President Donald Trump’s recent budget proposal includes making cuts to infrastructure, education, affordable housing and healthcare, leading one watchdog group to speak out in concern about the potential impact those cuts could have.
Last December, President Trump signed the GOP tax bill, giving breaks to big business and claiming those would trickle down to employees.
Frank Clemente is the executive director of Americans For Tax Fairness. He says very few corporations – in Indiana or elsewhere – have followed through.
“We’re finding that the vast majority of workers are not getting any kind of pay bump from this tax cut,” Clemente says.
Clemente and his organization are concerned recent budget proposals could actually hurt the majority of Americans, including taking away more than $35 million in grants to Indiana teachers in 2019.
In a recent report released by Americans For Tax Fairness about Indiana, the group estimated that not only healthcare could be hurt, but also things such as infrastructure. The watchdog group says Indiana could lose nearly $3 billion in transportation funding between 2021 and 2027 under the Trump Administration’s budget plan.
“He basically cuts spending programs in order to pay for his tax cuts,” says Clemente. “Cutting those spending programs takes money directly away from services, such as infrastructure, that would go into Indiana towns and communities.”
However Ball State University economics professor Michael Hicks says he sees Trump’s proposals as bargaining chips for a larger budget debate. Now if the infrastructure cuts were to be approved as is, Hicks says he believes they will have only a modest effect on Indiana.
“The construction of roads, the maintenance of bridges, those are probably largely unaffected by the federal budget that’s going to cut infrastructure,” says Hicks. “At the same time now’s not a great time to be doing infrastructure. Would have been good three or four years ago.”
Hicks argues states should delay infrastructure investment anyway.
“The reason is simply that we have rising interest rates, which makes it harder to borrow and most importantly we have a very large, available workforce with which to fix potholes and to work on bridges,” Hicks says.
Clemente argues any positives of the tax plan are outweighed by the negative impact on the larger tax base.
“I think the better way to look at it is sort of the overall impact of these tax breaks,” says Clemente. “And the overall impact is that, by and large, they are overly skewed towards wealthy individuals and corporations, which means that the majority of Americans – and majority of people in Indiana – will not be benefiting overall. Especially when you look at how these things are going to be paid for.”
However Hicks says there is a major misunderstanding the core issue with taxes.
“The problem isn’t so much with the personal income taxes,” says Hicks. “Almost half of households pay no income tax and about one-third of them actually receive a negative income tax.”
The problem is with low-income households having to pay sales tax and payroll tax, and households in a higher income bracket having tax loopholes available.
“Something that everybody should like: this tax reform eliminates a lot of those loopholes for very high-income households,” he says.
Hicks says both sides of the aisle are getting the equation wrong.
“The left has been deluded about the equity issue; the right’s deluded in the sense that they believe there’s going to be–these are going to pay for themselves in terms of more tax revenue,” says Hicks.
Americans For Tax Fairness is also documenting how major corporations – like Anthem, headquartered in Indiana – are using the tax break they received.