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AFBAmerican Foundation®
for the Blind

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What's in it for us? A Brief Taxonomy of Pending Tax Proposals

For further information, contact:
Mark Richert, Esq.
Director, Public Policy, AFB
(202) 469-6833
MRichert@afb.net

As Congress moves ever closer toward enactment of sweeping changes to America's tax system, advocates for people with disabilities, including people who are blind or visually impaired, are increasingly sounding the alarm. It is not AFB's purpose to opine on the macro-issue of whether proposed dramatic reductions in corporate tax obligations result in benefits to the national economy as a whole. However, we do want to be sure that advocates are able to distinguish fact from fiction about the pending tax proposals and are aware of specific provisions that are of particular concern for the disability community.

Setting the Record Straight on the Blindness Standard Deduction

It has been widely reported that the House version of tax reform eliminates the additional standard deduction currently available to blind tax payers, meaning that, as a class, Americans with significant vision loss stand to lose hundreds of millions of dollars if the House bill becomes law. This analysis is not true. While it is technically accurate to describe the House's approach as a repeal of the additional standard deduction for blindness, it is not accurate to characterize the House's repeal of the additional standard deduction for blindness as a measure that would increase the tax burden borne by Americans who are blind or visually impaired. Under the House approach, the basic standard deduction dollar amounts available to all tax filers, sighted or blind, would be doubled. What the House-passed bill would not do is allow the additional standard deductions available today to blind or elderly tax payers over and above the doubled basic standard deductions the bill would provide for everyone.

In contrast, the Senate bill would not only increase the basic standard deductions available to everyone but also allow additional standard deductions for blind or elderly tax payers. Obviously, such an arrangement would, all other things being equal, be a better deal for tax filers who are blind or visually impaired. Unfortunately, however, the House's failure to follow suit and continue to provide blind tax payers with an additional benefit not available to taxpayers generally pales in comparison to other provisions of these pending tax bills which would unmistakably put people who are blind or visually impaired and others with disabilities at significant risk.

Further Stress on an Already-Fractured Budget Structure

While the long-term benefits to the American economy of sizeable corporate tax cuts are being vigorously debated, what is undeniable is that the tax proposals currently under consideration on Capitol Hill will most certainly take approximately $1.5 trillion in otherwise available funds off the table over the next ten years. Under the budget rules and processes currently in play, enactment of the tax bills would mean that advocates can expect to see $473 billion in cuts to Medicare, approximately $1 trillion in cuts to Medicaid, and $800 billion in cuts to so-called non-defense discretionary programs. Such programs include just about everything that the vision loss community cares about, from the vocational rehabilitation and special education contexts generally to programs of specific concern, such as the Independent Living Services to Older Individuals who are Blind (OIB) program, funding for the American Printing House for the Blind, U.S. Department of Education funding supporting critical resources like BookShare, personnel preparation programs, the talking book program (including hoped-for funding for the recently established initiative to make refreshable braille displays available to patrons), funding for disability-related research projects, and on and on.

It is a matter of historical record that, in the past when previous Congresses have enacted tax cuts, law makers from both major political parties have largely ignored the pleas of deficit hawks and nevertheless approved spending packages significantly surpassing available revenue (which is what results in budget deficits and massive national debt). However, analysts fear that the reduction in revenue contemplated by the pending tax bills will only further amplify the particularly strident calls in the current Congress to dramatically slash spending on a host of priorities should the tax proposals become law. Putting it another way, enactment of tax reform will either result in deep cuts to programs we care about, or the Congress will have to drive the country into even deeper debt just to maintain the programs we care about at their current, unconscionably inadequate, funding levels.

Poison Pills for Disability Employment Policy

While both the House and Senate versions of tax reform risk profound cuts in spending priorities for the vision loss community, the House bill includes a number of poison pill provisions that advocates should find particularly troubling if not insulting.

The House bill would repeal the Disabled Access Credit (DAC), a tax credit which was created in 1990 to assist small businesses in complying with the workplace accessibility and reasonable accommodations requirements of the Americans with Disabilities Act (ADA). The DAC allows small businesses with 30 or fewer employees and gross receipts of less than $1 million a year to claim a nonrefundable tax credit that covers 50% of eligible expenditures between $250 and $10,000 for a maximum of $5,000. The DAC can be used to help defray the costs of architectural barrier removal as well as for achievement of accessibility through information and communications technologies and assistive devices. While it is unfortunately true that the DATC is woefully underutilized, disability rights advocates are scratching their heads in bewilderment at the House's gall to propose elimination of a tax credit to support small businesses in hiring and accommodating employees and customers with disabilities.

Similarly, the House bill would repeal the Work Opportunity Tax Credit (WOTC) which has been available to employers for twenty years for hiring individuals from certain target groups, such as people who receive Supplemental Security Income (SSI) or who are referred by a state vocational rehabilitation agency. The WOTC for people with disabilities provides a credit for up to 40% of the first $6,000 in wages, for a maximum of $2,400 for SSI beneficiaries but up to $9,600 for certain disabled veterans. It is underutilized because it has been reauthorized year to year retroactively, meaning businesses cannot count on being able to claim the credit. It is also difficult to claim because it requires certification before work begins and paperwork within 28 days of work beginning, even when the credit hasn't been reauthorized. Nevertheless, disability rights advocates wonder at the repeal of a tax credit intended to encourage employment of people with disabilities being included in legislation touted as a bill to create jobs.

Exacerbating the Cost of Disability

Yet another poison pill, and one way in which the House bill would indeed increase the tax burden of people with disabilities, is the bill's rollback of the current medical expense deduction. This critical allowance enables nearly 9 million filers to deduct medical expenses that exceed 10% of an individual or family's adjusted gross income and is intended to offset "out of pocket" medical expenses, e.g. high cost prescription drugs, long term physical and occupational therapies, durable medical equipment, and long-term care services and supports. People with disabilities, including people who are blind or visually impaired, use this benefit to have access to pricey assistive technologies that are not otherwise made available to them.

What's the Bottom Line?

While the House-passed version of tax reform includes a variety of offensive disability-specific provisions, both the House and Senate approaches put future funding for many of the highest priorities of the vision loss community in peril.

To add insult to injury, both the House and Senate bills propose standard deduction increases and limits placed on itemization that are estimated to yield approximately $13 billion in losses to the nonprofit/charity sector, a community of already-underfunded resources across the country that are often the last hope for the delivery of services and devices meeting the unique needs of people with disabilities, especially people who are blind or visually impaired.

Based on these harmful disability-specific provisions and the resulting cuts to critical services both within and outside government, advocates are urged to tell your members of Congress to vote NO on the pending tax legislation. Tell Congress that, even if the poison pill provisions in the House-passed version of tax reform are thrown overboard as the House and Senate work out their differences, a tax plan of this magnitude that puts the priorities of the vision loss community in peril is categorically unacceptable.

Contacting Congress

Look up the names and contact information for your one Representative and two Senators using the links below.

Alternatively, you can call the Congressional Switchboard at (202) 224-3121 to be connected to your members of Congress.

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