What Does the Tax Bill Do for Low-Income Workers?

Tom Williams/CQ Roll Call via AP Images

Treasury Secretary Steven Mnuchin speaks during a news conference in the Capitol where GOP senators said families and small businesses would benefit from tax reform. Appearing behind him are, from left, Senators Mike Rounds, Thom Tillis, David Perdue,  John Barrasso, and Steve Daines. 

Imagine a low-wage worker, perhaps one who voted for Donald Trump.

This worker is getting nothing from the huge Trump-GOP tax plan. This worker won’t benefit from phasing out the estate tax. Nor will this worker gain from eliminating the Alternate Minimum Tax or from reducing the business pass-through tax from 39.6 percent to 25 percent.  And because working class people can’t afford to invest in stocks or mutual funds, they won’t be among the lucky folks who receive bigger dividend checks after the corporate income tax is cut from 35 percent to 20 percent.

This worker toils hard day after day, juggling two kids and a job that pays just above the minimum wage. She was understandably thrilled to hear that Ivanka Trump was pushing to increase the child tax credit. It’s slated to go to $1,600 per family from the current maximum of $1,000. But this larger child tax credit won’t help her at all even as it is extended for the first time to families making $150,000 to $300,000 a year. The House GOP seems to have gone out of its way to make sure that people like her don’t benefit at all from this expanded credit—they’re refusing to make more than the current $1,000 maximum refundable.

Many people say this worker doesn’t deserve to be helped by the Trump-GOP tax plan because she doesn’t pay any federal income tax. But please don’t forget, despite their meager income, low-wage workers do pay several highly regressive taxes: the federal Social Security tax, the federal Medicare tax, as well as local sales taxes.

And many wealthier Americans mock this worker as a taker, as one of the 46 percent of Americans to be looked down upon. But she feels that she gives and gives and is not a taker, because day after day, she is a loyal worker, giving her all on the job, all for paltry pay. She would be happy to contribute more in taxes if only she were paid more.

This worker feels it’s not fair that so many Americans, especially richer Americans, will benefit from the huge tax cuts while so many low-wage workers will be left out in the cold—and receive nothing from this budget-busting cornucopia. She fears that because the tax cuts will add at least $1.5 trillion to the national debt, those cuts and the resulting higher deficits and debt will ultimately push Congress to chop Medicaid and other programs that help keep low-income Americans like her out of misery. Twenty-five million households—around one fifth of all households in the United States—have annual income of less than $23,000.

This worker feels that the architects of the tax plan are punishing her—punishing her for having poor parents and for having the misfortune of going to a low-performing, segregated schools in a high-poverty neighborhood. She feels she is also being punished for not being in the small minority of students from her high school class who went to college.

This worker was hoping that President Trump and Congress would follow in Ronald Reagan’s footsteps and increase funding for the Earned Income Tax Credit (EITC). But no luck there. President Reagan had championed the EITC as a great program for hard-working, low-income Americans.

This worker wants to make America Great Again for people like her. She wishes that she could donate millions of dollars to political candidates, political action committees and dark money groups so that politicians would pay attention to workers like her—instead of to millionaire and billionaire donors who complain about corporate taxes, the estate tax and the alternative minimum tax.   

This worker thinks America is Already Pretty Great for those wealthy donors, and she’s not sure why Congress is rushing to make American Even Greater for them. But then she remembers that the most important thing for many politicians is to keep their big donors happy.

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