Progressives make big play on 2025 tax debate

Presented by NFIB: Delivered every Monday by 10 a.m., Weekly Tax examines the latest news in tax politics and policy.
Sep 16, 2024 View in browser
 
POLITICO's Weekly Tax newsletter logo

By Bernie Becker

Presented by NFIB

GET TO YOUR CORNERS: Progressive groups are rolling out a new coalition this week, for what they expect to be a costly, time-consuming campaign next year over the future of the American tax system.

Hundreds of state and national groups are joining what’s known as Fair Share America, which is publicly launching with an event on Capitol Hill on Wednesday that will offer a progressive vision for what Washington should do in 2025, when it will be faced with the expiration of large chunks of the Trump tax cuts.

The new coalition’s aim is to counteract the work of a host of business lobbyists and other advocates for the Tax Cuts and Jobs Act, who long ago started buttonholing lawmakers and their staffs about next year’s debate.

To put that another way: Progressive activists and some Democratic lawmakers swear up and down that they’re no longer on the defensive on taxes, pointing out that polling consistently shows that their stance that the rich and corporations should pay more in taxes is popular among a wide range of voters.

But progressive groups also believe that they’re still playing catch-up when it comes to lobbying Congress on taxes, and they’re hoping that this new initiative will give the left extra resources and manpower as it seeks to push the American tax system to the left next year.

“For quite some time, it’s been clear that people who want to tax the wealthy and corporations are outgunned — outgunned on money, outgunned on shoe leather. We hear that from the Hill all the time,” said Lindsay Owens of the progressive group Groundwork Collaborative.

MORE ON ALL THIS in a bit. But first thanks for joining a very special “National Guacamole Day” version of Weekly Tax.

Turned out to be a bit of a bumpy trip: Today marks 404 years since the Mayflower left for the New World from Plymouth, England — a name so nice that it inspired the Plymouth colony’s name in modern-day Massachusetts.

Know something rock-solid? Send it our way.

You can reach us at bbecker@politico.com, bfaler@politico.com, bguggenheim@politico.com and teckert@politico.com.

You can also reach us on X, formerly known as Twitter, at @berniebecker3, @Brian_Faler, @ben_guggenheim, @tobyeckert, @POLITICOPro and @Morning_Tax.

Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories.

 

A message from National Federal of Independent Business:

Congress: Stop the massive tax hike on small business. Without Congressional action, 9 out of 10 small businesses will be hit with a massive tax hike next year, decimating small businesses' ability to grow, hire, provide for their employees, and give back to their community. Congress needs to pass the bipartisan Main Street Tax Certainty Act to protect the 20% Small Business Deduction. Learn more.

 

LOOKING AHEAD: A trio of Democratic tax writers — Sen. Michael Bennet of Colorado and Reps. Lloyd Doggett of Texas and Gwen Moore of Wisconsin — are scheduled to appear at the Fair Share America launch on Wednesday, and the coalition also expects activists from around the country to attend.

The organizations involved with the initiative include progressive policy groups in D.C., like the Center on Budget and Policy Priorities and the Institute on Taxation and Economic Policy, unions like the Service Employees International Union and the National Education Association, and dozens of state-based policy advocates.

With such a wide membership, the coalition is focusing on several broad goals for the big 2025 tax debate, including raising the corporate rate and finding new revenues in general to help pay for further social spending and benefits. As part of that, Fair Share America wants high-income households to pay more as well, and is prodding Congress to ensure that expiring provisions aren’t extended for those making over $400,000 a year.

Those were very purposeful choices, according to the coalition’s leaders — to focus on how progressives want to raise revenues, an area where there is much common ground within the left, versus the more complicated topic of how to spend those gains.

“Taxes are the connective tissue between all we care about. If you care about health care, if you care about education, the care economy, all of that’s bound together by the need to grow revenue,” said Kristen Crowell, the executive director of Fair Share America, who led a grassroots effort in 2022 to install a new surcharge on top earners in Massachusetts.

The coalition’s goals also underscore that the 21 percent corporate rate, which Republicans made permanent in TCJA, still looks likely to be a central topic in next year’s tax debate.

Lots of Democrats have proposed hiking the rate back up to 28 percent, including their presidential standard bearer, Vice President Kamala Harris, along with keeping some of the other corporate revenue-raisers included in the tax law — while some Republicans have stopped short of fully ruling out a rate increase.

Meanwhile, corporate lobbyists have also made it clear that protecting the existing rate will be a top priority next year.

WHAT DOES SUCCESS LOOK LIKE? One of the key ways that the coalition is looking to reach its goals, Crowell said, is to try and make sure that any tax deal next year is struck more in the open — in other words, no late December (or early January) agreement reached by a couple key players behind closed doors, as then-Vice President Joe Biden and Senate Minority Leader Mitch McConnell did with the 2012 fiscal cliff.

As you might recall, lots of progressives didn’t like that deal, which essentially locked in the vast, vast majority of the Bush-era tax cuts.

Crowell said the approach this time around would be to train state-level advocates, who would then try to gin up more grassroots energy back home for tax hikes on the rich and corporations.

The group will also be a constant presence on the Hill, she said, while also acknowledging they probably can’t match the traditional lobbying prowess of the other side.

“If we do our job well over the next 15 months, what we will see and feel will be very different than what it’s been in the past,” Crowell said. “And that means people around the country knowing what’s happening, having input. We want elected officials hearing directly from their constituents on this.”

PROPOSALS JUST KEEP COMING: Former President Donald Trump first rolled out his “no tax on tips” idea three months ago, and independent scorekeepers are still trying to totally wrap their heads around it.

And with good reason, given that Harris herself followed Trump in backing the idea in August.

Yale’s Budget Lab took a deeper dive into exempting tipped income from taxes, in a new report out today, examining who might benefit, how such a tax cut might be designed and the overall potential cost.

The group found that eliminating the income tax for tips would cost just north of $100 billion over a decade. Add in a payroll tax exemption, and the cost nears $200 billion.

But if scrapping the income tax on tips is limited to just those in the hospitality industry, as Harris has floated? That’s more like $60 billion, according to the Budget Lab. (Harris’ camp has also suggested that she would put income limits on who could claim a tip tax cut.)

Even so, the group stressed those were static projections — in other words, they don’t take into account any potential behavioral changes that might be spurred by enacting a special tax exemption for tipped income.

And those behavioral effects might be massive, to the point that the Budget Lab declined to try to put an actual number on the cost of a tip exemption after taking account for them. (The group noted that there’s no real precedent for this kind of tax cut, and that “tipping is hard to model as a purely economic phenomenon.”)

Plus, one more interesting finding: Not even 3 percent of families would benefit from an income tax deduction on tips — and while the average tax cut for those who do would be $1,700 a year, the lowest-income tipped workers would only gain about $200.

Semi-related note: "Trump’s no tax on overtime idea could be staggeringly expensive," via Pro Tax's Benjamin Guggenheim.

 

A message from National Federal of Independent Business:

Advertisement Image

 
Around the World

Financial Times: “Italy retains allure for rich Europeans fleeing higher taxes.”

The Guardian: “Jet fuel tax could raise £6bn a year in the UK, says thinktank.”

Reuters: “India sharply raises import tax on edible oils to support farmers.”

Around the Nation

Nola.com: “Who wins? Who loses? A new Louisiana tax plan in is in the works under Gov. Jeff Landry.”

Spectrum News: “Western N.Y. film industry flourishing but tax credit is under fire.”

Bloomberg Tax: “California Proposes Tax Rule for Sourcing Sales of Intangibles.”

Also Worth Your Time

Wall Street Journal: “Rich Americans Prep Fail-Safe Estate Plans Ahead of Election.”

Washington Post: “U.S. hostages still owe taxes. Congress might not help.”

Tax Notes: “Employee Retention Credit Unknowns Spur Taxpayer Litigation.”

Did you know?

The English explorer William Dampier is the first known European to have recorded a description of guacamole, in his 1697 book “A New Voyage Round the World.”

 

A message from National Federal of Independent Business:

Congress: Stop the massive tax hike on small businesses.

Small businesses are the foundation of the U.S. economy. Without Congressional action, 9 out of 10 small businesses will be hit with a massive tax hike next year. This will decimate small businesses' ability to grow, hire, provide for their employees, and give back to their community.

In the 2017 Tax Cuts and Jobs Act, Congress cut corporate taxes permanently but made the 20% Small Business Tax Deduction temporary. If Congress fails to act, taxes will increase on over 30 million small businesses at the end of 2025. Making the 20% Small Business Deduction permanent will protect small businesses from this massive tax hike and keep their tax rates closer to that of their large, corporate competitors.

A level playing field for small businesses is good for America. Congress: pass the bipartisan Main Street Tax Certainty Act.

 
 

Follow us on Twitter

Toby Eckert @tobyeckert

Bernie Becker @berniebecker3

Brian Faler @brian_faler

Benjamin Guggenheim @ben_guggenheim

 

Follow us

Follow us on Facebook Follow us on Twitter Follow us on Instagram Listen on Apple Podcast
 

To change your alert settings, please log in at https://login.politico.com/?redirect=https%3A%2F%2Fwww.politico.com/settings

This email was sent to salenamartine360.news1@blogger.com by: POLITICO, LLC 1000 Wilson Blvd. Arlington, VA, 22209, USA

Unsubscribe | Privacy Policy | Terms of Service

Post a Comment

Previous Post Next Post