More Charts: The Child Tax Credit and the End of the Medical Expenses Deduction

The Republican tax bill eliminates deductions for a bunch of odd things: tuition debt, mortgage interest, alimony, medical expenses, state and local taxes, gambling losses, tax prep expenses, moving expenses, and a few others. Several of these are obviously designed to punish blue states especially hard. I suppose the gambling thing is a sop to evangelicals. Alimony is…hard to figure out. Ditto for moving expenses and tax prep. None of these are going to raise much money, so I’m not sure what the point is.

But there are two sizeable ones worth looking at. The first one is the bill’s expansion of the child tax credit. Netted together with other changes, this benefits families with lots of children. Here’s where those families live:

No surprise: red states tend to have a higher percentage of children who will qualify for the tax credit. Once again, the tax bill is biased in favor of red states.

But then there’s medical expenses. This is a little tricky to figure out, but I wanted to test my intuition that this actually hurts red states more than blue states. The deduction for medical expenses helps families with big out-of-pocket costs as a percentage of their income, so I used Urban Institute data on average spending among those with the highest medical expenses. Note that “top 10%” refers to those with the highest medical expenses, not to well-off people in general:

This time it’s red states that suffer the most. This makes sense, since red states have higher levels of uninsured residents and, often, higher medical costs thanks to less competition in rural areas.

So why is this deduction being killed off? It seems like it came out of nowhere, and it’s not as if the tea party has been outraged by it or anything. One possibility is that a deeper dive would show that it’s mostly poor people in each state who have big medical expenses, and who cares about the poor? Another possibility is that this is some kind of subtle attack on Obamacare that I can’t quite get my hands around. Or maybe I’m not using the right data to really see what’s going on here. It’s mysterious.


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