Recent college graduate Jonathan Brown, Congresswoman Chellie Pingree and analyst Sarah Austin of the Maine Center for Economic Policy (Click on dots below for more photos)
Recent college graduate Jonathan Brown, Congresswoman Chellie Pingree and analyst Sarah Austin of the Maine Center for Economic Policy (Click on dots below for more photos)

This Thursday, the US House of Representatives is expected to vote on a bill that promises to deliver a massive income tax cut to the wealthiest taxpayers and corporations while eliminating various tax breaks, credits and deductions. A Senate amendment proposes to repeal the Affordable Care Act mandate that everyone buy insurance, which would cause 13 million people to lose their insurance, according to the nonpartisan Congressional Budget Office. Because the measure would raise the defcit by $1.5 trillion, it is also expected to trigger cuts to Medicare and a variety of other programs 

First District Congresswoman Democrat Chellie Pingree says she will vote against the House Republican bill. 

“There are a variety of reasons I am frustrated with this bill,” said Pingree at a forum on Monday. “Basically, it’s going to be a giveaway to corporations and some of the wealthiest people in the country. They’re dropping the corporate tax rate from 35 to 20 percent, a $5 trillion benefit to some of the wealthiest people in the country. They’re eliminating $3 trillion in tax cuts. And then they’ll be adding $1 to $2 trillion to the deficit. That means they’re going to come to us in no time and say that now we don’t have enough money for Medicare or Medicaid.”

Second District Republican Congressman Bruce Poliquin told various news outlets that he will support the House GOP plan. Poliquin told the Lewiston Sun Journal that he worked hard to make the House GOP version “very family friendly,” but did not specify which families. When asked about the bill’s impact on the national debt, which Poliquin has campaigned on reducing, Poliquin told the Bangor Daily News that he is “very concerned” about the debt, but also “very concerned about our families who haven’t had a pay raise in 10 years.” 

Senate Republicans can only afford to lose two votes in order to pass tax reform with a simple majority. Angus King appears to be leaning against the Senate tax plan, telling Maine Public Radio last week that the “process stinks,” as there haven’t been any hearings, public input or analysis of the proposals. Sen. Susan Collins told The Hill news site on Monday that it’s “premature” to say how she’ll vote and that she “would like to see more of the tax relief skewed to middle-income and lower-income families.” 

Last Friday, Collins, US Treasury Secretary Jovita Carranza and the president’s daughter Ivanka Trump held a tax policy forum at Volk Packaging Corporation in Biddeford before a select group of “small business owners, community leaders, and advocates.” In joint statements, Trump and Collins praised each other, with Collins calling Ivanka “a passionate advocate for working families and working mothers” and Trump calling Collins “a great champion for working families.” 

Tax Cuts, Medicare Cuts & Destabilizing the ACA

The two tax plans are still being crafted on the eve of the vote, but the Washington, DC-based Institute on Taxation and Economic Policy (ITEP) estimates that both of them would cut taxes for most earners and raise taxes on some earners. Under the Senate GOP proposal, the richest 1 percent of Mainers would get a $20,990 tax break in 2019 and $26,850 in 2027, while foreign investors would receive a $31 million tax break, according to ITEP. At the same time, the middle 20 percent of Maine taxpayers, those earning between $41,650 and $64,580, would see an average tax cut of $750 in 2018, before dropping to $580 in 2027. The analysis further finds that 11 percent of Maine taxpayers would actually see a tax increase. 

On Tuesday the Congressional Budget Office pointed out that the “Pay-As-You-Go” Act (PAYGO) requires that any bill that increases the deficit must be met with automatic across-the-board spending cuts, known as “sequestration,” to keep it budget neutral. So because the House GOP plan adds $1.5 trillion to the deficit over the next decade, the CBO estimates there will have to be $150 billion in annual spending cuts to a range of programs such as the Student Loan Administration and $25 billion from Medicare. As the Washington Post notes, Congress can pass a separate measure to waive PAYGO, as they have in the past, but they would need Democratic votes to do so.

Senate Republicans say their amendment to repeal the ACA mandate that everyone buy insurance would free up $338 billion over the next decade to help pay for the tax cuts. However, because the mandate helps pay for the ACA, the amendment would cause insurance premiums to go up and 13 million people to lose coverage in the same period, according to the CBO. By 2027, 50,000 Mainers would lose their insurance as premiums rise by as much as $3,000 per year in some regions, according an analysis of CBO data by the Maine Center for Economic Policy.


Medical Deduction & Disability Employment Incentive

The elimination of credits and deductions would also have a significant impact on the 30 percent of filers who itemize their taxes, according to speakers at Congresswoman Chellie Pingree’s press conference in Portland on Monday. Breast cancer survivor Sue Clifford of Freeport pointed out that the GOP plan eliminates a provision in the tax code that allows people suffering from serious illnesses to deduct medical expenses. Clifford said that although she had good insurance when she was being treated for cancer, she currently has an $11,000 deductible. 

“It’s a sad thing to think about, but over 8,000 people in Maine are diagnosed with cancer of many types every year,” said Clifford. “And it’s just a catastrophic thing for anyone, and the loss of that deduction would be a terrible thing.”

Disability advocate Jodie Hall said she took advantage of the medical expense deduction after her son was born with Down syndrome and severe health issues. She noted that the GOP plan also eliminates the Work Opportunity Tax Credit, which provides an incentive to businesses that hire people with disabilities. 

“Seeing these things disappear has a real life impact for people like my son,” said Hall. “It’s just another hurdle to overcome when you’re looking at trying to help him have a productive and meaningful life.”

Teacher Supplies & Student Debt Tax Breaks

Portland high school teacher Sally Regan drew attention to the GOP proposal to get rid of the deduction for teachers who purchase school supplies. She read a list of all of the things she buys for her classroom including a color printer, planning materials, art supplies, content books, snacks for students and professional subscriptions as well as items for economically disadvantaged students like Christmas presents, warm clothes and food for vacations. On average teachers spend about $600 a year of their own money on school supplies, according to a survey by the nonprofit

Recent college graduate Jonathan Brown said he was planning to use a deduction that allows people to deduct up to $1,000 in student loan interest, but the Republicans are planning to scrap it. According to the student debt refinancing site LendEDU, Maine students have the 15th highest debt load in the country, with an average debt of nearly $30,000.

Dairy Farms to Take a Hit

Representing Agri-Mark Dairy Cooperative, economist Bob Wellington said the GOP proposal to eliminate a tax break for agricultural cooperatives will hit the dairy industry hard. He said the 1,000-member dairy cooperative, which includes a third of Maine dairy farmers, has invested $120 million in their facilities and owns Cabot Cheese. He said the plan would also impact Oakhurst Dairy, which is owned by the Dairy Farmers of America cooperative. Wellington said that other large non-agricultural businesses that take advantage of the waiver aren’t fighting the plan because they benefit from it in other ways, but “farmers are going to lose.”

“This will end up with an increase in taxes to both farmers who invest in their own facility and in hiring their neighbors as well as the cooperatives they formed,” said Wellington. “A lot of people don’t know that. It’s frustrating.” 

Historic Tax Credit & Mortgage Interest Deduction

Nancy Smith, executive director of GrowSmart Maine, spoke out against the GOP proposal to eliminate the Historic Preservation Tax Credit, which provides an incentive to developers to rehabilitate historic buildings. She said that since 2008, the program has helped stimulate the construction of 83 projects and 1,440 housing units and created 5,180 jobs and $42 million in tax revenue. Smith also said the GOP plan to get rid of a tax credit for constructing low-income housing would cut the number of affordable housing units by 56 percent.

Maine Realtor Association lobbyist Barbara Berry blasted the House Republican proposal to reduce the cap on mortgage interest deductions on newly purchased homes. Right now, people can deduct interest on mortgages of up to $1 million, but under the House plan, that would be cut to $500,000. According to the Maine Association of Realtors, of the 14,951 homes sold so far this year, 1,099 were above $500,000.

“We’re seriously concerned about both the House version of tax reform that’s been presented and the Senate version,” said Berry. “We believe that they represent a direct threat to the real estate industry and that they’ll result in a diminished house value. Home values will go down.” 

Think tanks on both the right and the left, from the conservative Tax Foundation to the centrist Tax Policy Center and liberal-leaning Center on Budget and Policy Priorities, are critical of the mortgage interest deduction for being an expensive subsidy to wealthy homeowners. According to the Tax Policy Center, the $77 billion program only benefitted one-fifth of households in 2016. It notes that while 85 percent of the households in the top 1 percent of earners took advantage of the mortgage interest deduction, only one in 20 in the bottom 40 percent benefitted, because less wealthy households usually don’t itemize their taxes. 

Berry also took aim at Republican plans to eliminate or scale back a provision that allows filers to deduct state and local taxes from their federal income tax, which she said would also negatively impact home values. She also spoke out against another part of the GOP plan which would eliminate a tax break for people who sell their homes. 

“Corporations will still have full deductions from mortgage interest and state and local taxes and moving expenses out of the country,” she said. “And we simply don’t think it’s fair for homeowners to be paying for those tax benefits for corporations.”