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Democrats accelerated tax hikes – after pushing back GOP haste on tax cuts

“It’s oddly similar,” said Mark Prater, who at the time was their chief tax adviser on the Senate finance committee.

The House Ways and Means Committee aims to approve by Wednesday a massive tax plan it just released on Monday as lawmakers oppose a September 15 internal deadline to assemble their entire agenda of “reconciliation” expenses. Democrats hope to get him out of the chamber by the end of this month.

Acting quickly has tactical advantages for Democrats, making it harder for lobbyists – and Republicans – to dissect their plans.

But Democrats can only afford to lose three votes in the House, and a moderate there complains that his colleagues are going too fast.

And some wonder if the Democrats’ plans will end up marred by glitches and other mistakes, like those that undermined the 2017 law.

Democrats reject the comparison, saying many of their proposals have been around for months.

Some lawmakers, such as Senate Finance Chairman Ron Wyden, have gone so far as to publish the legislative texts of the plans for public comment.

It’s an open question how fast Democrats can act, with lawmakers at odds over many details of their reconciliation plans and Sen. Joe Manchin (DW.Va.) saying he wants a “break” in the negotiations. negotiations and a package totaling far less than the $ 3.5 trillion most progressive Democrats are talking about.

The plan unveiled by Ways and Means includes nearly $ 3 trillion in tax increases, including raising the corporate tax rate to 26.5%, imposing a new surtax on people earning over $ 5 million and dozens of other proposals.

Behind closed doors, Democrats have attempted to settle differences with the Senate and the Biden administration to expedite consideration of their reconciliation plan.

Acting quickly gives critics less time to rally opposition to the proposals. And it can also generate a sense of momentum which can help opponents steamroll.

There’s also House Speaker Nancy Pelosi’s deal with moderates in her chamber to take over an infrastructure bill passed by the Senate later this month, which is pushing tax drafters as well. to work quickly.

Party leaders want to examine this bill and their reconciliation plan together, in order to appease progressives and centrists who disagree on which bill should be voted on first.

But during a ways and means hearing last week, Rep. Stephanie Murphy (D-Fla.) Urged her colleagues to slow down the reconciliation. Even when the panel began voting on parts of the proposal, Murphy complained that she still hadn’t seen most of their plan.

“I don’t know how much we spend, how much we collect, how we spend part of the money and how we collect part of the money,” she said. “We need more time.”

And it’s hard to speed up big, complicated tax bills, as Republicans demonstrated in 2017.

Layouts can interact in unexpected ways, for example, and a seemingly minor oversight can have big consequences.

Restaurants, for example, were unable to deduct renovation costs as a business expense due to a drafting error in the TCJA. Co-op owners in New York seemed to have a way around the controversial SALT cap of that law because lawmakers had failed to complete a section of the law dealing with housing co-ops.

A vague reference to corporations, some lawyers said, gave the wealthy a chance to escape a high-profile crackdown on “deferred interest.”

In total, the law included more than 70 elements that required technical corrections, according to the Non-partisan Joint Committee on Taxation – issues largely blamed on Republicans who rushed legislation through Congress.

After releasing the framework for their plan in September 2017, Republicans unveiled its legislation in November and knocked it out of the House two weeks later. Congress completed its work on the legislation on December 20.

Some of the pitfalls of the TCJA have since been addressed by Congress or the IRS, but most remain on the books because Democrats have blocked attempts to fix them, in retaliation for Republicans refusing to allow Democrats to fix the issues. of the Affordable Care Act.

Democrats say they are not moving as fast as they seem because many of their proposals, at least conceptually, are already well known – although others are new.

And they are aware of the risk of repeating the Republicans’ experience with glitches.

“There will be ample opportunity to comment,” said Ways and Means president Richard Neal (D-Mass.).

“I have a great staff on the committee and there will hopefully be enough oversight to avoid the mistakes they made,” he said.

Wyden, his Senate counterpart, released a bill for several proposals, such as a plan to rewrite the taxation of large multinational corporations to give experts a chance to speak out on potential problems.

Of course, it remains to be seen whether the Democrats can stick to their ambitious timetable.

They have ultra-thin margins in both chambers and have yet to decide on basic issues like how much they’re going to spend in total and how much they’ll be paid, not to mention countless details of the arrangements.

Earlier this month, Manchin said he wanted his colleagues to put their reconciliation plans on hold. This would allow them to get “more clarity on the trajectory of the pandemic” and have a better idea of ​​”whether inflation is transient or not,” Manchin wrote in a Wall Street Journal op-ed.

Democrats also face other things, like raising the debt ceiling and keeping federal agencies in business beyond the end of this month.

Some predict that their reconciliation campaign will eventually run into this winter – which would not be different from the TCJA either.

“It’s probably going to take the rest of the year to complete,” said Howard Gleckman, senior researcher at the Tax Policy Center.

“We take bets at the office and I have Christmas Eve.”

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