House Democrats are waiting until Republicans unveil their tax reform proposal before they respond with their own set of principles, the top Democrat on the House Ways and Means Committee said October 11.
Speaking at a tax reform event in Washington sponsored by the RATE Coalition, Ways and Means ranking minority member Richard E. Neal, D-Mass., said he has been consulting with Democratic conference members and former economic advisers to the Obama administration to develop a consensus document.
When the Republican tax proposal will be revealed remains unclear. Ways and Means Committee Chair Kevin Brady, R-Texas, told Bloomberg TV the same day that tax reform “pivots off” passage of a fiscal 2018 budget resolution, adding that the committee staff has drafted parts of the bill already.
The House passed a budget resolution October 5 that includes reconciliation instructions for over $200 billion in deficit reduction over 10 years, while the Senate’s resolution allows a $1.5 billion budget deficit increase over a decade. The Senate is expected to consider its resolution the week of October 16.
House Budget Committee Chair Diane Black, R-Tenn., appeared cool to the idea that the House might simply take up and pass the Senate budget. “That’s what conferences are for . . . to hammer those differences out,” she told Tax Analysts, adding that House leadership would designate the conference committee members to “have that discussion with the Senate.”
‘Middle-Out’ Tax Relief
Neal did not reveal many specifics about the Democratic principles, but he did suggest that they would focus on “investing in human capital” like apprenticeships and higher education programs, pairing tax policy with infrastructure spending, and instituting “middle-out” tax relief.
“It’s very hard to respond to any proposal that lacks specifics,” Neal said of the current unified GOP tax reform framework, but he did point out the broad proposals outlined would “concentrate tax relief at the top.”
Expanding on Neal’s preview, Ways and Means member Judy Chu, D-Calif., told Tax Analysts, “We want something that will truly benefit the middle class. They are not feeling that their income is giving them a better quality of life, and yet we see the [GOP] tax plan coming out now that would benefit the wealthy by 80 percent.”
Chu said she would be interested in an expansion of the earned income tax credit, and although she highlighted the GOP’s proposal to expand the child tax credit, she said that provision alone would not be enough to win her support. On the corporate tax side, Chu suggested she could support a statutory rate deduction “that is obvious, without all the loopholes and deductions.”
Ways and Means Tax Policy Subcommittee ranking minority member Lloyd Doggett, D-Texas, said that Neal’s remarks largely echo what he and many Democrats urged President Trump to do earlier this year during a meeting at the White House.
“Don’t borrow any money to pay for this. This needs not to widen the income gap in our country. We’re concerned about distribution. [Also,] any relief needs to be targeted on small businesses and middle-class families,” Doggett said.
Like Neal, Doggett emphasized the need to “invest in human capital,” saying that doing so would be the “way to grow the economy, rather than investing in more tax breaks for those at the top.”
Senate Finance Committee member Robert P. Casey Jr., D-Pa., meanwhile, sent President Trump a letter urging him to consider a tax reform proposal that is not deficit financed, does not benefit the wealthiest earners, and goes through regular order. Those are the same principles included in a letter that almost every Senate Democrat signed in August.
In his letter, Casey cited a recent Urban-Brookings Tax Policy Center report estimating that over the long term, 80 percent of the benefits of the GOP framework would accrue to the top 1 percent of taxpayers. “This framework, which was negotiated in secret by congressional Republicans, will devastate middle class families and workers by raising their taxes, cutting Medicare and Medicaid and forcing cuts to investments in education,” Casey wrote.
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