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By Laura Davison (Bloomberg Tax)
Democrats and Republicans clung to their respective talking points about the 2017 tax law, with each side hoping to use its perspective to sway voters in the midterm elections later this year.
The tax cuts have become more popular as taxpayers have seen increases in their paychecks, bonuses, and additional contributions to retirement accounts, undercutting Democrats’ arguments that changes from the 2017 tax law (Pub. L. No. 115-97) benefit a select few, Sen. Patrick J. Toomey (R-Pa.) said.
“The other side overplayed their hand and they were so shrill in their criticism and, frankly, not very accurate,” Toomey said April 17, the individual tax filing deadline, at a U.S. Chamber of Commerce event.
Republicans are planning to highlight how individuals face a lower tax burden under the tax law. Democrats have criticized the individual tax cuts, which are set to expire in 2026, for disproportionately benefiting the wealthy and cutting taxes for corporations too much.
Senate Minority Leader Charles E. Schumer (D-N.Y.) said in a Senate floor speech that 6 percent of the capital allocated by companies from the tax bill savings has gone to employees, while 57 percent has gone to shareholders, citing numbers from Just Capital.
“That statistic gets to the very core of the debate—who benefited from this tax bill?” Schumer said. “Mainly, wealthy CEOs, a lot of foreigners, and the wealthiest people in America. Not the average working person.”
Senate Finance Committee ranking member Ron Wyden (D-Ore.) said in a report that CEOs are funneling tax breaks into buybacks, which in turn increase their stock-based compensation. “Their windfalls are raining down like manna from heaven,” he said in a statement.
Several polls showed the tax cuts were largely unpopular when they were signed into law in December. Since then, national polls have shown that support is increasing, but Republicans will still need to persuade many voters uncertain about the impact of the cuts. About 27 percent of respondents to an NBC/Wall Street Journal poll released this week called the tax overhaul a good idea. Thirty-six percent disagreed and 34 percent said they didn’t know enough to offer an opinion.
The Democratic National Committee released a memo April 17 that included talking points on the tax law. It said many of the tax cuts are too small to be meaningful to many people, and that President Donald Trump’s businesses will likely benefit from the tax changes. The exact amount is uncertain because Trump hasn’t released his tax returns, the memo said.
Trump filed for an extension on his 2017 tax return, which pushes the deadline until Oct. 15, 2018, White House spokeswoman Sarah Huckabee Sanders said in a statement. Requesting additional time from the IRS is common, particularly for individuals with lots of business holdings.
Republicans, including Trump and House Ways and Means Committee Chairman Kevin Brady (R-Texas), have talked about a second phase of tax cuts this year, which could make the individual cuts permanent and lower capital gains rates. The House will hold a vote this year to make individual tax cuts permanent, according to House Speaker Paul D. Ryan (R-Wis.), even though the effort is unlikely to become law during this Congress.
“Tax certainty is very important for keeping this good economic news going, so obviously we believe that’s necessary for economic growth,” Ryan told reporters. “We fully intend to make these things permanent, and that’s something we’ll be acting on this year.”
Toomey said it’s unlikely there will be a big tax bill this year but that Democrats continuing to bash the bill could help the GOP. A tax bill would likely require 60 votes in the Senate, which would mean at least nine Democrats would need to vote for the legislation.
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