Opponents of the Republican tax plan warned the plan could decrease funding for safety net programs in Missouri, cut funding for the state’s schools and harm minority groups Friday.
Empower Missouri, an organization that advocates for health care, human rights and other causes, held a news conference at its High Street office Friday morning, where speakers said congressional Republicans rushed the plan through Congress in sometimes sloppy ways. They also said it could change the way people donate to churches and nonprofits.
Kurt Brewer, executive director of the Missouri Community Action Network, said plans to double the standard deduction could create a $700-$900 million deficit in Missouri revenues.
“In addition to cuts to other federal programs that may come with this, we’re going to have that amplified by cuts to Missouri’s local and state-level safety net and social programs,” Brewer said.
Brewer said tax reform bills rushed through the House and Senate. The distribution of the long Senate bill just hours before the Senate voted on it also left little time for discussion about its effects, he said.
“We’ve seen images of the handwritten notes in the margins,” Brewer said. “That doesn’t allow anybody to evaluate what they’re voting on.”
The Republican tax plan would cut the corporate tax rate from 35 percent to 20 percent. The House tax plan also would cut the number of personal tax brackets from seven to four. The Senate bill keeps seven tax brackets but cuts the rates at most levels and raises the income level to qualify for brackets. Under the Senate plan, the cut to the corporate rate would be permanent, while the rate reductions for individuals would expire after 2025.
Both tax plans would add at least $1.4 trillion to the national deficit, according to the non-partisan Congressional Budget Office. House Speaker Paul Ryan, R-Wisc., said this week that Republicans later want to rein in spending on costly health care programs like Medicare and Medicaid to reduce the deficit.
Missouri NAACP President Rod Chapel said trickle-down economics failed in the past and will fail again. If passed, this legislation will take services away from groups, like people of color, who historically have been disadvantaged, he said.
“These tax cuts are going to have a detrimental effect on the neediest segment of society and leave state governments such as Missouri with less ability to protect those folks,” Chapel said.
Brewer said these programs are important for people who pay into them and expect them to be there when they retire.
“These are often labeled ‘entitlements,’ but they’re not,” Brewer said. “These are insurance programs that Americans pay into year after year. We expect and deserve those programs to be intact when we get to the point that we’ve paid our dues.”
When filing taxes, Americans use a figure called adjusted gross income, which essentially is all income minus deductions. People use this same figure when filing state tax returns.
Missouri NEA Legislative Director Otto Fajen said that essentially changes Missouri’s tax code by default.
“We weren’t looking to do another $700 million (general revenue) reduction, because we’re trying to not cut all these other programs,” Fajen said. “But now we’re stuck with it because (the federal government) made that decision for the Legislature.”
Fajen said while state and local taxing entities support most school programs, federal money does support some critical programs. Title I of the Elementary and Secondary Education Act provides financial assistance to schools with high numbers of children from low-income families. Federal money also funds programs related to special education services.
Fajen said the state funds only about 30 percent of education expenses. This is already low compared to other states, he said. So Missourians would pay more through local school taxes under the tax plan because it will decrease state revenues and funding for schools, Fajen said.
“We just are struggling to have the state fulfill its role,” Fajen said. “The reduction in the allowance for property tax under federal law is going to make that impact acutely felt.”
The House tax plan also would repeal the Johnson Amendment. Created by President Lyndon Johnson during his time in the Senate, the 1954 bill prohibits nonprofit organizations from endorsing or opposing political candidates or risk losing their tax-free status.
Allie Chang Roy, advocacy manager for nonprofit advocacy group Nonprofit Missouri, said this change could undermine the core premises of religious and other nonprofit groups because of the influence of partisan politics.
“It is really difficult to manage public perception of your nonprofit anyway,” Chang Roy said. “When you are so reliant on contributions as it is, it’s just better to keep it clean without conflict.”