Comparing Democrat and Republican Tax and Budget Proposals

Congressional Republicans have released some of the details of their proposed rewrite of the federal tax code, and the Texas Association of Realtors responded with a study showing the vast majority of homeowners in this state would pay more taxes if the current proposals are passed into law. The realtors’ study also shows the Republican plan would cost Texas more than 22,000 jobs and $3.4 billion in economic activity, mostly due to the distribution of tax breaks being weighted to the top 5%.

Republicans are also promoting a budget that cuts Medicaid by $110 billion a year. Remember that a substantial fraction of Medicaid covers costs for about two thirds of nursing home residents. That means many of us could end up with our aging and ill parents and in-laws living with us. Are you ready for that?

In addition to those cuts the Republican proposal calls for $47 billion a year in Medicare cuts and raising the eligibility age from 65 to 67. While the proposal doesn’t say exactly how those cuts will manifest themselves they are guaranteed to come out of the pockets of retirees who depend on it for their healthcare. As to raising the eligibility age well that just means higher private insurance costs and industry profits as those of use reaching that again see our premiums rising rate of illness with age. Employer based insurance coverage will also cost more small companies with older employees.

These proposals haven’t gone unchallenged, Democrats in Congress have offered “The People’s Budget”. Where Republicans would cut the healthcare for seniors and reduce the number of people eligible for Medicare/Medicaid Democrats would expand Medicare by offering the Public Option which would allow every American to buy their insurance from Medicare if they can’t find a better deal on the private insurance market.

The Democrats proposed budget permits the Secretary of Health and Human Services (HHS) to negotiate cheaper drug prices with pharmaceutical companies. This will significantly lower the price of prescription drugs for seniors and save Medicare $429 billion. The People’s Budget also combats monopolies held by drug companies and the use of patent settlements to block generic drug competition for a growing number of branded drugs. The People’s Budget ensures Americans have access to affordable prescription drugs.

The Democrats proposal would eliminate the preference for investment income over labor income which allows a hedge fund manager to earn the same amount as salaried employee and yet allow them to pay a lower tax rate. Currently, the tax code gives preferential treatment to income from investments, long-term capital gains, and qualified dividends. The People's Budget ensures the rich pay their fair share by creating new tax brackets for millionaires and billionaires. It preserves existing marginal tax rates for middle-class families while restoring Clinton-era tax rates on annual incomes above $250,000. For annual incomes above $1 million, it would adopt new progressive tax rates topping out at 49% for $1 billion and over.

While the Republican budget cuts billions from public education spending The People's Budget provides universal access to quality pre-k programs, which will expand social mobility by helping low-income and at-risk students read and write at the same rates as their peers. It would also provide $41 billion a year to eliminate undergraduate tuition and fees at public colleges and universities.

Even with the cuts proposed by congressional Republicans their budget would increase the deficit $200 billion each year because they also increase tax breaks for big corporations and the 400 or so wealthiest families in the nation. This is the era of Borrow and Spend Republicans.