We know the Trump Tax Scam gives most of its benefits to the wealthiest 1% and corporations. It’s designed that way: repealing the Alternative Minimum Tax, phasing out the estate tax, cutting the corporate rate, and limiting the rate on pass through income are all benefits that flow exclusively to the wealthy.
But the Trump Tax Scam also repeals dozens of popular deductions that help the middle class, like the medical deduction, the student loan interest deduction, and the State and Local Tax deduction.
Find out how the Trump Tax Scam hurts you, and call your Members of Congress to tell them NO to the Trump Tax Scam.
Students and Teachers
The Trump Tax Scam repeals a significant list of credits and deductions that currently help students and teachers:
- The $250 deduction for teachers’ out-of-pocket expenses, like supplies for their classroom. Note that corporations can continue deducting supplies as a business expense, but teachers will no longer be able to deduct their supplies.
- The student loan interest deduction. The Association of Public and Land-Grant Universities estimates this will increase the cost of student loans for borrowers by $13 billion. This deduction helps the economy grow, by encouraging people to get education and training, making them eligible for better paying jobs.
- Graduate student tuition waivers (currently exempt) would become taxable, thus substantially increasing the tax burden on graduate students.
- The Lifetime Learning Credit, which primarily helps grad students because it applies to years of higher education beyond the first four, is “consolidated” (read: eliminated) into the American Opportunity Tax Credit.
Homeowners and State Taxpayers
The Trump Tax Scam repeals the deduction for state taxes, both income tax and property tax. Eliminating this deduction would increase the taxes of those in high-tax states and it would pressure states to cut taxes—jeopardizing funding for schools, roads, and other services. It would also make buying a home more difficult for younger people, and could result in a drop in home values for everyone but the wealthy. Many current homeowners with high property taxes, large mortgages, and high state income tax would see a net tax increase under the Trump Tax Scam (to fund tax breaks for the wealthy). Homeowners that have lived in their house less than five years and are currently planning to sell in the near future would also be hurt, because the capital gain exclusion on residences would be extended from two years to five years.
The Trump Tax Scam would eliminate the Work Opportunity Tax Credit, which is designed to encourage employers to hire more people from certain target groups—including unemployed and/or disabled veterans. According to the Paralyzed Veterans of America, “nearly 300,000 veterans benefitted from The Work Opportunity Tax Credit between 2013 and 2015” alone. Republicans voted to send this bill to the floor on the eve of Veterans Day.
It wouldn’t be a Republican bill if the Trump Tax Scam didn’t also discriminate against immigrants. Republicans sell the scam in part by talking about the changes they’re making to the Child Tax Credit, even though those changes leave millions of families behind. And they leave out that they are cutting off the Child Tax Credit for American citizen children with undocumented parents. This change, which would harm 3 million low-income children, satisfies Trump’s dual goals of further enriching the wealthy and enacting anti-immigrant policies.
The Elderly and Patients
Each year, nearly 9 million Americans claim a deduction on their taxes for their medical expenses. This deduction is only available to people who spend 10% or more of their income on medical expenses, so it benefits people who have very high medical expenses, such as those with chronic illnesses and the elderly. In 2015, they claimed approximately $87 billion in deductions, meaning that each filer saved nearly $10,000 on their taxes—a huge boost for people who are already spending tens of thousands of dollars on medical care and long-term care. The Trump Tax Scam repeals this deduction, meaning these 9 million people—75% of whom are 50 or older, and 70% of whom have annual incomes of $75,000 or below—would see drastic increases in their taxes as a result.
The bill also repeals the credit for clinical expenses of testing orphan drugs. Some 30 million Americans suffer from a disease covered by this program, and many are waiting for a cure or more effective therapy. Without tax incentives to test treatments for these diseases, patients could literally die.
The Trump Tax Scam essentially does away with itemized deductions (only the top 6% or so will itemize), which means that most people will no longer claim charitable giving as an itemized deduction when they file their taxes each year. Charities expect this will lead to a major reduction in how much people give, hurting vital programs.
Hurricane and Flood Victims
One of the things that victims or hurricanes and floods can do if they suffer a loss when their home is destroyed or seriously damaged is take a casualty loss deduction to help cover reconstruction costs. The Trump Tax Scam eliminates this deduction.
Workers who Move
The Trump Tax Scam eliminates the moving-expense deduction, which will make it more costly for a family to move to pursue more attractive jobs in a new area. Not only is this unfair to those affected, but it hurts economic growth by reducing mobility.