Big “Beautiful” Bill means real harm for impacted communities
Impact on the Economy
North Carolina taxpayers, low-income individuals and everyone in between will be affected by the newly passed federal tax and spending bill. The 2017 Tax Cuts and Jobs Act (TCJA) is set to expire after 2025. As a result, this new tax and spending bill restores favorable corporate tax treatment, while significantly impacting Black North Carolinians economically over the next four years and beyond. Here’s a breakdown of the key economic impacts.
Taxes
The new law introduces tax exemptions for overtime pay and tips, a deduction for auto loan interest, and an additional standard deduction available for some seniors, all of which violate basic tax principles of treating taxpayers equally.
Corporations and businesses will be able to write off the cost of research and development and the cost of equipment in the first year it was purchased. Manufacturers will be allowed to fully deduct the cost of building new manufacturing facilities.
Wealthy Americans will benefit far more from the tax package than those lower on the income scale. While all households will see their taxes reduced, some 60% of the benefits will go to those making $217,000 or more (the top 20%). These households will receive an average tax cut of $12,500, or 3.4% of their after-tax income. The lowest-income households, who earn about $35,000 or less, will receive an average tax cut of only $150, less than 1% of their after-tax income. Middle-income households will see their taxes reduced by about $1,800, or 2.3% of their after-tax income, on average.
The state and local tax deduction known as SALT will be raised from $10,000 to $40,000 for five years. This provision will primarily benefit upper-middle-income earners since lower earners typically do not itemize deductions for income and property taxes.
Employees who work in jobs that traditionally receive tips could deduct up to $25,000 in tip income from their federal income taxes, while workers who receive overtime could deduct up to $12,500 of that extra pay. Under the new law, the child tax credit will permanently increase to $2,200. The current $2,000 child tax credit was set to return to its pre-2017 level of $ 1,000 in 2026.
National Deficit
Lowering the amount of tax revenue the country collects, while increasing spending on defense and immigration enforcement, will contribute to an increased debt limit. The Congressional Budget Office (CBO) estimates the bill will add over $3 trillion to federal deficits over the next 10 years. Black North Carolinians will feel the consequences of the nation’s ever-growing debt in their wallets. The CBO estimates the bill will potentially increase interest rates. That could make mortgages, car loans and credit card payments more expensive. Congress will need to address the debt limit in the coming weeks. The U.S. could be unable to pay its bills as early as August, which could lead to another government shutdown standoff.
Impact on health care
Ingrained in the Big “Beautiful” Bill are deep cuts that will unravel the progress North Carolina has made to expand healthcare access and fight food insecurity. Programs like Medicaid and Supplemental Nutrition Assistance Program are lifelines for Black, brown, and rural communities. In North Carolina, an estimated 3 million people rely on Medicaid coverage. Under Medicaid Expansion, this number grew, providing approximately 600,000 people with access to affordable care, with copays capped at $4. In the first month of launching Medicaid Expansion in North Carolina in December 2023, Black people made up 38.1 percent of those enrolled, even though we only make up 22.1 percent of the state population. Medicaid cuts will strip away coverage for hundreds of thousands of North Carolinians who only recently gained coverage through expansion. Alongside these cuts, reductions to SNAP benefits will undercut one of the most critical tools we have to reduce hunger, leaving families to navigate higher grocery costs and fewer healthy options in communities where fresh food access is already limited. Affordable health insurance and access to care create healthier outcomes. There’s nothing big or beautiful about a bill that will lead to 579 avoidable deaths in North Carolina per year.
Pushing working families, seniors, and rural communities back into the coverage gap will do more than hurt individual lives — it will undermine the backbone of our state’s health infrastructure. Reduced coverage will increase the amount of uncompensated care provided by hospitals in our state. The financial strain from high levels of uncompensated care is what drove 12 hospitals within the last 20 years to close in North Carolina, with Martin General Hospital being the state’s most recent closure. This policy will devastate more healthcare systems in rural communities. Five rural hospitals–UNC Rockingham Hospital in Eden, Person Memorial in Roxboro, Chatham Hospital in Siler City, Angel Medical Center in Franklin, and Blue Ridge Region Hospital in Spruce Pine–have already been identified as at risk of closure or severe service reductions due to Medicaid cuts. North Carolina is no stranger to climate disasters like hurricanes and tropical storms. As our communities continue to grapple with environmental harms like drinking water contamination, repeated climate disasters, and flooding, the loss of healthcare facilities compounds risk and erodes resilience when the next storm hits.
Impact on the Environment
The catch? Everyone’s impacted, one way or another. By repealing federal funding for domestic electric vehicle manufacturing, as well as the Greenhouse Gas Reduction Fund and the Inflation Reduction Act (initiatives that encouraged clean energy and environmental justice), the Big “Beautiful” Bill undermines clean energy initiatives, while incentivizing fossil fuel expansion and simultaneously creating more pollution and an energy burden. The bill reduces energy capacity by 330 Gigawatts (GW) over the next 10 years; for context, 1 GW can power a medium-sized city (~100,000-500,000 people) per GW, with approximately 165 million people affected, meaning higher energy costs and energy burdens passed on to the consumer. This in conjunction with removal of Clean Air Act and air monitoring initiatives, further affects communities leading to higher rates of asthma, respiratory illnesses, and diseases, while also removing funding for Medicaid and SNAP thus disproportionately affecting Black, Brown, and low-income neighborhoods even more by limiting their ability to live adequate, healthy lives.
This budget bill also encourages fossil fuel production in the wake of removing environmental regulations and clean energy initiatives, resulting in higher emissions. This is approximately 310 metric tons of carbon dioxide over those same 10 years. Phasing out clean energy opportunities, such as solar and wind, while funding the fossil fuel industry can only lead to further pollution, in turn fueling more extreme weather events, including hurricanes and flooding, heatwaves, and wildfires, as well as diseases. This bill also rescinds methane emissions reduction programs for oil and gas, eliminates funding for EPA climate monitoring, low-emissions electricity programs, methane waste mitigation, climate justice, and resilient programs, and terminates renewable energy tax incentives. Overall, this budget bill represents a drastic step away from protecting people and the environment, and a stark pivot toward investing in industries that will have the opposite effect.