Democrats griped about one particular provision in the 2017 tax cut bill, and now they are in a position to fix it. They railed that tax breaks for individuals would expire but those for businesses would not. Now that they run the House, they can help make individual tax cuts permanent.
When Democrats declared the apocalypse a year ago and called the Tax Cuts and Jobs Act “the worst bill in the history of Congress,” they based half of their argument on the misleading claim that the bill was really a middle-class tax hike.
“I’m concerned, obviously, about this tax bill because it’s going to raise taxes on the middle class,” Democratic New York Sen. Kirsten Gillibrand said during the debate. “The truth is this tax [plan] raises middle-class taxes.”
Actually that wasn’t the truth, but Gillibrand’s statement was typical of Democrats in those days and was echoed by much of the major media. Yet the legislation cut taxes for 70 to 80 percent of taxpayers. The median family of four is estimated to save about $2,000 a year. Democrats and their enablers get away with their lie by pointing out that the bill’s individual tax cuts expire in 2026, at which point middle-class taxes will return to where they were before they were cut. The sunset was necessary to keep the headline cost of the legislation below a level at which the Democrats would be able to filibuster it to death.
Come 2025, tax rates are scheduled to go up again, and the standard deduction will shrink along with the child tax credit. But the law’s new, less generous formula for calculating inflation would stay in place, leaving many taxpayers in a higher tax bracket than they would have been absent the law.
Democrats now control the House of Representatives but not the Senate. They don’t have the votes to raise corporate tax rates back to their old job-killing levels. They may have the votes to abolish the new law’s caps on their favorite special-interest tax breaks for the wealthy, which is the deduction for state and local taxes and the mortgage interest deduction on mortgages over $750,000.
But if they really did object to the expiration of the individual tax cuts, they could easily, on the next legislative day, put the bill on the floor. There’s no need for a markup, as the bill would simply read, “In 26 U.S. Code § 1, Subchapter J, strike the words ‘before January 1, 2026’ and strike the phrase ‘and before January 1, 2026.’”
That bill would pass the House and, with the cooperation of seven Democratic senators, could pass the Senate. Voila. You’ve killed a huge part of what made the bill a “tax scam,” in Democrats’ rhetoric.
We understand that House Speaker Nancy Pelosi, D-Calif., with her reputation as a fierce operator, might take a cynical approach. “She’ll cut your head off,” Pelosi’s daughter promised to her opponents last week. Why improve the tax code in a bipartisan way, she might think, when we can extract some concession from the GOP in exchange?
But are they really willing to slash the standard deduction almost by half in 2026 for a middle-class couple? Are they really ready to halve the child tax credit? Do they really want to raise marginal rates by one third on an individual earning $30,000?
There’s plenty of dealing Democrats could still do on taxes. Do they want to restore their tax breaks for wealthy homeowners? Maybe in exchange they could give up some of their tax breaks for green energy. Do they want to hike taxes on small businessmen and women? Maybe in exchange they could abolish the Alternative Minimum Tax.
But they shouldn’t demand a pound of flesh for supposedly something they want, which is avoiding a tax hike on everyone in 2026.
