CFPB Proposes Prohibiting Inclusion of Medical Debt on Consumer’s Credit Reports
On August 10, 2023, CCLP celebrated our 25th anniversary, bringing friends new and old to the Carriage House at the Governor's Residence.
Katie Wallat, CCLP’s Senior Attorney, provided testimony at the August 11, 2023, meeting of the Medical Services Board.
HB23-1126 provides first-in-the-nation protections for Coloradans with medical debt.
Support tax policies that help the rest of us
To make a big difference on financial security to families with low or middling wages — for better and worse — let’s talk taxes.
The last overhaul of the federal tax code occurred not long ago. Approved by Congress in 2017, the Tax Cuts and Jobs Act (TCJA) had a big effect on taxpayers all along the economic spectrum, but largely benefited those in the top tier. Case in point: While the bottom 80 percent of workers received a tax cut of about $795 a year, the biggest (and permanent) cuts were reserved for corporations who saw their tax rate cut from 35 percent to 21 percent. This reduced corporate tax revenue to the U.S. by 40 percent, and accounted for $1 trillion of the $1.5 trillion cost of the bill. In total, 51 percent of the income gains from the legislation went to the wealthiest 5 percent of Americans. The legislation provided some tax relief for Americans by reducing tax rates, doubling standard deductions and increasing the Child Tax Credit.
When policymakers think of meeting the needs of the middle class, businesses or the wealthy, they think in terms of tax incentives and tax policy changes. For people who are struggling to make ends meet, the discussion generally centers on programs. For example, to help the middle class and wealthier individuals meet their needs, the U.S. offers the Home Mortgage Interest Deduction. For low-income Americans, the U.S. provides Housing Choice Vouchers for one out of four eligible applicants. The middle class and wealthier get tax breaks on their 529 College Saving Accounts, while poorer students can apply for Pell Grants.
In 2018, CCLP, together with United for a New Economy and Colorado People’s Alliance, and in consultation with the national Economic Security Project, developed a proposed ballot measure to re-craft Colorado’s income tax code. The proposed measure would have replaced our flat income tax of 4.63 percent with a more progressive structure; a Working Families Tax Credit.
The WFTC would have been funded with higher marginal tax rate on Coloradans earning more than $500,000 per year. According to the Who Pays report from the Institute on Taxation and Economic Policy, the bottom 20 percent of earners would have seen the share of their income they pay towards state and local taxes drop from 8.7 percent to 3.7 percent, while the top 1 percent of earners (who currently provide the smallest share of their income towards taxes) would see their share of income going towards taxes increase from 6.5 percent to 8.8 percent. More than half of Coloradans (those earning less than $70,000) would have seen some benefit, including working individuals without children, parents, low-income independent college students, and caregivers for small children and older relatives. In all, 2.7 million Coloradans would receive a benefit, compared to the 340,000 Colorado households who currently receive the state’s Earned Income Tax Credit. Learn more in this analysis. Given our late start, and because of a competing ballot measure, we decided to not move forward with the initiative.
Bold new ideas
Meanwhile, a number of presidential candidates have put some bold ideas on the table, including several proposals to use the tax code to reduce inequality, lift families out of poverty, and address rising costs and income stagnation. While none of these bills has a chance to pass through a divided Congress, they may inform the policy discussion for leveling the playing field for people with low- to middling incomes in the months leading to the election and the years to come.
- Kamala Harris has proposed the Lift Act, which would be structured like our proposed Working Family Tax Credit but provide a $3,000 year refundable tax credit for individuals ($6,000 for couples). It would build upon the EITC to provide more benefit to individuals without children, caregivers, independent college students, etc. It would be paid for in part by rolling back much of the TCJA.
- Cory Booker has introduced the Rise Act to double the income eligibility ceiling on the EITC, expand coverage to caregivers and low-income college students, and reduce the age of eligibility for single adults from the current 25 to age 18. If approved, it would provide up to $4,000 a year for an individual (or $8,000 per year for a couple). The proposal would cover 154 million Americans and lift 15 million people out of poverty. Senator Booker has also proposed legislation to increase the estate tax and tax rate on capital gains to fund Child Savings Accounts.
- Businessman and presidential contender Andrew Yang has proposed a universal basic income of $1,000 per month to all Americans, paid for with a new value-added tax (consumption tax levied on products or services), to reduce inequality, supplement wages and enable people to meet their basic needs.
- Colorado Sen. Michael Bennet has proposed the Working Families Tax Relief Act, which would lift 7 million people out of poverty. It would make the federal Child Tax Credit fully refundable- so that families in poverty would get the same $2,000 for a child that wealthier families do under the TCJA. It would provide an extra $1,000 per year for those with a child under 6, since families with the youngest children are the most likely to struggle to meet basic needs. It would increase the current EITC by 25 percent. It would dramatically expand the EITC for workers without minor children at home, and expand the age of eligibility from the current 25-64 to 19-67.
- Bernie Sanders has proposed increasing the Estate Tax to 45 percent on estates over $3.5 million and 77 percent on estate over $10 million. Meanwhile, Sen. Elizabeth Warren has proposed a tax of 2 percent on wealth over $50 million and a 3 percent tax on wealth over $1 billion. In both of these proposals, extra revenue created would fund programs.
Tax policy changes are high-stakes, as our elected officials, and by extension, our voters decide whether and how this powerful tool is used. Who should get tax relief? Who should pay more? Which tax cuts should be permanent? Which credits or deductions, or changes in tax rates should expire? At a federal level, should we allow tax cuts to increase the deficits, or should previous tax cuts be reversed to pay for different tax reductions? What is the value of more cash to individuals? What is the value of services and programs we would want the government to provide?
What’s happening in Colorado
At CCLP, we prioritize state-level policy. We have worked to create and make permanent our current state EITC. We have worked with Colorado Fiscal Institute and Colorado Children’s Campaign to create a refundable Child Care Tax Credit for families earning under $25,000, which passed with bipartisan support. We supported the unsuccessful effort to start paying Colorado Child Tax Credit this year. We have opposed efforts to reduce the state income tax rate further. That would lower revenues for essential state services and benefit most the wealthiest Coloradoans and provide no benefit to those with incomes too low to pay state income tax.
Our proposal for a Working Families Tax Credit functions as a blueprint for how the tax code can be restructured to reward work and supplement low wages, recognize the unpaid work of caregiving, and finishing one’s education. Whether at the legislature or the ballot box, CCLP will fight to ensure that any proposed changes in tax policy will benefit struggling Coloradoans.
– By Chaer Robert