Remember 2017? It’s the Origin of A Big Tax Fight Starting Right Now

That’s when Republicans rushed through, and Trump signed into law, a bill that was a bow-tied gift to the rich and corporations.

By William Rice

Given everything that’s happened in the intervening seven years – Covid, Jan. 6, AI, Taylor Swift’s ascendance – 2017 seems a million miles away. But in the tax world, 2017 is a vital year to remember, because that’s when Republicans rushed through, and Donald Trump signed into law, a massive tax-cut bill that was a bow-tied gift to the ultra-rich and big corporations. The Trump tax cuts not only lined the pockets of the richest, it added nearly $2 trillion to the national debt and set up a political and legislative battle that we’re about to enter into, again, over what kind of country we want to be. 

When Trump took office in 2017, Republicans were handed a rare gift: a trifecta of a Republican controlled House, Senate and Presidency. This meant that they had a smooth path to push through whatever legislation they believed was most important for the country and they rushed to take advantage of it. With all of their power what did they do? They passed exactly one major bill:the Tax Cuts and Jobs Act (TCJA), better known as the Trump-GOP tax law. 

Their tax law cut corporate taxes to staggeringly low levels. Even though Corporate America was rolling in profits and the share of federal revenue coming from corporations had been falling for decades, Republicans were intent on reducing even further how much some of the wealthiest firms in the world had to contribute to the nation that helped make their success possible. 

But even Republicans—who back then were generally close allies with huge corporations —knew how unpopular mega firms were with the voting public and therefore how well a big tax cut just for them would go over. (The reaction would be even worse if those voters were aware that it’s rich people who own almost all corporate stock and therefore individually benefit from these corporate tax cuts.) 

So in order to obfuscate the major elements of the bill, the GOP added some provisions for individuals and non-corporate businesses to their tax bill. The biggest difference between the corporate tax cuts and the cuts for rich individuals is that the corporate cuts were made permanent and the others temporary, so they would expire. 

Why enact a tax cut with a pull date? It was necessary to conform to Congressional budget rules. You aren’t supposed to add too much to the deficit beyond a certain date, so by making some costly provisions temporary the GOP tax law appeared to fit within the limit.  However, no one promoting the law wanted or expected those cuts to actually go away: they assumed they would be extended—they hoped, permanently—before expiration.

Well, despite some Republican efforts over the intervening years, those expiring provisions haven’t yet been extended. Expiration dates differ, but the biggest die-off date—when the most tax cuts are scheduled to disappear—is December 31, 2025, now less than two years away.  

Two years may seem like a long time, but not when it comes to a fight over trillions of dollars in tax revenue. And especially not when there’s an intervening national election that will almost certainly include the proud signer of that original tax giveaway—Donald Trump—running to regain his office. 

That’s why we need to engage in this fight now, not when it’s too late. 

Let’s look at what’s hiding in the Trump tax cuts and why those provisions exclusively benefiting the rich and big companies should be allowed to expire on schedule. 

Among them is a double cut in how much the highest-income Americans—folks making over roughly half a million dollars this year—pay on the top part of their income. The Trump law both reduced the rate and raised the threshold over which you had to pay it. These high-earners were doing fine under the old rules. The new rules–which have contributed to the further widening of the nation’s destabilizing wealth gap–should be allowed to expire.  massive gap between the richest and the poorest continues to be widened by these Trump-era giveaways.

Another part of the law makes it easier for rich people to reduce their exposure to the Alternative Minimum Tax (AMT). The AMT was created to keep the wealthy from exploiting so many loopholes and special breaks that, despite high incomes, they pay little or nothing in federal taxes. The Trump law allows couples making over a million dollars a year to shield some of that income from the AMT. That’s an expensive shield they don’t need. 

You’ll undoubtedly hear during the coming debate Republicans claiming they’re trying to preserve a tax cut for “small business.” Don’t believe it. The provision they’re talking about—the pass-through loophole—is actually a giveaway to Wall Street law firms, hedge funds, land developers and other businesses that are very big but just not the kind of corporation that pays corporate taxes. (Instead, profits and losses are “passed through” to the business owners who pay any tax due on their personal returns at individual rates.) Those bigger businesses don’t need more advantages over real small businesses and should lose this handout. 

Thanks to the Trump tax law, the pampered offspring of moneyed privilege can inherit roughly $27 million this year without paying a penny of estate tax. The year before the Trump law came into effect, 5,500 of the country’s wealthiest families paid the estate tax. The year after, the number fell below 2,000 and stayed there. That means estates worth tens of millions of dollars are passing between generations tax free.  The exemption amount should be allowed to revert to around $14 million, which is still a nice amount to pocket before you have to start paying some tax on your good fortune to fund services for all those kids who weren’t born so lucky. 

That’s the fairness argument for allowing tax cuts for the wealthy to expire. Then there is economics. Extending all the tax cuts would cost $3.5 trillion over 10 years. How would we pay for it? According to Republican doctrine, in one (or some combination) of three bad ways: higher taxes on working families; massive cuts to public services that families rely on; or greater national debt. 

Let’s reject all three. Let’s instead allow the Trump tax cuts for the wealthiest Americans and largest businesses to expire on schedule—and on top of that, pursue real tax reform that ensures the rich and corporations pay closer to their fair share. Those reforms include special taxes on billionaires and Wall Street speculators and a vigorous crackdown on wealthy tax cheats. 

Then we can let our memories of the Trump tax law slowly fade, just like our recollections of Starbucks Unicorn Frappuccinos and other unfortunate fads of 2017.