After Democrats won the House in Tuesday’s elections, House Ways and Means Democrats are preparing for a series of hearings on the 2017 tax law early next year.
Rep. Richard Neal (D-MA), likely to be the next chairman of the Ways and Means Committee, wants changes to the GOP’s Tax Cuts and Jobs Act (TCJA) focused on a possible increase in the corporate tax rate and greater tax relief for the middle class. Last year’s tax law cut the corporate tax rate to 21 percent and lowered the top marginal rate for individuals to 37 percent. House Democrats have attacked the tax law as benefitting primarily corporations and high earners, with many of the individual tax breaks in the law set to expire in a few years unless Congress acts.
Neal and other Democratic tax-writers want to act quickly on tax changes once the new Congress is seated in January, partly to help set Democrats’ tax agenda for the next two years and to help set messaging for the 2020 elections.
Neal is also likely to pursue repeal of the $10,000 cap on state and local tax deductions in the GOP tax law. The SALT cap, which under the TCJA is set to expire in 2025, has raised an outcry in certain high-tax states like California, New York and New Jersey.
There is also speculation that Neal could use his chairman’s gavel to issue a subpoena for President Trump’s tax returns, a prospect that President Trump bristled at in a news conference this week.
“They can play that game, but we can play it better because we have a thing called the United States Senate,” Trump said. “They can look at us, then we can look at them and it’ll go back and forth. And it’ll probably be very good for me politically because I think I’m better at that game than they are, actually.”
Trump warned Democrats not to push him into a “warlike posture,” while expressing hope that he can work with House Democrats on issues like infrastructure.
Trump also suggested he could be open to “some adjustment” in the corporate tax rate to achieve more middle-class relief.
On the other side of the Capitol, where Republicans were able to increase their majority slightly in the Nov. 6 elections, the Senate Finance Committee will be in line for new leadership once Chairman Orrin Hatch (R-UT) retires at the end of the session. While he has not announced a final decision, it’s widely speculated that Sen. Chuck Grassley (R-IA) will head the committee again next year. Grassley chaired the Finance Committee in 2001 and from 2003-2006, and has two years left under Senate rules to chair the committee again.