By Ryan Velez
This headline can’t be that surprising, can it? All jokes aside, Atlanta Black Star reports that among many other groups, Black families stand to be subject to disproportionate harm from the upcoming tax plan, and it’s important to know if and how you are among that group.
The competing versions of the tax proposal — the Senate version was released on November 9, with the House version being released a week prior — will both reduce taxes on average for all income groups, per analysis by the Tax Policy Center. Sounds good, right? Not necessarily. The top two quintiles by income will receive 78.7 percent of all total federal tax and those in the bottom two quintiles seeing less than a 1 percent change in their average after-tax income. Republican leadership hasn’t necessarily been shy in saying that this is a change largely to please wealthy campaign donors. Common theory is that these donors have pledged to fund competitors in future races if they don’t get what they want.
While Black people will likely see a lower impact than under the plans Donald Trump tried to implement earlier this year, there is still a chance for a lot of the progress made after the Great Recession to be wiped out under such rules. One major issue that isn’t getting a lot of press is the Low-Income Housing Tax Credit, which the House bill is looking to limit. Roughly 90 percent of all affordable housing construction in the United States is funded in part through the Low Income Housing Tax Credit.
“It would be a catastrophe,” Bob Moss, principal and national director of governmental affairs at CohnReznick, told Affordable Housing Finance. “In New York alone, housing advocates project that [the state] will lose $4.5 billion in affordable housing investment, 17,000 affordable homes, and 28,000 jobs annually. The national impact of losing 50 percent of production is devastating, at a time when an estimated 25 million Americans are paying more than 50 percent of their monthly income in rent.”
“Americans are especially likely to face a tax increase if they have a smaller family, have mostly wage income instead of investment income, or claim some of the many deductions that the bill repeals, like those for state and local taxes and employee business expenses,” Lily Batchelder, a professor and tax specialist at New York University Law School who worked on economic policy in the Obama administration, told the New York Times. “They are increasing taxes on many in the middle class while concentrating their tax cuts on the wealthy.”