Sen. Elizabeth Warren (D-Mass.) urged her fellow Democrats not to compromise with Republicans in fighting for tax increases for billionaires and corporations as Congress is set to reexamine tax policy next year upon the expiration of Trump-era tax cuts.
Ms. Warren said in a speech before the Washington Center for Equitable Growth on June 17 that progressive taxation is necessary to help fund social programs and improve the nation’s fiscal position.
“The 2025 tax fight will create a huge opportunity to break with decades of tax-cutting political orthodoxy and reshape the tax code to reflect our nation’s values by raising taxes on the wealthy,” she said in prepared remarks.
The senator says that begins by allowing the Trump-era Tax Cuts and Jobs Act (TCJA) to expire in 2025. Instead, lawmakers must double down on taxing the wealthy to dedicate funding for universal child care, education, and infrastructure, she said.
“Our tax code is now caught in a doom loop,” Ms. Warren said.
“After Biden won and a deadly pandemic rattled our economy to its core, Biden and Democrats actually delivered. We passed tax policies that broke with decades of bad economic and political orthodoxy, and in doing so, we helped fuel the best economic recovery on the planet.”
While touting the Democrats’ tax policy achievements, Ms. Warren criticized the party’s history of making concessions.
“In the past, we eagerly cut deals with Republicans and gave a teeny, tiny tax cut to middle-class Americans, and then another big, fat tax cut to those at the top,” the senator said.
“And too many Democrats have demonstrated just how eager we are to compromise.”
Talking Taxes Ahead of 2024 Election
Seeking reelection, the senator from Massachusetts has focused on tax policy heading into the November elections.In a weekend thread posted on the social media platform X, Ms. Warren criticized the TCJA and former President Donald Trump’s 2024 election tax proposals.
“Now, he’s proposing another giant tax cut—$48 billion per year to just the Fortune 100, which raked in $1.1 trillion in profits last year,” she wrote, listing big banks, oil and gas companies, and pharmaceutical giants as some of the beneficiaries of the presumptive Republican nominee’s tax framework.
“American families are already being squeezed by the price gouging and junk fees of giant corporations—they shouldn’t have to subsidize another giant corporate tax break, too.”
An estimated $3.4 trillion in individual income and estate tax cuts are set to expire at the end of 2025.
President Joe Biden has promised to allow his predecessor’s landmark legislation to expire.
“Donald Trump was very proud of his $2 trillion tax cut that overwhelmingly benefited the wealthy and biggest corporations and exploded the federal debt,” President Biden said in an April X post. “That tax cut is going to expire. If I’m reelected, it’s going to stay expired.”
The $2 trillion figure alludes to the projected 10-year cost.
In recent months, the president has endorsed raising the corporate tax rate from 21 percent to 28 percent, increasing the capital gains tax, and implementing a tax on unrealized capital gains.
Sen. Sheldon Whitehouse (D-R.I.), chairman of the Senate Budget Committee, argued that the tax cuts have primarily benefited large corporations and affluent Americans.
“Republicans are awfully eager to shield their megadonors from paying taxes,” Mr. Whitehouse said in a statement.
At a May rally, former President Trump promised tax cuts for people of all incomes.
“Instead of a Biden tax hike, I’ll give you a Trump middle-class, upper-class, lower-class, business-class big tax cut,” he told a New Jersey crowd. ”You’re going to have the biggest tax cut.”
According to a new report by the Congressional Budget Office (CBO), a nonpartisan budget watchdog, researchers are forecasting that extending the Trump-era tax cuts would contribute a net $3.3 trillion to the federal deficits over the next decade.
“Most of the effects would occur after 2026,” the CBO noted.
The House Budget Committee has pushed back against the CBO’s projections, asserting that “its track record in predicting the economic and fiscal outcome of the 2017 Trump tax cuts is poor to say the least.”
In 2018, the CBO projected that tax revenues would fall by $1.1 trillion between 2018 and 2027. However, the latest CBO numbers show that revenues will be nearly $600 billion higher for the same span after adjusting for inflation.
Rep. Jodey Arrington (R-Texas), the House Budget Committee chief, said that the former president’s tax cuts allowed revenues to exceed forecasts, bolstered economic growth, and lifted the top 1 percent’s federal taxes.
“Beyond what the Trump tax cuts did for economic growth and federal revenues, it provided major benefits to working families,” he said.
Others have criticized the tax policy’s price tag.
The Committee for a Responsible Federal Budget, for example, says public policymakers face a possible $4 trillion cost if it is extended.
“Adding these tax cuts to the national credit card will dramatically worsen an already dismal fiscal picture, putting the debt on a rapid upward trajectory,” the organization stated last month. “Policymakers should not extend these tax cuts without offsets, and should instead use the upcoming expiration as an opportunity to enact thoughtful deficit-reducing tax reform.”
Since the implementation of the Trump tax cuts, federal revenues have surged by more than 33 percent, to $4.44 trillion. Spending has climbed by 49 percent in the same span.
