December 20, 2017

GOP Tax Plan

On December 20, 2017, Congress passed the most extensive revisions to the tax code in the last thirty years. The new tax code will ease the tax burden on corporations and the wealthy but not for low and middle-income Americans. It permanently cuts corporate tax rates from 35 percent to 21 percent. Unlike the permanent business tax cuts, individual tax cuts will expire in 2025. According to the Tax Policy Center, Americans in the lowest earning fifth of the population would see their income increase by a fraction of a percent while Americans in the top-earning fifth would see an increase of nearly 3 percent.Obamacare mandates that citizens must purchase insurance or pay a penalty fee, unless they qualify for a limited number of exemptions. This mandate was put in place so that everyone would have access to affordable health insurance.

Obamacare stabilized the health insurance market by increasing the amount of people who bought health insurance. The healthy people who purchased insurance but did not use it subsidized the sick. Obamacare prohibited health insurance companies from overcharging or denying sick consumers but without Obamacare it is not likely that insurance companies will continue to charge affordable rates due to an expected decrease in insurance buyers. Although the Obamacare subsidy structure will not be affected by the tax bill, those who make too much to qualify for assistance may find higher insurance rates and will most likely decline to purchase insurance. This will lead insurance companies to revert back to overcharging or denying the sick, in order to make a profit. Additionally, the value of tax credits that affordable housing developers use will fall, eventually causing fewer units to be built and limiting the availability of affordable housing.

HOW DOES THIS RELATE TO STRUCTURAL RACISM?

America is increasingly divided along economic lines and, unfortunately, policies like this widen the disparity. Policies that favor affordable housing and health insurance are being replaced by policies that drive structural inequalities. Healthcare disparities exist between different racial and economic groups and repealing the Obamacare mandate will cause many who most need it to lose their healthcare. Likewise, the lack of affordable housing will further segregate neighborhoods and schools. Overall, the new tax code perpetuates racial group inequity.

For more on the GOP Tax Plan, see " How the GOP Tax Plan Scrooges Middle Class, Retired, and Poor " .