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5 Reasons Communities of Faith Should Be Alarmed by the Tax Bill
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5 Reasons Communities of Faith Should Be Alarmed by the Tax Bill

There is a profound absence of faith values in the pending tax legislation.

The U.S. Capitol dome as the sun rises on Tuesday, Oct. 3, 2017, at the foot of the Washington Monument on the National Mall in Washington. (AP/Manuel Balce Ceneta)
The U.S. Capitol dome as the sun rises on Tuesday, Oct. 3, 2017, at the foot of the Washington Monument on the National Mall in Washington. (AP/Manuel Balce Ceneta)

President Donald Trump, House Speaker Paul Ryan (R-WI), and many other GOP lawmakers have continually referenced faith and religion when referring to public policy. President Trump’s public remarks have increasing been laced with religious rhetoric—from invoking the Lord to support his declaration of opioid addiction as a national health emergency to his appeal to God to bless the world after launching military strikes in Syria. Similarly, when a policy crisis on gun violence reemerged in the wake of the Sutherland Springs, Texas, massacre, Speaker Ryan immediately reverted to religious rituals urging prayer for the community, but stopping short of a call for legislation to address gun violence—something he is well positioned to do.

Public facing piety and religious references from President Trump and GOP lawmakers in Congress are increasingly difficult to square with their public policy decisions. The tax reform legislation is one of the most glaring examples. Their aggressive legislative efforts to take from the least to give to corporations and people with the most are morally and ethically indefensible. In fact, these efforts are antithetical to the social teachings of Christianity and many other faith traditions that encourage courageous compassion and emphasize the responsibility to reject greed and give in service of the common good. The tax legislation is a profound illustration of the disconnect between a professed faith identity and actions that are inconsistent with the fundamental tenants of faith traditions.

The Republican tax bill passed the House on November 16, and the Senate could act on its version as soon as the week after Thanksgiving. Deceptively advertised as the fulfillment of a promise to help the middle-class, the bill’s $1.5 trillion tax cuts favor wealthy people and large corporations at the expense of the middle class and families living paycheck-to-paycheck. The bill also promises to balloon the federal deficit, which will then trigger calls to cut programs serving low- and middle-income families.

Although there are many troubling aspects about the bill, some of the most morally distressing are the provisions that target the most vulnerable communities in our country. For example, the bill cuts bonds that fund vital affordable housing for families, seniors and veterans further exacerbating the existing housing shortage during a time when homeownership is out of reach for many Americans. It also takes aim at the immigrant community, by creating new barriers to critical income support for families with children. Further compounding these reductions, according to Congressional Budget Office estimates, the cost of the tax bill would trigger automatic cuts to Medicare—an estimated $25 billion would be cut from Medicare in 2018 alone—and the elimination of a number of important programs including the Social Services Block Grant Program, which funds meals-on-wheels and other lifelines for people in need.

The Senate is also moving recklessly at lightning speed with a bill that is broadly similar to the House version. A key difference, however, is that the Senate version would also repeal a key part of the Affordable Care Act (ACA). The ACA makes health care affordable for many who may need lifesaving treatment, but some senators seem unmoved by the reality that lives could be lost as a result of this repeal.

Despite the enormous impact this legislation will have on the lives of millions of people, there has been a concerted effort to ram through in just weeks a tax bill that is hundreds of pages long with little transparency or rational deliberation. The overall thrust of the bill is deeply concerning for communities of faith, and there are at least five key provisions that will directly affect houses of worship and their parishioners.

Repeal of the Johnson Amendment

Included in the tax bill is a toxic provision meant to repeal the Johnson Amendment, a tax law that has shielded nonprofits from political influence and has prevented charitable donations from being funneled into political campaigns for six decades. The House tax bill threatens to do away with the measure, even though it has helped maintain the integrity and independence of houses of worship and nonprofit groups. While the law does not prevent nonprofits and clergy from speaking out on policy issues, it does prohibit them from endorsing or opposing political candidates. Without this rule, charities would be open to manipulation for partisan political ends, for example, through donations that come with strings attached. This is particularly problematic for houses of worship because it injects partisan politics into our country’s most sacred institutions making them vulnerable to political influence in ways that may compromise their core mission.

Elimination or reduction of the estate tax

The structure of current tax laws incentivizes wealthy individuals to donate to charity because these donations can be deducted. This incentive is particularly powerful for the wealthiest Americans because charitable contributions made through their wills, also known as bequests, can be deducted from their estates. Wealthy estates with assets greater than $5.5 million for an individual or $11 million for couples are subject the estate but can reduce what they owe through charitable bequests. The pending House and Senate tax bills reduce the number of wealthy estates that would be required to pay the estate tax over the next six years and the House bill phases out the tax entirely by 2024. These changes could make a substantial difference in charitable giving, including to faith-based nonprofits and houses of worship. A new study by the Center for American Progress estimates that eliminating the estate tax would reduce charitable bequests by $7.8 billion in 2024.  For the faith community specifically, the report projects a $2.5 billion decline in religion-related bequests by 2024.

Removal of incentives to invest in low-income communities

Many faith traditions advocate for those living on the margins of society. Accordingly, there are growing concerns about income inequality and joblessness. For years job creation has been key to addressing this issue. Yet in contrast to the stated purpose of the Tax Cuts and Jobs Act, the House version terminates the New Markets Tax Credit, a program meant to stimulate investments and economic growth in poor urban and rural communities. The elimination of this credit would reduce job growth in areas of the country that are in most need of economic revitalization. The program has generated 36,000 jobs in high-poverty areas and has created  178 million square feet of manufacturing, office, and retail space. At a time when income inequality has become so pronounced and when many households continue to struggle financially, lawmakers should do all they can to add jobs not eliminate them. 

Withdrawal of critical work-related support for immigrant families with children

The House and Senate bills also contain provisions that target immigrant families with children. Under current law, tax-paying immigrant families can claim a child tax credit (CTC) of up to $1,000 per child younger than age 17, with the credit phasing in based on earnings, which provides critical income support for families. Both tax packages propose changes to the requirements for CTC claims. The relevant provision in each modifies the law by requiring taxpayers who claim the child tax credit to have a valid Social Security number for the child, rather than the individual tax identification number (ITIN) that is currently used by many immigrant families. While this appears to be a simple change, for many families it could mean the difference between basic subsistence and poverty. The Center on Budget and Policy Priorities estimates that this change would hurt 1 million children in low-income working families.

Repeal of a key provision in the Affordable Care Act

A key distinction between the House and Senate tax reform bills is that the Senate bill would eliminate the individual mandate in the Affordable Care Act, which keeps health insurance costs down. The elimination of the individual mandate would result in a substantial increase in premiums, making insurance in the law’s marketplaces’ unaffordable. The Congressional Budget Office estimated that 13 million people would lose their health insurance and premiums would rise 10 percent because of the health repeal provision in the Senate tax plan. Repealing the individual mandate would likely mean fewer healthier and younger people would buy health insurance, causing skyrocketing costs for everyone else—including people with pre-existing conditions. Experts predict that many insurers would leave the marketplace, leaving many consumers vulnerable—with no coverage options.

One must never lose sight of the fact that at the end of every budgetary line item is a family, a child, a veteran, a student, the elderly, the middle class and the poor—people who need a government that recognizes the dignity and inherent value of every individual and works to uplift rather than enact policies the crush the most vulnerable among us. If the Senate bill passes, Congress will have to reconcile differences between their respective versions of the bill before voting to pass the final version. Given congressional leadership’s blind pursuit of tax cuts for the wealthy and corporations, the reconciliation process is likely to happen very quickly. In fact, the House could even just pass any Senate-passed bill, if it wanted to, without the need to reconcile differences. It will take swift and strong resistance from citizens, including the faith community, to stop this reckless legislation.

LaShawn Y. Warren is vice president of the Faith and Progressive Policy Initiative at American Progress.

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Authors

LaShawn Y. Warren

Vice President, Faith and Progressive Policy Initiative

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