To make ends meet, Jasmine Simon, 26, a single mother living in Las Vegas, has to work three jobs while juggling classes as a political science major at the University of Nevada, Las Vegas.
“As women of color, we do that,” she told NBC News.
Which is why she has some concerns about the recently proposed Republican-sponsored tax overhaul bill, which, if passed, would end the alternative minimum tax, reduce or repeal the estate tax and cut taxes for pass-through entities.
The Tax Policy Center reported that the proposed plan would also allow businesses to expense new investment, not allow businesses to deduct net interest expenses; and reduce federal revenue, raising federal debt over the next decade.
It’s why many African-Americans will have very little to celebrate this holiday season if Republicans get their wish on tax reform.
“If we just look at the proposed child care tax credit alone, it does not help people like me, people who look like me,” Simon said. “Each month I pay anywhere between $950 and $1,100 a month in child care. To just give me a credit of $1,000 a year? That is not enough. It just does not help people who look like me.”
Simon is just one of several within the African-American community expressing their concerns over the Republican proposed bill.
Julie Kashen, policy director of the Make It Work education campaign, said proposed cuts to tax credits such as child care assistance is in no way friendly to true middle-class workers.
“The GOP has proposed a tax bill that is a trillion dollar gift to the wealthiest Americans at the expense of working families,” Kashen said in a statement. “Families need a bold, comprehensive solution. For working families to do better, our policies must do better.”
Josh Hoxie, director of the Project on Opportunity and Tax at the Institute for Policy Studies, said the proposed bill would have devastating impacts on communities of color. The plan, he points out, makes massive cuts to programs beneficial to millions.
“If you’re not outraged, you’re not paying attention,” he told NBC News. “It is an enormous gift to the ultra-wealthy and pretty exclusively benefits the ultra-wealthy.”
The GOP tax plan is nothing more than a massive transfer of wealth to the richest Americans at the expense of working families and underserved communities, said Rep. Yvette D. Clarke (D-N.Y.).
Things are already seemingly bleak for communities of color, according to the report, “The Road to Zero Wealth,” co-authored by Hoxie.
There’s a long-term widening trend in the racial wealth that runs counter to the narrative that things were getting progressively equal, Hoxie said.
His report also looked at the racial wealth divide over the next four and eight years and the year 2043, when the U.S. population is predicted to shift to majority non-white.
“We find that without a serious change in course, the country is heading towards a racial and economic apartheid state,” the report’s authors said. “If the racial wealth divide is left unaddressed and is not exacerbated further over the next eight years, median Black household wealth is on a path to hit zero by 2053 — about 10 years after it is projected that racial minorities will comprise the majority of the nation’s population.”
If the middle class were to be defined by wealth rather than by income, Black and Latino families in the middle-income percentile would need to earn two to three times as much as White families in order to enter the middle class, according to the report. Also, the accelerating decline in wealth over the past 30 years has left many Black and Latino families unable to reach the middle class.
Between 1983 and 2013, the wealth of median Black and Latino households decreased by 75 percent (from $6,800 to $1,700) and 50 percent (from $4,000 to $2,000), respectively, while median White household wealth rose by 14 percent (from $102,200 to $116,800).
If current trends continue, by 2020 median Black and Latino households stand to lose nearly 18 percent and 12 percent, respectively, of the wealth they held in 2013. In that same timeframe, median White household wealth would see an increase of 3 percent.
By 2024, median Black and Latino households are projected to own 60-80 percent less wealth than they did in 1983.
Both the GOP Senate and House bills include proposals to reduce corporate tax rates from 35 percent to 20 percent — a dramatic reduction that is supposed to stimulate the economy by giving corporations more cash with which to hire more employees.
Clearly, larger companies with greater profits will benefit the most, according to a Forbes Magazine report. This, in and of itself, perpetuates the existing biases in corporate America: considering that of the 2017 Fortune 500 CEOs, only four are African-American and only 32 are women, and that CEOs today earn nearly 300 times the average employee — compared to only 20 times 50 years ago — it is clear that this corporate tax break will create a disproportionate benefit to the current white male establishment, Forbes reported.
However, an additional danger comes from a proposal to change the rules for taxing of stock options and Restricted Stock Units (RSUs), a proposal that’s believed will disproportionately damage entrepreneurs from disadvantaged groups.
Stock options and RSUs are one of the primary instruments used by startups to attract talent, because they allow employees to share in the future growth of the company’s value; and they are used to retain talent, because options and RSUs typically vest over time, meaning that the employee can only cash out after staying with the company through the vesting period, which is typically a few years.
Hence stock options and RSUs are used to attract top talent at reduced costs, to encourage employees to increase company value, and to stay with the company for a long time to realize a share of its increased value, said Forbes contributor Paolo Gaudiano.
The fundamental change proposed in both tax reform bills is that options and RSUs will be taxed at the time of vesting, and their value will be based on the company’s estimated market value at the time of vesting. In comparison, under the current law, options and RSUs become taxable only when they are exercised or settled, i.e., when the holder is in a position to sell the company’s shares, Gaudiano said.
Women of color have been a major driving force in the creation of new businesses since the 2008 recession.
Eighty percent of all women-led businesses started since 2007 were started by women of color, according to Forbes, hence the impact of the proposed legislation about options and RSUs will disproportionately affect women of color.
“Without question, African-Americans are left out in the cold with this tax plan, to say the least,” said Harry Stephens, a cyber school math instructor. “You don’t need an expert to tell you how unfair the Republicans plan is to blacks and people of color.”