With the U.S. Senate and House of Representatives passing their own versions of tax reform bills in recent weeks, both chambers are now focused on combining the two into a single piece of legislation to present to President Trump.
The procedure is called “reconciliation,” and it is our hope that the final version produces a tax bill that follows guidelines offered last month by the U.S. Conference of Catholic Bishops.
These guidelines, in a series of letters signed by Bishop Frank J. Dewane of Venice, Fla., chairman of the bishops’ Committee on Domestic Justice and Human Development, and other bishops, called for a tax reform bill that cares for the poor, strengthens families, develops a progressive tax code, raises adequate revenue for the sake of the common good, avoids cuts to poverty programs to finance tax cuts and incentivizes charitable giving.
So far, the outlook has not been encouraging.
With the Senate version passing early last Saturday in a straight Republican party-line vote, Bishop Dewane released a statement saying that Congress must fix the “fundamental flaws” in both bills as they move toward reconciliation.
“For the sake of all people—but especially those we ought, in justice, to prioritize—Congress should advance a final tax reform bill only if it meets the key moral considerations outlined in our previous letters,” Bishop Dewane said.
Experts early this week were still analyzing details of the Senate bill, a complicated, lengthy document filled with last-minute changes and additions. There are enough measures present in both bills to raise concerns, along with some positive proposals as well.
A key provision is the doubling of the standard deduction for individuals and families, which should simplify tax filing for many middle- and lower-income people and could also result in a tax saving, at least in the short term.
At the same time, however, the personal exemption (currently at $4,050) would be eliminated in both the House and Senate versions, potentially placing a significant burden on two-parent families with more than three children and on single-parent families with more than one child.
We agree with Bishop Dewane’s statement, “A change in the tax code should not place families in a worse situation because they have welcomed the gift of life.”
We also share the concern of the bishops and others that donations to charity, including Catholic-affiliated charities, could drop severely (estimated at up to $13 billion) if most people choose to take the standard deduction instead of itemizing. Other advocates for charities are calling for an “above-the-line” deduction that would allow those who take the standard deduction to have an additional deduction for charitable gifts.
Other concerns include proposals to eliminate deductions for state and local income and sales taxes, and to reduce the amount that can be deducted for property taxes and mortgage interest – which would affect places like New York where property values are high.
More positively, the Senate bill, unlike the House version, does not tamper with the current tax credit for adoption and retains a deduction for out-of-pocket medical expenses that can be a lifeline for those with chronic or serious illnesses.
So we’re watching the progress of this tax process carefully, and urge everyone to do the same. We also question why something so monumental needs to be pushed through so quickly.
As Bishop Dewane and his brother bishops have pointed out, tax reform is far-reaching, and Congress must provide ample time for Americans to discuss the complexities of the proposed reforms and fully understand their effects.
That’s a very reasonable suggestion.