Senate Republicans passed a major tax cut Tuesday night amid Democratic claims of the apocalypse.
One ubiquitous complaint was that the GOP package’s substantial tax reductions for the middle class expire in 2025, whereas the reform of the corporate tax code is permanent.
So we propose a solution to this problem: Democrats should vote to make the individual tax cuts permanent.
Heck, they could do it first thing next year. They'll get all the Republicans, and with Democrats on board and thus a filibuster off the table, tax cutters can clear the procedural hurdles that prevented Republicans from making these cuts permanent in the big bill.
Expiration dates are used in legislation for various reasons. Sometimes it is out of necessity, and other times it is out of a desire to cheat. When Democrats rammed Obamacare through Congress in 2009 and 2010, they voluntarily used expiration dates on certain provisions, and created others as permanent that they intended to expire, as tricks to hide hundreds of billions of dollars in costs from the bottom line.
In contrast, the Republicans passing tax reform today would much prefer to have their handiwork made permanent right away, without any expirations, but they lack the ability to do it on their own. Because of the vagaries of Senate procedure, they need 60 votes to do anything that is projected to increase deficits in the long run, beyond the window of the budget they are reconciling. This means the fundamental changes to the corporate tax code can be made permanent in what is known as a reconciliation bill, but most changes to the individual tax code cannot.
This means that it would take the support of at least eight Democratic senators to make the bill’s middle-class tax reductions permanent.
Do Democrats have any motives to cooperate on tax reform? That really depends on how it turns out. If it’s a flop, like Obamacare, then they’ll be grateful they stayed away. They’ll reap the political benefits, just as Republicans did in 2014.
But behind the Democrats’ ferocious, end-of-the-world rhetoric over tax reform is not just their desire to protect the wealthiest Democratic voters and donors from a system that eliminates special tax breaks they currently enjoy. There’s also a deep-seated fear that tax reform will actually work as planned, unleashing growth, creating jobs, and fostering increased competitiveness for American firms against foreign competitors — that in eight years, no one will want to go back to the current system.
If that happens, then not only could tax reform be politically beneficial for Republicans in the short run, but it could also put Democrats in a tough spot later on, when the reforms expire. If the changes really do work, will Democrats want to undo them? To raise taxes on middle- and lower-income workers getting a break now?
Democrats claim to be upset about expiring middle-class tax cuts. If they really think a 2027 tax hike on the middle class would be bad, there's no reason to wait until then — they should introduce a bill in January to make permanent the changes in the GOP bill.
Of course, maybe their attacks are motivated by something besides policy concerns.