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Democrats face early division over rules for tax hikes

House Minority Leader Rep. Nancy Pelosi (D-Calif.) leaves after a weekly news conference Nov. 15.
House Minority Leader Rep. Nancy Pelosi (D-Calif.) leaves after a weekly news conference Nov. 15. (Alex Wong/Getty Images)

As one of their first acts in the majority, Democrats hope to undo a Republican rule that makes it difficult for the House to vote to raise anyone’s taxes. But the solution Democratic leaders are advancing has already hit opposition from some liberal lawmakers and groups — potentially foreshadowing battles to come as the new House Democratic majority tries to settle on an economic agenda.

The GOP rule requires a three-fifths supermajority vote in the House to approve any income tax increase. Democratic leaders would replace it with a rule requiring a supermajority vote to approve tax increases for most taxpayers — but only a simple majority vote to raise taxes for the wealthiest 20 percent or for corporations.

The solution was proposed in a package of rules changes advanced by Minority Leader Nancy Pelosi (D-Calif.) and other leaders, and presented to House Democrats earlier this week. Democratic leaders are soliciting input from rank-and-file lawmakers and newly elected members, and the package could change before the full House votes on it in January.

“Right now, the House is governed by a Republican rule rigged to permanently lock in the massive tax giveaways the GOP has handed the wealthiest 1 percent and big corporations,” Henry Connelly, a Pelosi spokesman, said in a statement Friday.

“The proposal would rewrite that rule to end the supermajority protection for the GOP’s tax giveaways for the wealthiest, while affirming Democrats’ commitment to protect hard-working Americans,” the statement said.

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The richest fifth of taxpayers are those who make more than $108,000 annually, said Steve Wamhoff, director of federal tax policy at the Institute on Taxation and Economic Policy.

Some liberal Democrats said that if the party limits its own ability to raise taxes, it could make it harder for the House to adopt policies that could require tax increases, including a Medicare-for-all health program or a plan for tuition-free state colleges and universities.

Those proposals are likely to be blocked by GOP control of the Senate, but some Democrats on the left hope to advance them through the House to signal their intentions to voters.

“This majority was given a mandate from the voters, and we’ve seen these policies skyrocket in support across the country,” said Corbin Trent, spokesman for Rep.-elect Alexandria Ocasio-Cortez (D-N.Y.). “We don’t think there should be any roadblocks blocking that vision for the Democratic Party.”

MoveOn criticized the proposal on Twitter on Friday as “a staggeringly bad idea,” while Kenneth Zinn, political director of National Nurses United, said it was “incredibly shortsighted.”

“The House of Representatives does not need new rules that make it harder to address the health-care crisis, the crisis of income and wealth inequality and the other issues negatively impacting working people in this country,” Zinn said.

The tax rule change sparked some consternation when it was presented to the Democratic Caucus this week, said Rep. Gerald E. Connolly (D-Va.).

“A number of Democrats raised concerns about, ‘Do we really want to go down that road,’ ” Connolly said in an interview Friday. “That’s kind of a Republican argument, that you need supermajorities to do all kinds of things, and that kind of shackles us. And that seems antithetical to where we Democrats have historically been on that kind of thing. So I would say that provision in the rules is one that probably will be revisited.”

The debate comes as Democrats focus on who will be House speaker in the next Congress, with Pelosi facing opposition from a small group of incumbent and newly elected lawmakers calling for change atop a Democratic caucus that’s been led by the same trio of aging lawmakers for years.

And both issues are intertwined, with larger debates about the identity of the Democratic Party in the age of Trump. House Democrats will have to decide how aggressively to challenge President Trump, and whether the bold progressive ideas favored by liberal voters can also please moderate middle-class voters in states Trump won.

Some liberal Democrats initially pushed to get rid of the entire GOP rule on taxes, according to one House Democratic aide who spoke on the condition of anonymity to disclose confidential caucus deliberations. But there was concern about the optics of Democrats casting one of their first votes in the new Congress in favor of making it easier to raise taxes on everyone.

The solution that emerged was the one presented to lawmakers this week: keeping the supermajority threshold in place for most taxpayers, but lifting it for the wealthiest.

House Democratic aides noted that the rule should not preclude House Democrats from advancing policies they favor, because it could always be waived by the House Rules Committee.

Republicans last year signed into law a tax package that dramatically cut rates for corporations. The law also reduced taxes for most Americans, but nonpartisan analyses say the cuts were overwhelmingly concentrated among the wealthy.

Democrats have not settled on a strategy for revising the GOP tax law, though many have called it a giveaway to the rich and called for parts of it to be repealed or pared back.

Deficit hawks also voiced concerns about the Democrats’ proposed internal tax rule, worrying it would make it harder for Democrats to reduce the deficit. The plan could make it harder for Democrats to repeal tax benefits that primarily benefit the rich but still benefit some members of the upper-middle class, said Marc Goldwein, senior vice president of the Committee for a Responsible Federal Budget, which advocates for lower federal deficits.

“This is a bad idea: It will limit our ability to raise the revenue necessary to fund government,” Goldwein said. “And even if it can be waived, it creates more political pressure against reform, because opponents will say, ‘They waived the rule to raise taxes on the middle class.’”

A handful of other left-of-center political organizations came out against the proposal, including Social Security Works, which supports Medicare-for-all, and the Institute for Taxation and Economic Policy, a left-leaning think tank specializing in tax policy.

“Democrats are not being serious about governing this country with real solutions to our country’s crises if they are going to mirror Republican talking points demonizing taxes and revenue,” said Waleed Shahid, spokesman for Justice Democrats, an insurgent left-wing political organization.

Rep. Ro Khanna (D-Calif.), like Ocasio-Cortez a member of the Progressive Caucus, called the proposal “bad policy.”