- Written by Roseann Martoccia, Executive Director
- Published: 22 November 2017
What would tax reform mean for elders and caregivers?
While Congress has not passed a budget, the FY 2018 budget “plan” does set a framework to potentially make significant cuts to overall federal non-defense discretionary (NDD) programs, including OAA (Older Americans Act) and other federal mandatory programs, such as Medicaid and Medicare. The budget resolution itself doesn’t have force of law – Congress still must enact these cuts in future legislation.
Congress approved a plan that would allow the Senate Finance Committee and House Ways and Means Committee to craft tax proposals that could add up to $1.5 trillion to the federal deficit over the next ten years. The approved plan paves the way for – but does not immediately require – Congress to identify $5 trillion in spending cuts from NDD and mandatory programs over 10 years.
Specifically, the measure calls for $800 billion in overall cuts to NDD programs; a cut to NDD funding of this magnitude would erode overall funding for domestic discretionary programs. If lawmakers enact cuts this drastic, by FY 2027, NDD funding overall would fall nearly 30 percent below FY 2010 levels.
Additionally, the budget resolution calls for $1.3 trillion in Medicaid cuts by 2027, which would slash the program by more than 25 percent. These cuts exceed those in either the House or Senate ACA-repeal bills to cap Medicaid that the National Association of Area Agencies on Aging (n4a) opposed earlier this year. Given that the bulk of Medicaid spending provides essential health care and long-term services and supports to 16 million older adults and people with disabilities, States would be unable to absorb cost increases associated with a declining federal share of Medicaid spending, and would likely resort to cutting, wait-listing or otherwise restricting services for high-cost beneficiaries.
In addition to $473 billion to Medicare, which provides acute healthcare and hospice services to 57 million seniors and people with disabilities, $650 billion in cuts is slated for mandatory income-support programs, including Supplemental Security Income (SSI) and Supplemental Nutrition Assistance Program (SNAP) programs.
As the tax reform plans evolve, who benefits from them will be a major point of debate. Initial analysis indicates that high-income earners and corporations will be the primary beneficiaries of tax cuts. According to the Tax Policy Center, the proposed tax cuts would, over 10 years, direct 80 percent of the benefit to the top one percent of earners. Earners in the bottom 80 percent would receive only 13 percent of the benefit. Additionally, households making less than $75,000 annually would receive a tax benefit of roughly $200 per year.
While tax policy is not a common topic for advocates, it takes center stage when it will significantly impact federal domestic and mandatory programs serving older adults in their homes and communities.
This article was adapted from n4a Legislative Update, dated October 27, 2017.