So, the latest Democratic lie regarding the Republican tax reform plan is a simple one: that poor Americans will be hurt by higher taxes. That’s simply untrue. But the media are running with the story anyway. CNN headlines, “Poor Americans would lose billions under Senate GOP tax bill.” The New York Times: “Senate Plan Would Raise Taxes On The Poor, Report Says.” The Washington Post: “Senate tax bill would cut taxes of wealthy and increase taxes on families earning less than $75,000 by 2027.”
How would this egregious injustice be accomplished?
Here’s CNN’s analysis, via the Congressional Budget Office:
Poor Americans would lose billions of dollars worth of federal benefits under the Senate GOP tax bill, according to a new Congressional Budget Office report. This is largely because the legislation would eliminate the individual mandate, which requires nearly all Americans to get health insurance or pay a penalty. This would result in 13 million fewer people having coverage in 2027, the CBO found. Many of the folks who would forgo coverage would have lower or moderate incomes and would have qualified for Medicaid or federal help paying their premiums or out-of-pocket health expenses, CBO found.
So, in other words, the Senate tax bill allows individuals not to buy health insurance. How does that take money out of the pockets of the poor? It doesn’t. It simply means they have the option to avoid buying insurance, which means that they wouldn’t take advantage of tax subsidies — but the CBO counts this as a tax increase, since revenue to the Treasury would increase through a drop in payouts. And a huge number of those who would be dropping out of the insurance program are supposedly on Medicaid — which means they won’t drop out at all, since Medicaid is basically free.
Don’t believe the hype. The repeal of the individual mandate isn’t a tax increase on the poor. The poor, like every other income group, will make money on average thanks to this tax reform bill.