Sen. Elizabeth Warren, D-Mass., advocated for lawmakers to let the Tax Cuts and Jobs Act’s provisions sunset as scheduled in 2025, arguing that the positive impacts for low- and middle-income Americans from the law are not good enough.
Warren, a member of the Senate Finance Committee, made the case that Democrats should use the looming expirations as a chance to raise the corporate tax rate and increase taxes on high-income individuals during a Senate Banking Subcommittee on Economic Policy hearing September 18 that focused on the macroeconomic impacts of the 2017 tax law.
“It is better to walk away and let the Trump tax cuts expire than to sign our names to that kind of wealth transfer to help multimillionaires and billionaires at the expense of working families,” Warren said. “But that doesn't have to be where our 2025 tax fight ends. I believe we can do better than that.”
No Republicans were in attendance at the hearing to defend the TCJA or argue for its extension. Warren argued that Republicans’ decision to schedule the expiration of wide swaths of the TCJA at the end of next year both hid the true cost of its provisions and set up an expectation that lawmakers would simply extend the law without reform – a rubber stamp she says Democrats should not provide.
“Republicans need to understand that we're not going to go along with buckets of money for rich people. We are willing to walk away,” Warren told Tax Notes regarding how she thinks her party should approach the expirations. “That's what gives us strength in these negotiations. . . .We can't walk into a negotiation saying, ‘No matter what, we'll take a deal.’ No. Nobody comes out of that well on our side.”
GOP party leaders have indicated they plan to address the TCJA expirations through the reconciliation process if Republicans sweep the House, Senate, and White House in the November elections.
Among the provisions from the TCJA scheduled to expire are lowered individual income tax rates, including for those making less than $400,000 a year, a group for whom Democratic presidential candidate Kamala Harris has pledged not to increase taxes should she win the White House. The TCJA’s provision doubling the child tax credit – championed by Democrats and temporarily expanded further in the American Rescue Plan Act of 2021 – is also set to expire at the end of 2025.
When asked how a plan to let the TCJA expire might square with the $400,000 pledge, Warren said the breaks for working families in the law are dwarfed in size by the tax cuts for the wealthiest individuals and companies. “The opportunity we have to make the billionaires actually pay a fair share and use that money to invest in cutting costs for families — that's what families want us to do,” Warren said.
Warren previously argued that Democrats should model their tactics for tax talks in 2025 after the party's "tax the rich" approach to the Inflation Reduction Act in 2022.
At the other end of Capitol Hill, a group of advocates launched efforts to block the TCJA’s extension, boasting $12 million in initial funding and new polling in every congressional district on voters' views about the taxation of high-income households and large corporations.