The Institute of Taxation and Economic Policy (ITEP) has crunched the numbers on what the GOP tax plan would mean for the people of California, and none of it is good news for working people.
To see how the tax scam would spell disaster for the middle class and for efforts to relieve income inequality generally, consider how it affects a typical waitress in California versus an heiress.
Only the richest 1 percent would benefit at all from the repeal or rollback of the estate tax — in fact, just 1,100 wealthy families in California are subject to it. And in the House bill, the inheritance would also be larger in the first place, because their parents could shelter money in “pass-through” entities. ITEP estimates this loophole will save California’s 1 percent $1.2 billion over ten years.
This tax repeal would be a massive boon to people like the Hilton family, who, despite giving much of their fortune to charity, still stand to give their entitled children like Paris — California’s most famous heiress — a combined $62 million.
By contrast, the waitress would end off little better — and possibly could be paying even more.
The average salary for waitstaff in California is just over $21,000 a year. ITEP finds that under the House bill, people in that income group would reap just 4 percent of tax relief by 2027. Under the Senate bill, that income group actually would see their tax burden go up by $1.1 billion — largely because it repeals the individual health insurance mandate, which would deprive low-income California households of hundreds of millions in insurance tax credits. Losing state and local tax deductions will also raise their effective rate.
Republicans have no justification for raising taxes on waitresses to pay for tax breaks for heiresses, save for condescending stereotypes about how the poor spend their money. Iowa Sen. Chuck Grassley, when asked about the estate tax repeal, said it benefits people who do not spend their money on “booze or women or movies.”
The eleven GOP congressmen who serve California, including Rep. Steve Knight of Palmdale, ought to realize the truth of what the working poor face in their districts. They owe their constituents answers on why they are hurting the most vulnerable to enrich 1,100 families.