Typically, a bill like the one Senator Chris Van Hollen, a Maryland Democrat, introduced last month would not make much of a splash.
It was, after all, a tax proposal that is not going anywhere while President Trump remains in office, the type of idea that is often only greeted by self-congratulatory news releases. But Mr. Van Hollen’s legislation went viral, at least by the perhaps modest standards of Washington tax developments.
The bill was the subject of extensive news coverage even before it was formally introduced, and lawmakers from the party’s moderate and progressive wings, including Senator Bernie Sanders, a Vermont independent, endorsed it. Democratic policy experts, meanwhile, unleashed such intense and insistent criticism of Mr. Van Hollen’s plan that some of them only half-joked that the party was in the midst of a “wonk revolt.”
The reason for the attention, ire and, admittedly, articles like this one was that Mr. Van Hollen was proposing a broad tax cut. His bill would exempt many working-class Americans from paying any federal income tax, while cutting taxes for individuals making up to $80,500 and married couples earning up to $161,000. Mr. Van Hollen would cover the $1.6 trillion cost of these cuts by raising taxes on people making more than $1 million a year.
And he’s not alone: Other Democrats — including Senator Cory Booker of New Jersey and candidates in races across the country — have put forward their own plans for wide-ranging tax cuts.
“The fundamental idea is if you’re working paycheck to paycheck and earning enough just to make ends meet, you should be able to keep more of what you earn,” Mr. Van Hollen said in an interview.
To the party’s caste of economists, tax lawyers and think tank analysts, substantially raising taxes on millionaires is all well and good. Their main problem is with dedicating that potential revenue to another round of tax cuts, rather than reversing Mr. Trump’s cuts to programs like food stamps or Medicaid — or otherwise expanding the social safety net. Tax cuts like Mr. Van Hollen’s also don’t offer much to Americans who are too poor to owe any income tax in the first place.
“It leaves out the people who struggle the most with affordability, which is low income families who frequently don’t get a dollar of benefit from these proposals,” said Brendan Duke, a senior director at the Center on Budget and Policy Priorities, a liberal think tank. “Second, it raises the question of what else is left on the agenda.”
The debate is shaping up to be an early exhibition match in the Democratic struggle over what economic agenda the party should adopt on its quest to reclaim power in Washington. At its root are disagreements about the power of federal programs to improve people’s lives, the relevance of policy ideas in winning elections and whether America can afford to have both of its major political parties committed to cutting taxes as the federal debt bulges.
Many Democrats are still stung by their loss in 2024, when President Biden’s economic agenda did little to win over voters. Much of that agenda was focused on rebuilding infrastructure and building new factories, supply-side changes that did not have immediate, broad-based effects.
Mr. Van Hollen’s proposal is an attempt to come up with a more tactile, fast-acting policy program that could speak to voters’ concerns about affordability by returning money to them over the course of a single tax season.
“The status quo left lost and is going to continue to lose until they climb down from the ivory tower and come up with real solutions,” said Erica Payne, the president of Patriotic Millionaires, an activist group made up of liberal multimillionaires that helped craft Mr. Van Hollen’s bill. “There’s an efficiency to the tax cut that does not exist in any government program, however laudable.”
The party’s established policy experts, many of them alumni of the Biden administration, still believe that public policies aimed at expanding access to health care, for example, would be a more meaningful way to address costs. They don’t want Democratic elected officials to heed the siren song of tax cuts.
“It starts to reinforce this idea that taxes, rather than being a thing that we all have to pay in order to support the kind of society that we want, are a punitive tool from the government,” said Lindsay Owens, the executive director of the Groundwork Collaborative, a progressive group.
That doesn’t worry Mr. Van Hollen.
“As we go into the next presidential cycle in 2028, we need to very clearly have a platform that focuses on changing our tax system, which is currently rigged to favor people who make money off of money and penalize people who earn money off of hard work,” he said. “I think this needs to be a major issue.”
A Response to ‘No Tax on Tips’
Mr. Van Hollen has been interested in crafting a broad tax plan for years. But it was when he went to get his hair cut last year, after Republicans had passed their broad tax cut, that the need for Democrats to come up with new ideas hit home.
In Mr. Van Hollen’s telling, the women working at the barbershop were calculating how much they would save from Mr. Trump’s campaign promise to not tax tips.
“I mean that was a very good example of how a tax cut delivered a benefit to someone who was working paycheck to paycheck,” Mr. Van Hollen said. “It did reinforce the idea that I’d already been kicking around, which is that Democrats should have an alternative that does help people like the barber.”
Mr. Trump’s seemingly off-handed idea for “no tax on tips” has tied Democrats in knots ever since he first proposed it on the campaign trail in 2024. It polls well, Kamala Harris endorsed the idea once she became the Democratic nominee and many Democrats on Capitol Hill have supported the concept.
But the law Republicans actually passed does not fully exempt tips from taxes the way Mr. Trump advertised. Instead, it created a temporary income tax deduction for tips, though tips are still subject to payroll taxes. His other popular tax proposals from the campaign trail, including “no tax on overtime” and “no tax on Social Security,” were similarly diluted when they went through Congress.
And those tax cuts, while popular on their own, have not necessarily done much to support Mr. Trump’s political standing. Even as Americans have seen larger tax refunds this year because of those policies, Mr. Trump’s approval rating overall remains underwater.
Political scientists are skeptical of the ability of tax cuts to shape voters’ attitudes. That has led some critics of Mr. Van Hollen’s plan to argue that Democrats should focus on copying the catchy branding at the heart of “no tax on tips,” rather than its policy substance.
“It doesn’t achieve the strategic end that politicians expect it to,” Vanessa Williamson, a senior fellow at the Brookings Institution, said of tax cuts. “Democrats never retake the tax issue, and Republicans never stop demanding more tax cuts.”
Then there is the budget. Even before Mr. Van Hollen and other Democrats released their tax cut ideas this year, some of the party’s policy hands had started to game out the fiscal situation they could face if they controlled Washington in 2029.
What they found concerned them: Just reversing many of the Trump policies that Democrats widely oppose, including his tariffs, would cost hundreds of billions a year. Lots of tax revenue would be needed to merely return the country to the Biden-era status quo. Much more would be necessary to pay for any other programs Democrats wanted to pursue, never mind further reducing the deficit.
“It will be really limiting,” said David Kamin, a former economic aide in the Biden White House.
Democrats are split on the extent to which the debt is an economic problem; while moderates worry, progressives are more sanguine. But among the policy experts, there is an agreement that the debt is a political reality. Winning the support of the party’s moderate members for an ambitious agenda would, as it did under Mr. Biden, probably require limiting its cost.
So the self-described wonks would rather save the revenue from Mr. Van Hollen’s proposal to raise taxes on earnings over $1 million to pay for something besides a tax cut. Mr. Van Hollen said that was a failure of imagination.
“I reject the premise that Democrats should just think small,” he said, pointing to several other ways that the party could raise taxes to pay for other priorities.
Among them is a wealth tax, an idea that lawmakers like Mr. Sanders continue to push for, including through a California ballot initiative to tax billionaires. Many Democrats support changing how the assets of the ultrawealthy are taxed, though doing so would still face political and potential legal obstacles.
And even if the party were to gain consensus on significantly raising taxes on the wealthiest Americans, some Democratic policy experts would still prefer to keep other Americans eligible for tax increases. Mr. Biden pledged not to raise taxes on Americans making less than $400,000, echoing a similar promise from President Barack Obama.
People like Mike Konczal, another former economic aide in the Biden White House, fear that previous pledges to not increase taxes on most Americans will morph into a commitment to cutting them.
“At each moment that’s a rational decision considering political constraints,” said Mr. Konczal, a senior director at the Economic Security Project, a liberal nonprofit. “Overall, it locks Democrats in and keeps locking them in further from being able to fund a government that can do all of the things that need to be done.”
“Democrats cannot outcompete the Republicans on tax cuts,” he added.
Andrew Duehren covers tax policy for The Times from Washington.
The post Are Democrats Becoming a Party of Tax Cuts? appeared first on New York Times.
