Wyoming’s Congressional delegation is strongly backing a Republican tax plan that would slash corporate tax rates nearly in half while providing more modest and temporary relief to individuals. The House passed its version of the plan earlier this month and the Senate’s version is expected to be voted on Thursday or Friday.
Several analyses have found that the bill would imperil Wyoming’s health insurance market and send most tax cuts to the state’s wealthiest residents while possibly raising taxes on tens-of-thousands of middle-class Cowboy State families and individuals. Public opinion polls show the bill is unpopular, with many Americans concluding the measure would most benefit the rich.
Wyoming’s all-Republican Congressional delegation has thrown its weight behind GOP efforts to overhaul the federal tax code, with Rep. Liz Che…
After failing to pass health care legislation earlier this year, the tax plan is a key political goal for Republicans. Wyoming’s U.S. Sens. Mike Enzi and John Barrasso, the fourth-ranking Republican in the Senate, have applauded its advancement, as has Rep. Liz Cheney.
“Our country needs a simpler, fairer tax code that will keep more money in the pockets of hard-working families. Tax relief and simplifying taxes means more jobs and higher wages for families in Wyoming and across the nation,” Barrasso said in an email Wednesday.
Health care concerns
In a speech Wednesday, Barrasso praised the tax bill’s repeal of the Affordable Care Act’s requirement that all Americans purchase health insurance.
“Under the Republican plan, people would no longer have to pay a tax penalty to the IRS if they didn’t want the Democrats’ expensive health insurance – or if they just couldn’t afford it,” Barrasso said.
Enzi also supported the mandate’s repeal, with his spokesman Max D’Onofrio saying that Wyoming residents were currently being forced to choose between keeping their house or paying for health insurance. According to D’Onofrio, Wyomingites were charged $9 million in penalties for not having health insurance in 2015, and that 70 percent of those fined earned less than $50,000 per year.
The nonpartisan Congressional Budget has estimated that repealing the mandate will push insurance premiums up by 10 percent and lead to 13 million people becoming uninsured.
A Los Angeles Times data analysis found that repealing the insurance requirement could “derail insurance markets in conservative, rural swatches of the country” including Wyoming.
“It’s very, very concerning to us,” Denise Burke, a health care analyst with Wyoming’s Department of Insurance, told the newspaper.
Some Wyomingites will pay more than $600 a month for a standard bronze plan on the health care exchanges in 2018, the third-highest amount in …
Health insurance premiums in the state have gone up by an average of 48 percent in 2018, a number that would likely be pushed higher by a repeal of the mandate because fewer young and healthy individuals would remain in the market.
Little public support
The tax plan is unpopular among Americans with an average of 25 percent to 35 percent of voters supporting the plan and closer to 50 percent opposing it. According to a Quinnipiac University poll released earlier this month, just 16 percent of voters believe the bill will decrease their taxes and 59 percent believe it “favors the rich at the expense of the middle class.”
Enzi disputed this claim Tuesday on Twitter.
“The Tax Cuts & Jobs Act will raise incomes, add jobs and boost economics growth — it will not hurt the poor as some claim,” Enzi wrote.
He linked to an editorial in Investor’s Business Daily that argued most criticism of the GOP tax plan does not account for the “economic boost, the new jobs and the increased income” that Republicans have stated the corporate tax cuts included in the bill will lead to.
The largest tax cuts in the Republican proposal are for businesses, with the corporate rate dropping from 35 percent to 20 percent. But it also includes tax cuts for individuals in all income brackets, a point Barrasso and Enzi, as well as Wyoming’s lone U.S. House Rep. Liz Cheney, have highlighted.
However, the cuts for low-income and middle-class individuals and families would expire in 2025, and due to a change in tax brackets, many of those taxpayers could actually find themselves paying more taxes after the cuts expire than they do today.
Impact in Cowboy State
The Institute on Taxation and Economic Policy estimates that 66,800 Wyoming taxpayers would see an tax increase in 2027 under the GOP plan.
The non-partisan organization also estimated in September that 70.7 percent of the tax cuts received by state residents under the legislation would go to the richest 1 percent, who would see their tax bill drop by $180,000 while the bottom 80 percent would receive reductions of between $100 and $1,100.
The average income of an individual in Wyoming earning within the top 1 percent is $2.47 million.
Hunter Blair, a budget analyst at the left-leaning Economic Policy Institute, said that the only significant permanent items in the Senate bill are the corporate income tax cuts and the tax bracket change that would push middle-class earners into higher income brackets through a new method of calculating inflation.
“If (Republicans) wanted the tax cuts throughout the distribution to be permanent they have a very clear way to do that: they can write it in the bill,” Blair said. “But they’ve given away what their priorities are, which are big corporate tax cuts.”
The individual tax cuts are set to expire because the method Republicans are using to pass the tax legislation requires it to eventually be revenue neutral, something that would not occur if the cuts were made permanent.
But John Buhl of the more conservative Tax Foundation said in an email that it is likely the individual tax cuts would not actually be allowed to expire in 2025.
“I’m sure the goal here is to sunset them to make sure the legislation is compliant with budget rules and operate under the assumption that a future Congress will keep the individual cuts in place,” Buhl said. He noted that most of the Bush temporary tax cuts were made permanent during the Obama administration.
Enzi’s office said he “would prefer to see ... hardworking Americans keep as much of their money as possible, for as long as possible.”
Barrasso pointed to an analysis from the Tax Foundation that found middle-class Wyoming families would receive a $2,544 tax cut under the Senate plan. The same analysis shows an increase of 1,796 jobs in the state as a result of the plan.
Buhl said that while the Senate plan was the result of political compromise and “isn’t perfect,” it achieves many of the more generic goals of reforming the federal tax code including broadening the tax base, encouraging more people to use the standard deduction rather than needing to itemize their deductions and eliminating some corporate tax breaks.
“(O)n the whole this certainly qualifies as tax reform,” Buhl wrote.
Bill not finished
The Senate bill’s passage is not yet certain, though more skeptical Republican senators have signed on in recent days.
“It’s a challenging exercise,” conceded Senate Majority Leader Mitch McConnell of Kentucky. He compared it to “sitting there with a Rubik’s Cube and trying to get to 50” votes, a tie that Vice President Mike Pence would break.
If the measure passes, leaders from the Senate and House will meet to create a compromise bill out of the two pieces of legislation and then both chambers will need to approve a final version.
Sen. Bob Corker, the Tennessee Republican who’s all but broken with President Donald Trump over the president’s temperament in office, is among a handful of Republicans uneasy over the mountains of red ink the tax measure is expected to produce. He said he was encouraged by discussions with the White House and party leaders to include a mechanism — details still unknown — to automatically trigger tax increases if specified, annual economic growth targets aren’t met.
An estimate by congressional analysts says the Senate tax bill would add $1.4 trillion to the budget deficit over the next decade. GOP leaders dispute the projection, saying tax cuts will spur economic growth, reducing the hit on the deficit.
Many economists disagree with such optimistic projections. The trigger would be a way for senators to test their economic assumptions, with real consequences if they are wrong.
D’Onofrio said Enzi is “listening” to discussion about tax triggers but supports the legislation as it stands, without such clauses. The provision is drawing stronger opposition from some Republicans, including Barrasso, according to his spokeswoman Laura Mengelkamp.
Mengelkamp said Barrasso did not support any clause that would automatically raise taxes in the event that anticipated economic growth did not materialize and said that cutting spending would be his preferred option.
“Tax legislation should remain focused on the priorities of lower rates for taxpayers, simplification, and certainty in order to spur job growth and raise wages,” Mengelkamp wrote in an email. “Cutting wasteful federal government spending should always be the first option.”
Blair, from the Economic Policy Center, said that by passing tax cuts that allow the deficit to bloom, Republicans may be setting the stage for arguing that the federal government must cut spending on social services.
“We kind of know where they’re headed next,” Blair said. “They’re going to make claims about the need to cut Medicaid and Medicare and education and public investment because all of the sudden the deficit is too big.”
The Associated Press contributed to this report