Dear Representative:

On behalf of Americans for Tax Fairness (ATF) and its coalition of more than 420 endorsing organizations, we write to strongly oppose the so-called “Big, Beautiful Bill” (BBB) that  would enact a new suite of tax breaks for the ultra wealthy, large corporations, and other big businesses, including by extending many provisions of the 2017 Tax Cuts and Jobs Act. If these proposals are enacted and made permanent, the benefits would go overwhelmingly to the ultra wealthy, billionaires, and big corporations while increasing the federal debt by nearly $5.5 trillion over the next 10 years and raising costs on workers and families to cover some costs of the bill.

The tax provisions of this legislation cannot be viewed in isolation from the rest of the legislative package. In its entirety, this reconciliation package proposes the most radical transfer of wealth from low- and middle-income families to wealthy households in American history. It does this by stripping Medicaid and healthcare coverage from almost 14 million Americans; making huge cuts to the nutritional-support program SNAP for seniors, veterans, and children; and raising the monthly costs of student loans for millions of borrowers–all to finance new tax breaks mostly for the rich. With the cost of healthcare, housing, education, and other essentials already too high and going higher, financing new tax breaks for wealthy individuals and large corporations by gutting services that help Americans afford their basic needs would be a catastrophic mistake.

The 2017 Trump tax law has been a failure for the economy and none of the promised benefits materialized for workers and families. Many low- and middle-income families actually saw their taxes increase while price gouging corporations have taken advantage of the economic situation to raise prices on families even further. By maintaining this regime of Trump tax cuts that would otherwise expire at the end of this year, the top 1% of wealthy individuals stand to gain on average a $65,000 tax cut and the top 0.1% will get an estimated $252,000, while most families will only be getting about a dollar a day. When taking into account the many cuts to programs in other aspects of the reconciliation bill, most workers and families will likely see their income shrink and taxes rise over the long term. There is absolutely no reason to continue giving wealthy people special tax breaks while sticking families with the cost.

If it wasn’t clear already who this bill was written to benefit, the provisions that benefit the wealthy are made permanent, while the few provisions that may help workers and families expire after four years or less. This means while billionaires and the mega corporations they lead get to plan for the long term, workers and families will be left guessing about their tax and financial situation in the near future. Even worse, when analyzing the impact on taxpayers at different income levels over the long term, the average taxpayer can expect their costs to increase by $500-$1,200 after 2029. As if raising taxes on workers and families to pay for billionaire tax breaks wasn’t bad enough, the bill also blocks the popular Direct File program, which will force taxpayers to spend hundreds of dollars a year to tax prep services rather than saving more of their own money by using a free-to-file tool.

Other glaring examples of the way this legislation harms workers and families are proposed changes to the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC). This legislation would result in nearly 20 million of the poorest kids being locked out of full benefits of the CTC because their family income is too low. And while the bill increases the maximum CTC from $2,000 to $2,500, it does so only for only three years, and fails to reinstate full eligibility for 17 million kids while resulting in 2.5 million more low-income kids getting less than the full credit. And instead of making it easier to expand the EITC and easier to access, this bill puts up more hurdles for workers and their families. Despite one in five EITC-eligible workers already not getting the credit because it’s too complicated or expensive to file taxes, the current bill will make families with kids jump through more hoops to access their EITC. The new ‘pre-certification’ proposal for the EITC is essentially to audit every working family with kids that claims the credit—before they ever receive a refund—adding more layers of bureaucracy that will prevent working families from getting the credits they are owed. These hurdles are put in front of workers and families for one reason only: to funnel more money to the wealthy with special tax breaks.

This legislation is full of provisions that give special tax breaks to the wealthy while making workers and families pay more. One such provision is the pass-through loophole, also known as Section 199A, which this bill would make permanent. This provision has been widely mischaracterized by big businesses and their lobbyists as having benefited “small businesses.” But any honest analysis of the beneficiaries from this loophole reveals that the income from pass-throughs–and therefore the benefit from the loophole–is highly concentrated at the top. One study found that 75% of it went to big businesses, while households with over $1 million of income receive over half of the tax benefit. In fact, seven billionaires, including Michael Bloomberg and Richard Uihlein, were able to cut their collective tax bills by almost $200 million in a single year thanks to the pass-through loophole. This bill would hike the income deduction to 23 percent from 20 percent, a huge special-interest tax break available to some of the wealthiest individuals in the country. It does nothing to prevent abuse by millionaires and billionaires.

Another clear benefit for the wealthy is a provision that would make permanent the weakened alternative minimum tax (AMT). The AMT was created over 50 years ago to ensure that higher-income taxpayers could not substantially or even completely eliminate their federal tax obligations through the exploitation of excessive credits and deductions. The 2017 Trump-GOP tax law dramatically weakened the AMT, making the tax code less fair while costing low and middle income taxpayers over a trillion dollars. Collectively, the number of taxpayers paying the AMT fell from around 5 million in 2017 to just 200,000 in 2018. The Committee for Responsible Federal Budget estimates that about half of the tax benefit from maintaining the weakened AMT would go to households with incomes over $400,000, and Yale Budget Lab estimates that 93% of the tax benefit from this provision would go to the top 10% of highest-income households.

Family dynasties are increasingly dominating our economy, society and democracy, yet this bill adds to the problem of excessive inherited wealth by increasing and making permanent the huge increase in the estate-tax exemption from the 2017 law. A couple will be able to leave $30 million to their descendants without paying a penny of tax next year, with that amount rising annually with inflation. This handout to lucky heirs and heiresses will cost over $200 billion in lost revenue over 10 years–money we could use to lower the cost of healthcare, housing, education and other essential services for everyone who wasn’t born rich.

Corporate tax breaks have proven to be an expensive and inefficient giveaway that do nothing to help families. After the enactment of the Trump Tax Scam– which lowered the corporate tax rate from 35% to 21%—corporations now pay on average a lower effective income-tax rate than the average American family for the first time in nearly a century. Rather than address that problem by raising corporate taxes, this bill does the opposite by repealing tighter corporate tax deduction rules, giving big firms even more tax breaks. Revoking stricter rules on how much corporations can deduct for depreciation, research costs and interest hands businesses a hundred billion dollars in tax reductions over 10 years. The evidence shows that the special breaks restored in these areas will not lead to greater business investment, hiring or wages–but rather give tax handouts for actions the corporations would have taken in the absence of that incentive.

And despite lofty promises made in 2017 by Donald Trump and Congressional Republicans, corporations used their windfall from that law to go on a massive stock-buyback spending spree, while giving their executives huge bonuses and keeping worker wages flat. According to analysis from the Institute on Taxation and Economic Policy (ITEP), for every $100 Congress spends on corporate tax breaks, $40 goes to foreign investors, $17 goes to the top 1% of highest-income households, and only $10 trickles down to the bottom 80% of American households. Further analysis from CBO finds that corporate tax breaks fail to generate meaningful growth, creating just 20 cents of economic output for every one dollar spent.

The bill also includes a new private school voucher scheme that creates another tax shelter for the wealthy while simultaneously diverting billions of dollars of public funds to private schools with no accountability for taxpayer dollars. This scheme is particularly egregious, effectively moving wealth to the rich and away from workers and families and draining needed public resources from public schools. Privatization schemes that include additional layers of bureaucracy, such as tuition tax credits, maintain the same harms as traditional private school vouchers while adding even greater opportunities for misuse of public funds, given the lack of transparency and oversight. Congress should not be wasting billions of dollars creating new methods for the ultra wealthy to evade paying their fair share.

Making some provisions of this bill temporary is another example of the misleading fiscal figures used to obfuscate the long-term cost of the tax provisions. As they did in 2017, Republicans  rely on sunsetting provisions at a future date to make the bill appear less costly over the budget window. Just as is happening now with the “temporary” provisions of the 2017 law, it’s clear Republicans intend to make many if not all the “temporary” provisions of this bill permanent at some future date. Other dubious scoring methods that obscure the real economic and fiscal effects of the bill include the dynamic scoring estimate and the current policy baseline of the Senate instructions. Stripping these gimmicks away, the true cost of this legislation over the next 20-30 years runs into the tens of trillions of dollars. There is absolutely no reputable fiscal analysis that shows this blueprint to be deficit neutral. Decades of tax breaks and special loopholes for the wealthy and corporations are the primary policies responsible for the ever increasing debt, and this bill will turbocharge the fiscal challenges our nation faces.

The new iteration of the Trump-GOP tax law relies on the economic argument that huge tax breaks for the rich and large corporations will trickle down to people or produce a boom in economic growth, despite that approach having unequivocally failed for decades, leaving millions of Americans economically behind. This new version, paid for by raising prices on workers and families through cuts to Medicaid, SNAP and other programs to finance trillions in tax breaks for the wealthy, including billionaires, will leave generations of Americans worse off. Americans for Tax Fairness reiterates our strong opposition to this bill and any reconciliation bill that gives tax breaks for the wealthy, large corporations, and big businesses by extending or expanding upon the 2017 Tax Cuts and Jobs Act. If you have any questions, please contact John Foti at jfoti@americansfortaxfairness.org.

Sincerely,

David Kass
Executive Director

John Foti
Deputy Executive Director & Legislative Director