LOOKING AHEAD: A trio of Democratic tax writers — Sen. Michael Bennet of Colorado and Reps. Lloyd Doggett of Texas and Gwen Moore of Wisconsin — are scheduled to appear at the Fair Share America launch on Wednesday, and the coalition also expects activists from around the country to attend. The organizations involved with the initiative include progressive policy groups in D.C., like the Center on Budget and Policy Priorities and the Institute on Taxation and Economic Policy, unions like the Service Employees International Union and the National Education Association, and dozens of state-based policy advocates. With such a wide membership, the coalition is focusing on several broad goals for the big 2025 tax debate, including raising the corporate rate and finding new revenues in general to help pay for further social spending and benefits. As part of that, Fair Share America wants high-income households to pay more as well, and is prodding Congress to ensure that expiring provisions aren’t extended for those making over $400,000 a year. Those were very purposeful choices, according to the coalition’s leaders — to focus on how progressives want to raise revenues, an area where there is much common ground within the left, versus the more complicated topic of how to spend those gains. “Taxes are the connective tissue between all we care about. If you care about health care, if you care about education, the care economy, all of that’s bound together by the need to grow revenue,” said Kristen Crowell, the executive director of Fair Share America, who led a grassroots effort in 2022 to install a new surcharge on top earners in Massachusetts. The coalition’s goals also underscore that the 21 percent corporate rate, which Republicans made permanent in TCJA, still looks likely to be a central topic in next year’s tax debate. Lots of Democrats have proposed hiking the rate back up to 28 percent, including their presidential standard bearer, Vice President Kamala Harris, along with keeping some of the other corporate revenue-raisers included in the tax law — while some Republicans have stopped short of fully ruling out a rate increase. Meanwhile, corporate lobbyists have also made it clear that protecting the existing rate will be a top priority next year. WHAT DOES SUCCESS LOOK LIKE? One of the key ways that the coalition is looking to reach its goals, Crowell said, is to try and make sure that any tax deal next year is struck more in the open — in other words, no late December (or early January) agreement reached by a couple key players behind closed doors, as then-Vice President Joe Biden and Senate Minority Leader Mitch McConnell did with the 2012 fiscal cliff. As you might recall, lots of progressives didn’t like that deal, which essentially locked in the vast, vast majority of the Bush-era tax cuts. Crowell said the approach this time around would be to train state-level advocates, who would then try to gin up more grassroots energy back home for tax hikes on the rich and corporations. The group will also be a constant presence on the Hill, she said, while also acknowledging they probably can’t match the traditional lobbying prowess of the other side. “If we do our job well over the next 15 months, what we will see and feel will be very different than what it’s been in the past,” Crowell said. “And that means people around the country knowing what’s happening, having input. We want elected officials hearing directly from their constituents on this.” PROPOSALS JUST KEEP COMING: Former President Donald Trump first rolled out his “no tax on tips” idea three months ago, and independent scorekeepers are still trying to totally wrap their heads around it. And with good reason, given that Harris herself followed Trump in backing the idea in August. Yale’s Budget Lab took a deeper dive into exempting tipped income from taxes, in a new report out today, examining who might benefit, how such a tax cut might be designed and the overall potential cost. The group found that eliminating the income tax for tips would cost just north of $100 billion over a decade. Add in a payroll tax exemption, and the cost nears $200 billion. But if scrapping the income tax on tips is limited to just those in the hospitality industry, as Harris has floated? That’s more like $60 billion, according to the Budget Lab. (Harris’ camp has also suggested that she would put income limits on who could claim a tip tax cut.) Even so, the group stressed those were static projections — in other words, they don’t take into account any potential behavioral changes that might be spurred by enacting a special tax exemption for tipped income. And those behavioral effects might be massive, to the point that the Budget Lab declined to try to put an actual number on the cost of a tip exemption after taking account for them. (The group noted that there’s no real precedent for this kind of tax cut, and that “tipping is hard to model as a purely economic phenomenon.”) Plus, one more interesting finding: Not even 3 percent of families would benefit from an income tax deduction on tips — and while the average tax cut for those who do would be $1,700 a year, the lowest-income tipped workers would only gain about $200. Semi-related note: "Trump’s no tax on overtime idea could be staggeringly expensive," via Pro Tax's Benjamin Guggenheim.
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