GOP tax plans make the American dream harder to achieve

As an educator who is the daughter of educators, it’s painful to see how GOP tax plans would hurt students’ quest for the American dream.

What Americans have long wanted is a system that enables them to do well based on their talents, skills and hard work. Achieving the American dream means having choices about how to live, having a good family life, owning a home, contributing to one’s community and enjoying a comfortable retirement.

Getting there involves hard work.

Media images miss the reality that most college students hold down a job while in school. A 2015 study by Georgetown University found that 70 percent were working, 40 percent full time.

Balancing a job with studies is tough. Shifts get rescheduled, wreaking havoc with all the reading, writing, studying and research students need to do. Because financial aid is limited and paychecks don’t cover enough, debt results.

BDN File Photo

Some students’ income is so limited they go hungry. Over half of community college students in a recent study were classified as “marginally food insecure” or worse; lack of food hurt their ability to concentrate and do school work.  

Despite this, provisions in proposed Republican tax bills hurt Americans’ ability to get technical training or a college degree.

In the tax bill passed by the House of Representatives with a vote from Rep. Bruce Poliquin, students and parents paying for education would lose tax breaks and pay $65 billion more in the next decade. For instance, interest on student loans would no longer be deductible.

Higher taxes would hit graduate students. Many universities pay master’s degree and doctoral students a stipend for working as a research or teaching assistant and waive the cost of tuition. Under one plan, they’d also be taxed on their tuition. A student earning $18,000 whose financial aid covered $45,000 in tuition would have to pay tax on $63,000.

Graduate students aren’t the only ones who’d have to pay taxes on tuition.

Some people working at a university can take a class tuition free. I’ve known staff members who slowly acquired a college degree this way, one of which is now working on a master’s degree. Fred Vautour, a janitor at Boston College, worked nights for years and was able to put his five children through college because his employer offered a tuition benefit.

A tax hike on these hard-working, persistent individuals hurts their ability and their children’s ability to do well. And, of course, these provisions hurt low-income students and their families the most.

Once students graduate, getting rid of deductions for state and local taxes hurt their ability to buy a home.

While in the workforce, if they have a child with a handicap or serious illness or an aging parent with a lot of medical expenses, they’d pay more because the tax deduction on medical expenses is slashed.

Moreover, since the tax bill borrows money and increases the deficit, under a Senate rule called PAYGO, the tax bill would lead to $150 billion dollars in cuts every year for 10 years.

These include Medicare cuts, hurting retirees and their families.

As the Washington Post reported, “Medicare alone could lose $25 billion in funding next year if PAYGO were to go into effect, according to a new Congressional Budget Office report. Customs and Border Patrol, the Student Loan Administration and the Military Retirement Fund would also face the scalpel, according to an analysis from the nonpartisan Committee for a Responsible Federal Budget.”

Beyond these harms to students, homeowners and retirees, the very structure of the bill is skewed and harmful.

Corporate tax cuts are permanent but other cuts go away. According to Congress’ Joint Committee on Taxation, by 2025 the plans would raise taxes on low and middle-income people but deliver a lot to the very wealthy, including the two-tenths of 1 percent richest heirs.

Today’s America has high wealth inequality. It’s also harder than before for most people to do better economically than their parents. We shouldn’t adopt a tax system that makes that worse.

Small business owners and others don’t like these bills, with their program cuts, loss of deductions, deficit-busting price tag, and transfer of wealth upwards. Only 22 percent of Mainers approve. Senators should listen to their constituents and instead pursue legislation that supports the American dream.

 

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Amy Fried

About Amy Fried

Amy Fried loves Maine's sense of community and the wonderful mix of culture and outdoor recreation. She loves politics in three ways: as an analytical political scientist, a devoted political junkie and a citizen who believes politics matters for people's lives. Fried is Professor of Political Science at the University of Maine. Her views do not reflect those of her employer or any group to which she belongs.