Report: Rising gas prices, healthcare costs mitigate impact of Trump tax cuts

donald trumpVirginia working families who have been waiting to see the benefits of the tax cuts from the Trump administration and Congress will be waiting awhile longer: their promised tax cuts will likely be eaten up by higher gas prices just as they hit the road for the Fourth of July holiday and by higher health insurance and prescription drug costs.

Increases in regular gas prices since January 2017 are costing Virginians about $335 more a year, on average, and increases in health insurance premiums in Virginia for a single adult under the Affordable Care Act will cost an extra $408 next year, on average—costs that are far above the tax cut a typical working family will receive.

Meanwhile, six months after passage of the tax cut law, Virginia’s wealthiest one percent will be watching fireworks at the country club in great comfort knowing that their tax cuts will provide them with a $60,000 average tax cut a year, according to the Institute on Taxation and Economic Policy.

According to figures from GasBuddy.com, the price of a gallon of regular gas in Virginia has risen from $2.18 in January 2017 to $2.61 in July 2018, a jump of 43 cents or 20 percent. This works out to around $6.45 more for a weekly fill-up of a 15-gallon tank, or about $335 a year. Over the same period, gas prices in Richmond rose by 41 cents, or $320 more a year, in Roanoke by 34 cents, or $265 more a year, and in Virginia Beach by 45 cents, or $351 more a year. See gas prices table here.

Gas prices aren’t the only rising household expense facing Virginia families. Health insurance premiums are headed up too due in part to the Administration’s attacks on the Affordable Care Act (ACA). To help pay for tax cuts for the wealthy and big corporations, the tax law did away with a key provision of the ACA requiring people to buy insurance or pay a penalty. This is helping to cause Virginia insurance companies to hike premiums for ACA plans in the individual market next year. The cost increase in Virginia’s most commonly sold silver “benchmark” plan for individuals will be $34 a month between 2018 and 2019, climbing from $482 to $516, according to the Kaiser Family Foundation. This 7 percent increase in premiums translates to an extra $408 in premium costs next year.

By doing away with the requirement to buy insurance, the tax law saved $314 billion (p. 2) that is being used to partially pay for tax cuts mostly for the wealthy and corporations, such as prescription drug firms and health insurers. The Congressional Budget Office estimates that this change will cause premiums for ACA family plans to increase 10 percent a year for the foreseeable future. It will also cause 13 million people to lose health care coverage by 2025—that translates to 287,000 Virginians.

“What some politicians and pundits call a tax cut is really just a transfer of money from the pockets of average working people to big energy, insurance, and pharmaceutical corporations and very wealthy individuals,” said Ladelle McWhorter, chair of the state governing board of Virginia Organizing. “And the politicians know it full well. They are not stupid; they are just the servants of those corporations and the very wealthy few. Working people deserve a tax system that values and supports what we do for the good of our families, communities, and country, and this tax system does not do that.”

Besides giving huge tax cuts to the wealthy, the tax law is giving a gusher of tax breaks to big oil companies and prescription drug companies. Seventeen oil and gas companies already received one-time tax cut benefits of $25 billion this year. Four of the biggest oil companies are estimated to be getting a tax cut of $15 billion over the next decade. America’s top 10 drug companies are saving $76 billion in taxes on their $500 billion in profits stashed offshore, as they rake in record profits and continue to price gouge customers and public health programs.

“Conservative politicians who supported the tax bill must face their record of rewarding donors and wealthy corporations with huge tax breaks while average families in Virginia struggle to pay for their healthcare and basic necessities like gas to get around town,” said Tory Brown, a spokesperson with For Our Families. “The tax bill has been such a bad deal for Virginians, it’s no surprise that none of its supporters are even talking about what is their greatest legislative achievement.”

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