On December 20, both the U.S. House and Senate passed sweeping tax overhaul legislation that could have serious ramifications for the disability community. President Trump is expected to sign the bill, which was passed without any Democrat votes, into law later this week.
Named the Tax Cuts and Jobs Act, the reform contains the largest reduction in the corporate tax rate in U.S. History, with the rate going from 35 percent down to 21 percent. Supporters say the across-the-board tax cut will stimulate economic growth and boost U.S. wages. Opponents say it is a giveaway to large corporations and the wealthy. On Friday, the Joint Committee on Taxation, a nonpartisan committee of the U.S. Congress, released a preliminary estimate that the final bill would add $1.4 trillion to the deficit over the next decade, something that has many in the disability community worried.
“With as much as $1.5 trillion in cuts to federal revenue, as part of this bill, several Republican lawmakers, including House Speaker Paul Ryan, have said they will be looking at cuts to entitlement reform in 2018 to help pay for the bill,” says Alexandra Bennewith, vice president, government relations for United Spinal Association. “That is, they will propose cuts to Medicare, Medicaid and welfare programs next year — programs on which many in our community rely for their survival and independence,”
Additionally, the legislation contains a repeal of the enforcement mechanism of the Affordable Care Act’s individual mandate, which compels all Americans to obtain health insurance or pay a penalty. A repeal of the individual mandate is expected to significantly raise private insurance rates for those with pre-existing conditions.
In a letter to senators, the Consortium for Citizens with Disabilities argued that with a repeal of the individual mandate, “People with disabilities and other chronic conditions who cannot go without healthcare would face much higher out-of-pocket costs. Many would face increased risk of institutionalization due to reduced access to care.”
There are several provisions in current tax law that directly affect the disability community, which had been on the chopping block in either the House or Senate version of the bill, but were ultimately retained. These include:
– Retaining the medical expense deduction, which allows individuals with high out-of-pocket medical expenses to deduct those costs. Current law allows individuals to deduct medical expenses in excess of 10 percent of their total income, but the new law will lower that threshold to 7.5 percent.
– Retaining of the Disabled Access credit, which is designed to help small businesses comply with the Americans with Disabilities Act by removing architectural barriers, providing auxiliary aids and services, or making reasonable accommodations to ensure equal opportunity for employees with disabilities.
– Retaining the Work Opportunity tax credit, which provides businesses with a federal tax credit for hiring people with disabilities, as well as others, including unemployed veterans. The current tax credit for hiring a person with a disability can be as high as $2,400 for a business.
Given that many of the potential effects of this legislation are still unknown due to the rapid nature in which it was passed through Congress, Bennewith says that the disability community must keep a close eye on congress in 2018.
“There have been some statements from House and Senate leadership, namely Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan in early December about ensuring that sweeping cuts [to social service programs] do not occur,” says Bennewith. “However, it is United Spinal’s job to remain vigilant on behalf of our membership and the broader disability community whatever 2018 holds for us and United Spinal will continue to be on the front lines both in Washington, D.C., and across the country.”