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Democrats eye the next repeal and replace: Trump’s tax law

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Democratic presidential front-runners largely agree on their first tax priority: Scrap President Donald Trump’s tax overhaul and institute new levies to pay for social programs to benefit the middle class.

But like the Republican struggles to repeal and replace President Barack Obama’s Affordable Care Act in 2017, there are lots of plans and little consensus on how specifically to go about it. And even if they could roll back all or part of the $1.5 trillion tax law, some of the candidates would still be short of the extra revenue needed to cover their expensive proposals.

Senator Bernie Sanders of Vermont — who is promising to pursue universal health care and free college — bluntly acknowledged that middle-class Americans will see their tax bills rise, but he promised an increase in the government services they would receive.

“Yes, they will pay more in taxes, but less in health care for what they get,’’ he said Thursday night in Miami during the second round of the first Democratic presidential debates.

Rolling back the Trump’s tax overhaul, which cut tax rates for individuals and corporations, is low-hanging political fruit for Democrats. But they differ on how they want to spend the revenue that a repeal would raise.

Some are also skittish about explaining how they would generate the trillions more needed to pay for ambitious policies like expanding health care, increasing access to child care and reducing student loan debt.

Former Vice President Joe Biden and Senator Kamala Harris of California both said during the debate they would make eliminating the Republican tax law a priority.

Harris has said her plan would grant tax credits to middle-income earners. The proposal, which would provide tax credits as high as $6,000 for a family annually, would cost about $3 trillion, about twice the cost of the Trump tax cut. Biden said he wants to give an economic boost to the middle class, but he hasn’t specified how to do that or how he would pay for it.

Sanders, along with Senator Elizabeth Warren of Massachusetts, has leaned into the cost of new social programs by proposing new taxes on Wall Street and wealthy individuals to fund the additional benefits. Even with higher taxes — including those on the middle class — people would still come out ahead, Sanders said.

Warren has promoted an annual 2 percent wealth tax on those with fortunes of at least $50 million, a levy she estimates would raise about $2.75 trillion. Sanders is proposing a tax on Wall Street trades that would include a 0.5 percent tax on stock transactions, a 0.1 percent tax on bond trades and a .005 percent tax on derivatives transactions to pay off student debt and finance tuition at public colleges and universities.

But other Democrats — including Harris and Biden — have been shy about embracing the specifics of new taxes. Former Texas Congressman Beto O’Rourke has been vague about how to pay for his plans, including a $5 trillion proposal to combat climate change with the goal of achieving net-zero emissions in the U.S. by 2050.

O’Rourke has said he wants to make the corporations and wealthy “pay their fair share” and “end the tens of billions of dollars of tax breaks currently given to fossil fuel companies.”

During the first night of the debate he refused to answer a question about whether he supported a 70 percent top individual rate, an idea that has been gaining traction among progressives in Congress.

He was pressed in an interview with MSNBC Thursday if he would support raising the rate to 70 percent. His response: “No, I’m not.”

Bloomberg News
Tax planning Tax reform Elizabeth Warren Bernie Sanders Joe Biden