As the hotly debated tax bills appear headed toward final votes in the House and Senate this week, the Center for Rural Affairs calls on members of Congress to send the bills back to committee for further debate. The Center opposed both the House and Senate versions of the bill.
In our review of the bills, a few of the provisions that will negatively impact rural people include:
Renewable energy credits targeted
The House bill directly cuts tax credits that help drive wind and solar energy development. The Senate bill makes a change to corporate income taxes that effectively does the same. Wind and solar energy are especially important economic drivers in rural America, and are critical to a clean energy transition. It is short sighted to end tax credits that support this emerging industry.
Tax cut for the wealthiest estates
Under current law, a married couple can pass on $11 million of assets in their estate without paying any estate tax. The Senate bill doubles the exemption to $11 million per person and $22 million per couple. Even under current law, only 0.2 percent of estates pay the estate tax. Just 28 estates in our home state of Nebraska were subject to any estate tax in the last year. Congressional leaders tout the estate tax roll back as a boon for small businesses and family farmers. In fact, it is a cut for the wealthiest individuals.
Tax bill triggers automatic cuts
Under budget sequestration rules, if the proposed tax bills go into effect and Congress takes no other action, countless federal programs could see budget cuts as soon as 2018. For example, $3.86 billion would be cut from farm bill programs including cuts to conservation, beginning farmer, and small town infrastructure programs.
Health care programs targeted
The Senate bill could trigger $25 billion in cuts to Medicare. Furthermore, by ending the individual mandate for health insurance, it is expected that 13 million low-income Americans will drop health coverage, leading to major reductions in tax credits designed to help working adults afford health insurance.
Cuts to corporate income tax permanent; cuts for individuals temporary
The Senate bill would cut corporate income taxes from 35 percent to 20 percent. Proposed cuts for real people are weighted in favor of high income households. Furthermore, cuts for real people would expire after 2025 while corporate tax cuts remain in place, permanently.
These are just a few of the provisions in the two bills that would affect rural people and small towns.
Given our concerns, we urge Congress to return the bills to the respective tax writing committees. The current bill was hastily written and benefits the very richest individuals and corporations too much, while doing too little for everyday people and small town development.
There are innovative changes to our tax code worth considering. The Center supports proposals that use the tax code to promote investment in employer-owned small businesses, beginning farmers, and small town infrastructure. Returning the bills to committee will allow for a more robust public debate and consideration of these ideas.
We will continue to monitor and report on changes to these bills, as well as project the impact of any legislation that does pass.