Implications of the 2017 Tax Cuts and Jobs Act for Public Health

摘要

The recently passed Tax Cuts and Jobs Act will reduce total federal revenues by about 4% between 2018 and 2027. The law makes multiple changes to the taxation of individuals and corporations. It also repeals the Affordable Care Act’s (ACA’s) individual mandate penalties, which will erase some of the gains in insurance coverage achieved since implementation of the ACA’s coverage expansions. The resulting increases in rates of uninsurance will likely lead to increased uncompensated care and deflect hospitals and health departments from addressing other prevention and public health needs. In addition, the law is expected to lead to substantial increases in the federal debt and, consequently, to calls for reductions in spending on entitlement programs, particularly Medicare, and on discretionary programs, including public health. Many other provisions of the law could also have second-order effects on public health. Late in December 2017, Congress passed—and the president signed—H.R. 1, the Tax Cuts and Jobs Act (TCJA; https://www.congress.gov/bill/115th-congress/house-bill/1 ), the 12th-largest tax cut (measured as a share of gross domestic product, or GDP) in US history. 1 The law is expected to reduce federal revenues by a total of $1.649 trillion between 2018 and 2027, amounting to a 4% reduction in revenues over the period. 2 To put this in a public health context, the reduction in revenue from the TCJA is about equal in magnitude to earlier estimates of the cost of all the Affordable Care Act’s (ACA’s) coverage expansions (Medicaid and insurance subsidies) over the same period. 3 The TCJA reduces individual income tax rates for most Americans through 2025, after which most of these provisions expire and rates revert to those that existed prior to the law. Among its provisions, it raises the standard individual deduction and the child tax credit and it repeals deductions for personal exemptions; together, these provisions will mean that fewer Americans will itemize taxes and claim other deductions (such as those for charitable giving). 4 The law reduces the maximum tax rate on corporate earnings—which, at 35%, had been relatively high compared with those in other high-income countries—to a flat rate of 21%. To pay for a portion of these and other provisions, the law caps the deduction for state and local taxes at $10?000 and eliminates the individual mandate penalties in the ACA. Proponents of the tax law claim that it will increase the growth of the American economy and raise wages for lower-income workers. 5 Skeptics argue that its provisions will have little macroeconomic effect, particularly in today’s robust and growing economy. 6,7 On the basis of the evidence available, the US Congress Joint Committee on Taxation, the government’s official scorekeeper on tax proposals, projects that the law will increase the rate of gross domestic product (GDP) growth by about 0.7% a year through 2027. 4 This commentary assesses the potential impacts of these substantial changes on public health.