Warren previews next year’s tax debate: Which side are you on?

Incoming Senate Banking Committee Ranking Member Sen. Elizabeth Warren, D-Mass., previewed her position on next year’s tax policy debate Wednesday during a subcommittee hearing in which she called the 2017 Tax Cuts and Jobs Act a “scam of giant proportions” and warned a “sequel” would be even worse.

The Committee on Banking, Housing and Urban Affairs subcommittee on Economic Policy hearing marked one of the Democrats’ last hearings before Republicans take over Congress next year. The focus was the “failed promise” of the first TCJA, which was President-elect Donald’s Trump’s signature legislation in his first term, and the cost of plans to extend it next year.

“The tax fight is starting now,” said Warren, and “every person in the Senate needs to show the American people what side we stand on. Will we sign our names to more giveaways to President-elect Trump’s billionaire buddies, or will we fight for tax fairness for the American people?”

The Republican plan to extend or make permanent expiring TCJA provisions would cost an estimated $4.5 trillion from 2025 to 2034, Warren said, citing the Congressional Budget Office and Joint Committee on Taxation. “And that is before Trump added in a few trillion more in goodies,” she said. If the GOP extends the provisions or makes them permanent, as Trump proposed on the campaign trail, “hard-working Americans will foot the bill for tax cuts for Trump’s wealthy donors,” Warren warned.

The municipal bond market is closely tracking next year’s tax debate amid worries that Republicans will seek to trim or even eliminate the tax-exemption on municipal bonds to cover the cost of the TCJA extension.

GOP leaders have said Congress plans to act as soon as January on a budget reconciliation bill, which requires only a simple majority vote and can’t be blocked by filibuster, to extend the TCJA. House Majority Leader Rep. Steve Scalise, R-La., said Monday the Republicans have “laid out a very aggressive first 100-day agenda.”

Warren will become the top Democrat on the powerful banking panel after current chair Ohio Sen. Sherrod Brown lost his reelection bid. The position will give the Massachusetts senator a bigger stage in her role as one of Trump’s most vocal critics.

The size of the deficit will likely be a starting point for the TCJA debate. The reconciliation process, which was used to pass the first TCJA, does not allow changes that increase the deficit outside of the budget window.

The Tax Foundation estimates the cost of extending the TCJA provisions at about $4.25 trillion. The price tag drops to $3.59 trillion if calculated with dynamic scoring, which includes economic growth effects, as some Republicans want to use.

Warren noted that incoming Senate Finance Committee Chair Sen. Mike Crapo, R-Idaho, has floated a proposal that would allow the GOP to avoid having to offset revenue lost by extending the TCJA, a proposal she called “magic math.

“He’s running around Capitol Hill saying that Congress shouldn’t pay for a single cent of the $5 trillion in the Trump tax cut extensions because that’s just extending current policy,” she said.

Sen. George Helmy, D-N.J., tossed into the discussion his opposition to the state and local tax deduction cap, which was enacted in the first TCJA and is set to expire next December.

“As this committee considers these important issues, I would hope that the SALT tax cap goes away,” Helmy said.