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Dems look to chip away at Trump tax reform law

Democrats in the coming year will be laying the groundwork to eventually roll back parts of President TrumpDonald John TrumpUSAID administrator tests positive for COVID-19 Kamala Harris, Stacey Abrams among nominees for Time magazine's 2020 Person of the Year DOJ appeals ruling preventing it from replacing Trump in E. Jean Carroll defamation lawsuit MORE’s tax law.

No Democratic lawmakers voted for the measure Trump signed in December 2017, criticizing the bill for providing large benefits to wealthy individuals and corporations and for adding to the federal deficit.

With Republicans controlling the Senate and the White House, Democrats are unlikely to be able to undo any significant portion of the law in the next two years.

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Instead, their goal is to lay a foundation for what they can do in the future if they retake the Senate or White House, hammering away at Republicans over the law’s least popular aspects ahead of the 2020 vote.

House Democrats’ approach on the tax law is expected to be more cautious than the actions Republicans took on ObamaCare after they took back the House in 2011. Republicans repeatedly held votes to repeal ObamaCare at the time, but Democrats are unlikely to hold a vote to do away with the entire tax law.

“I think Democrats are going to be pretty careful about it,” said Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center.

Democrats have been critical of many parts of the law, including the cut to the top individual tax rate, the size of the cut to the corporate tax rate and international tax provisions. But some parts of the law have support among Democrats, including tax cuts for the middle class and the Opportunity Zone program designed to boost investment in economically distressed areas.

Hearings in the House Ways and Means Committee are expected to be a key part of Democrats’ efforts this year to re-examine the law and shine a spotlight on its most contentious features. Democrats complained that Republicans didn’t hold hearings before passing the law and have vowed to remedy that situation.

The day after the midterm elections, new Ways and Means Committee Chairman Richard NealRichard Edmund NealOvernight Health Care: Trump announces two moves aimed at lowering drug prices | Sturgis rally blamed for COVID-19 spread in Minnesota | Stanford faculty condemn Scott Atlas Trump announces two moves aimed at lowering drug prices IRS races to get remaining stimulus checks to low-income households MORE (D-Mass.) said it would be hard to get a revamp of the tax law enacted this year, but that he wants to hold hearings because the law “has sowed a lot of confusion.”

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He suggested that he’d like the committee to bring in “people of great economic reputation, Democrat and Republican, to talk about the tax bill.”

A Ways and Means Committee aide said that there could be hearings both on the broad economic impacts of the law and individual aspects.

“We’re going to depend a lot on hearings,” said Rep. Bill PascrellWilliam (Bill) James PascrellPress: Trump's biggest fear is — lock him up Biden faces politically thorny decision on Trump prosecutions IRS races to get remaining stimulus checks to low-income households MORE (D-N.J.), a senior member of the tax-writing panel. “I think they’re important to bring out the truth and the facts.”

He added that “if you don’t have hearings, if you don’t bring the experts in, if you don’t hear many sides to the issues, if you don’t allow for that input, then you don’t really have legislation.”

Progressive leaders also see value to the hearings and say they will help to expose problems with the law.

Democrats can find “the areas where change is possible in the short term and where opportunity exists for changes in the medium-to-long term once Donald Trump is out of office,” said Neil Sroka, spokesman for Democracy for America.

Democrats also hope to draw a contrast between their policies and the GOP law.

Republicans expected the tax law to boost them in the 2018 midterms, but it failed to do so. Hearings targeting the law and highlighting issues such as corporate tax breaks and company stock buybacks could help Democrats politically.

In addition to hearings, Democrats — both in Congress and on the presidential campaign trail — are expected to offer a flurry of proposals to undo parts of the law. Those will include measures to roll back provisions in the tax law to pay for tax cuts or new spending focused on helping the middle class.

Already this year, New York Reps. Nita LoweyNita Sue LoweySpending deal clears obstacle in shutdown fight GSA offers to brief Congress next week on presidential transition Biden aide: First Cabinet picks will be announced Tuesday, GSA holdup preventing background checks MORE (D) and Pete KingPeter (Pete) KingRundown of the House seats Democrats, GOP flipped on Election Day Democrats, GOP fighting over largest House battlefield in a decade Treasury withheld nearly M from FDNY 9/11 health program MORE (R) have offered a bill to restore the full state and local tax (SALT) deduction, which was capped at $10,000 in the 2017 tax law.

House Democrats are also expected to look at the tax law as they develop a budget proposal.

“[T]he House Democrats’ budget will certainly focus on meeting the needs and priorities of the American people, not on corporations or wealthy shareholders,” said Sam Lau, a spokesman for House Budget Committee Chairman John YarmuthJohn Allen YarmuthThe GOP's debt boogieman is hurting families and derailing our recovery Pelosi, Democrats unveil bills to rein in alleged White House abuses of power GOP, White House struggle to unite behind COVID-19 relief MORE (D-Ky.). “[W]e will review all tax policy options, including a careful assessment of the GOP tax law and its corporate rates, to promote these priorities.”

Democrats will also face political pressures, including from progressives who want to do more than just chip away at Trump’s law.

Rep. Alexandria Ocasio-CortezAlexandria Ocasio-CortezKamala Harris, Stacey Abrams among nominees for Time magazine's 2020 Person of the Year Ocasio-Cortez, Cruz trade jabs over COVID-19 relief: People 'going hungry as you tweet from' vacation Biden Cabinet picks largely unify Democrats — so far MORE (D-N.Y.) received considerable attention for a “60 Minutes” interview Sunday in which she suggested a top marginal rate as high as 70 percent to pay for a “Green New Deal.”

Tax experts said it will take a while for Democrats to decide exactly what they’d like to do on taxes if they control the White House again, and that hearings on the bill can give them time to answer those questions.

With hearings, “you can buy some time before you have to lay out some big, broad solutions,” said Janice Mays, a former aide to Ways and Means Committee Democrats who now works at PricewaterhouseCoopers.

Republicans are likely to push back on Democratic efforts to undo or weaken the law.

In one of Republicans’ first actions in the new Congress, Ways and Means ranking member Kevin BradyKevin Patrick BradyOn The Money: Biden, Democratic leaders push for lame-duck coronavirus deal | Business groups shudder at Sanders as Labor secretary | Congress could pass retirement bill as soon as this year Top Democrat: Congress could pass retirement bill as soon as this year Momentum grows for bipartisan retirement bill in divided Congress MORE (R-Texas) offered a motion, tabled by Democrats, in an effort to make permanent the tax law’s expansions of the child tax credit and standard deduction.

“Any efforts by House Democrats to increase taxes on local job creators and return our economy to the slow-growth years of the Obama administration would be rightly met with resistance,” said Brady spokesman Rob Damschen.

Efforts from Democrats to repeal the SALT deduction cap could in particular face resistance from Republicans, as well as from some on the left. Critics note the deduction largely benefits high earners.

Maura Quint, executive director of the progressive group Tax March, said that her group doesn’t want to see “any stand-alone measure” to restore the full SALT deduction. She said lawmakers should focus on raising taxes on the wealthy before discussing the SALT deduction.

But Democrats in high-tax states are pushing back on such criticism.

“It doesn’t determine whether you buy a house, it determines whether you stay in it sometimes,” Pascrell said of the deduction.

Democratic leaders will need to navigate a complicated path as they attack the GOP tax law and lay the groundwork for their own policies in the future.

Rep. Ro KhannaRohit (Ro) KhannaBiden Cabinet picks largely unify Democrats — so far OVERNIGHT ENERGY: Biden eyes new leadership at troubled public lands agency | House progressives tout their growing numbers in the chamber at climate rally | Trump administration pushes for rollback of Arctic offshore drilling regulations House progressives tout their growing numbers in the chamber at climate rally MORE (D-Calif.), first vice chairman of the Congressional Progressive Caucus, said any efforts Democrats take on taxes this year are a good way to prepare for the next time the party is in the White House.

He suggested one option that could get support across the Democratic caucus would be repealing the tax law’s cuts for high earners while expanding the earned income tax credit and child tax credit to help working families.

“I think it will inform the debate for the 2020 presidential election,” he said.

“And more importantly, it’s important for us to be prepared with bills that we have passed when we do have a Democratic president.”