount on prescription medicines.
- Nearly 200,000 people in North Carolina could lose food assistance through SNAP.
- More than 370,000 individuals with disabilities could lose services because of a $2.4 billion cut to our state’s share of SSDI and SSI.
- North Carolina would lose $2.6 billion from highway funding and over $500 million from transit funding between 2021 and 2027—a cut that would also result in significant job loss.
While we’re paying more for health care and losing services, big pharmaceutical and insurance companies will be reaping big benefits under the new law. UnitedHealth, the nation’s largest insurance company will get a $1.7 billion annual tax break. Plus, the 10 largest prescription drug companies will get $80 billion in tax breaks over the next ten years on their offshore profits thanks to the new law even though they have gouged consumers for years, jacking up the price of nine of their most widely-prescribed drugs for older Americans by an average of 71% between 2011 and 2015. That’s 6.5 times the rate of prescription drug inflation and 14 times the rate of general inflation.
Tax breaks for the rich and corporations don’t put money in the pockets of working people, make health care more affordable or help pay for college – no matter what promises Wall Street CEO’s make about passing along the savings to employees or customers.
Instead of trickledown promises and more tax breaks that reward drug companies and insurers for gouging customers, Congress should make corporations pay their fair share of taxes to expand health care, make insurance and prescription drugs more affordable and protect education, Medicaid, Medicare and Social Security, just like the rest of us do.
Kevin J. Rogers, JD, is the director of policy and public affairs for Action NC and a lecturer of government and political science at William Peace University in Raleigh.