The Tax Cuts and Jobs Act: How It May Affect People with SCI

No matter how you look at it, the recently signed into law Tax Cuts and Jobs Act has many people with disabilities concerned. It is not yet emergency level status, but there are aspects of the bill that could affect people with spinal cord injuries, especially if you rely on state funded services.

The affect on people with disabilities is better than many originally thought however, due to key provisions Republican controlled Congress decided to keep. The Medical Expense Deduction is one of these; the threshold has been lowered from 10% to 7.5%. The Disabled access credit also remains, which helps small businesses comply with the ADA. In addition, the Work Opportunity Tax Credit was kept, which gives a Federal tax credit to businesses that hire people with disabilities.

There are however several reasons to be wary of what’s to come in 2018, such as how this Act will be paid for. Experts are weighing in from across the board. We’ve identified these causes for concern below.

1. Cuts to Medicaid, SSI & Medicare May Be Needed to Pay for the Act

One of the most significant changes to the tax structure is the change in the corporate tax rate, dropping from 35% to 21%. This will result in a deficit of $1.4 trillion in the next decade. Proponents of the bill insist that these cuts will stimulate the economy by increased corporate hiring and revenue generation, resulting in additional tax revenues.

This supposition is based on historical trends but there is no concrete evidence that this will occur. On January 19th, 2018, the LA Times reported that the pharmaceutical giant, Pfizer, announced that they are ending their research on Parkinson’s disease and Alzheimer’s syndrome, resulting in the loss of about 300 jobs. Will other companies follow suit?

This deficit is so big that many people with SCI are worried cuts to important state funded services like Medicaid, Medicare and SSI could occur.

The official Republican party denies this may be a possibility, but several Republican lawmakers, including House Speaker Paul Ryan, said they would consider cuts to Medicare, Medicaid and other entitlement programs. We hope the GOP’s denial of such claims is true.

2. Automatic Spending Cuts to Medicare, Other Programs Could Occur

Many are also worried that automatic spending cuts could be triggered to pay for the act. The Congressional Budget Office has forewarned the public that this may be a possibility. These automatic reductions could mean up to $25 billion in cuts from Medicare in 2018. Also at risk are cuts to State programs like vocational rehab and social services, which both operate on grants.

3. Congress Didn’t Renew the Children’s Health Insurance Program

One of the most obvious blows to the disability community is the expiration of the Children’s Health Insurance Program (CHIP), which Congress did not renew. This program helped parents who made too much to qualify for Medicaid and had no insurance from their employer. Most policy experts believe however it will be renewed, but funds could run out before this occurs. Additionally, GOP congressmen are adding additional “components” to the renewal, ie, other programs they want funded in exchange for agreeing to renew CHIP.

4. Repealing the Affordable Care Act’s (ACA) Individual Mandate Could Escalate Insurance Costs

Finally, is the repeal of the Affordable Care Act’s individual mandate. With this gone, the new tax plan could force the individual insurance market rates to soar. With so many people with SCI living in poverty, this could leave many uninsured. The Center for American progress has estimated the typical middle-class family will see a premium increase of $2,000 per year. Therefore, SCI research could stall.

5. “Orphan Disease” Drug Tax Credit Lowered

Many people don’t realize that spinal cord injury is classified as an “Orphan Disease” by international standards. This means that it’s rare enough that drug companies don’t have a high enough incentive financially to develop new medications and/or treatments for spinal cord injury.

To prevent this from happening, the United States has provided a longstanding tax credit for pharmaceutical companies who do decide to research treatments for spinal cord injury. Unfortunately however in the new tax cut, this tax credit was lowered to 25% of what it was previously. Spinal cord injury research could be lessened in the US because of this change.

All people with SCI need to keep a close eye on their much-needed state services in 2018. As always, we will keep our eyes on what’s happening and make sure to report the latest.

6. Medical Expense Deduction Lowered

People with disabilities, or people with any medical conditions rather, have been able to take a 10% deduction from their total income for their medical expenses if they reached that percentage of their income or more, but that has changed. The Senate voted to lower this threshold from 10% to 7.5%. For some people with disabilities, this may be a significant blow.

There were other tax deductions for people with disabilities that were on the chopping block in the House version of this bill, but in the final Senate version the only change was to medical expenses deductions. And there are several important tax deductions to know about if you have a disability, all of which you can still take. Learn more about these longstanding deductions here.

Does the new tax act worry you as a person with a SCI?