House Ways and Means Subcommittee on Tax Policy Hearing
Introduction
Chairman Roskam, Ranking Member Doggett, and members of the subcommittee, thank you for inviting me to appear this morning on behalf of UnidosUS (formerly
UnidosUS is the largest national Hispanic civil rights and advocacy organization in
UnidosUS has a long history of anti-poverty work and advocacy for a fair and equitable federal income tax system. For more than two decades, UnidosUS has actively engaged in public policy issues such as preserving and expanding the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), fighting to ensure all individuals who pay their fair share of taxes have access to crucial tax credits that they have earned and are eligible for, and working to reorient the tax code's wealth building subsidies around homeownership, higher education, and retirement so that they can benefit more middle-class and working families, as well as communities of color.
Advancing equity within federal tax policy is crucial for all Americans, including hard-working middle-class and working Latinos raising children. The Latino community has the highest labor force participation rate in the country (66 percent) but many still struggle to make ends meet:
* The Latino poverty rate remains the second highest when compared to other racial or ethnic groups. In 2015, 21.4 percent of Latinos lived in poverty compared to 13.5 percent nationally. ni
* Latinos had one of the lowest median household incomes in 2015. While non-Hispanic Whites enjoyed a median household income of
* In 2013, the average Latino family had just
The purpose of the federal income tax system is to collect necessary revenue to fund important public goods and services. Public funding for national defense, veteran's services, homeland security, health care, K-12 public education, transportation and infrastructure, social safety net protections, food safety and environmental protection, and workforce retraining are all important investments and services that taxpayers benefit from.
Over time the federal income tax system has also evolved to incentivize economic and social behavior among taxpayers. For instance, through the tax code, the government spends close to
Despite the important public and economic benefits to the individual income tax system, tax policies are not always fair and recent tax proposals tilt the playing field even further toward the wealthy and are cause for great concern. My testimony today will focus on the importance of the tax code to all middle-class and working Americans, including Latinos, our concerns with current tax proposals, and our principles for a tax reform that can benefit Americans from
Latinos and the Tax Code
Latinos, a young, aspiring, and hardworking segment of the federal tax base, make up 17 percent of the current
UnidosUS has held onto this premise in serving our mission to create more opportunities for Latinos to participate in and contribute to the nation's economy and wealth. For example, through the institution's tax policy work, UnidosUS has fought to protect and strengthen the refundable tax credits for working families - the EITC and CTC - two powerful tools for alleviating poverty, building financial security, and boosting opportunity for working families. In 2015, UnidosUS mounted a tax campaign to help preserve key provisions in the EITC and CTC from expiring that year. By the end of the campaign, we successfully made permanent those key provisions that were at stake, and were able to help five million Latino families with nine million children keep an average of more than
We believe that taxpayers with similar income, who work, and pay similar amounts in taxes ought to be treated the same by our tax system. Part of the reason for an overly complex tax system is a desire by politicians to restrict tax benefits from certain classes of taxpayers, such as immigrants. For over a decade, UnidosUS has worked with
Concerns with the President's and
Tax proposals from
* The Trump administration has shown that it intends to pay for proposed tax breaks through budget cuts on programs that help Americans. The Trump tax plan would result in over
o Endanger families' health through unprecedented cuts to the Medicaid program and changes to its structure that end the program as we know it. Latinos make up 31% of those who rely on Medicaid for health care coverage.
o Take food off kitchen tables across the country by slashing food stamps by 25%. This program helps working families, and those in between jobs, feed their families and reduce the risk of food insecurity. In 2015, SNAP provided nutrition assistance to 3.3 million Latinos, and kept 1.2 million Latinos out of poverty.
o Eliminate funding for after school programs for low-income kids and reduces funding for higher education programs, including federal programs like GEARUP and TRIO that are aimed at helping low-income students prepare for and succeed in college. One-third of GEARUP participants and one-fifth of TRIO participants are Latino.
Lessons learned from the state of
If
* Both the Trump and House tax proposals would accelerate the growing wealth divide. These tax plans would provide massive tax breaks to the wealthiest Americans and tilt the playing field even further in their direction at the expense of middle-class and working families.
o Both the Trump and House tax proposals would end the estate tax, levied on only the wealthiest estates. In 2017, 99.8% of estates owe no estate tax at all because only estates worth more than
o Both the Trump and House tax proposals would also provide massive pass-through tax breaks to the wealthy. Beneficiaries of such tax breaks would include wealthy investors, hedge fund managers, bankers, executives, and lawyers - many of whom are millionaires. nviii tax rate on pass-through business income like the one in the Trump plan would mean the 400 highest-income taxpayers would receive an average of roughly
These proposals not only bypass hard-pressed working-class families and individuals but could ultimately worsen their financial wellbeing. The gains for the highest-income households would dwarf those of less-affluent families. Under Trump's campaign tax proposal, people with incomes above
Such ill-advised deficit driven tax cuts would very likely leave most middle-class and working families who are the driving force behind the
* Both the Trump and the House tax plans propose changes that would take money directly out of the pockets of American workers and their families. The proposal to double the standard deduction for single filers and married taxpayers filing jointly would not provide any tax benefits to at least 17 million working families and individuals because they do not earn enough to owe federal income taxes, even though most pay significant payroll and other taxes. nxiii Trump's tax plan also likely proposes to eliminate the head of household filing status and personal exemptions, which together could increase taxes for single parents.
Furthermore,
Principles in Tax Reform
We believe that tax reform should work for all taxpayers, and provide sufficient money to fund vital public goods and services as well as meet the needs of an aging population. As
1. Raise sufficient revenue to build a strong economy and invest in our future - and at the very least not lose revenue. A strong economy remains a paramount concern for Latinos. With sufficient revenue our country can afford to invest in - not cut - essentials like education, infrastructure, health care, and family-supporting tax credits that help our children thrive. These investments will build a strong economy and competitive workforce in the long term.
2. Are progressive and ensure that everyone, including the wealthy and corporations, pay their fair share. As a result of enacted austerity measures, middle-class and working families and children have already endured cuts to vital programs such as
3. Support working families and children, and reduce poverty. The tax code has long been an instrument to provide critical means-tested supports to working families and children. More can be done to support working families by improving existing refundable tax credits that will further help working class taxpayers out of poverty.
4. Promote economic mobility and asset-building among middle-class and working Americans.The tax code supports asset-building through mechanisms such as deductions for retirement savings or mortgage interest, but does so in a way that disproportionately benefits those who need these least. Asset-building features in the tax code should be reformed to ensure that middle-class and working Americans also have the opportunity to save for their future, have access to affordable education, and a path to homeownership.
Conclusion
It has been over three decades since
ni
nii Ibid.
niii
niv How Much
nv
vi
nvii Ibid.
nviii Pass-Through Tax Breaks Would Benefit the Wealthiest and Encourage Tax Avoidance, (Center on Budget and Policy Priorities:
nix Ibid.
nx
nxi Ibid.
nxii Ibid.
nxiii
nxiv Statement on Immigrant Access to Tax Credits, (
Read this original document at: https://waysandmeans.house.gov/wp-content/uploads/2017/07/20170719TP-Testimony-Rodriguez.pdf
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