Parties' 2018 Hopes Ride on Selling -- or Maligning -- Tax Bill
To House Republicans, the legislation they unveiled Thursday is a simplification of the tax code that will benefit the bottom line of most Americans, particularly the middle class. To Democrats, the bill represents a major tax cut for the wealthy at the expense of popular provisions aimed at directly helping middle-class earners.
Many GOP lawmakers have warned that if they fail to pass a tax bill, they will anger their base and get swept out of the majority next year. But if the legislation passes, each party will face a critical test in selling their alternate versions of its impact to the public, aiming to motivate and mobilize their voters around what will likely be a central issue of next year’s elections.
“This plan is for the middle-class families in this country who deserve a break,” Speaker Paul Ryan said after his conference unveiled the bill. “It is for the families who are out there living paycheck to paycheck, who just keep getting squeezed.”
Minority Leader Nancy Pelosi, at a news conference, countered that argument: “The American people deserve real, bipartisan tax reform that puts the middle class first, growth, creating good-paying jobs and lowers the deficit. This Republican plan doesn’t do any of that. In fact, it’s a giveaway to corporations and the wealthiest.”
The legislation House Republicans released Thursday -- dubbed the Tax Cuts and Jobs Act -- is a massive overhaul of the Internal Revenue code, and contains provisions both parties think will be political winners for them at the 2018 ballot box. It slashes the corporate rate to 20 percent from 35 percent and lowers the pass-through rate for small businesses to 25 percent, both of which Republicans argue will spur economic growth. It establishes four income tax brackets, moving the lowest earners to zero percent and keeping the highest at 39.6 percent; it also doubles the standard deduction and increases the child tax credit, provisions Republicans argue will directly help middle-class taxpayers.
Democrats, on the other hand, hammered Republicans for the elimination of provisions necessary to finance those cuts, including the elimination of deductions for medical expenses and college loan debt, the capping of the popular interest payment deduction at $500,000 of mortgage debt for new homes, and the elimination of the deduction for state and local income taxes, which could force earners in high-tax states to pay more (Republicans retained a maximum $10,000 deduction for state and local property taxes).
Both sides view this fight as essential for next year. In a memo set to be released Friday and obtained by RealClearPolitics, Matt Gorman, the communications director of House Republicans’ campaign committee, labeled the overhaul the “centerpiece of our 2018 campaign plans.”
“Make no mistake: Cutting taxes for the middle class will be a political winner in 2018,” Gorman wrote. He included top-line internal polling numbers showing that Republicans have an edge over Democrats on the economy by eight percentage points, jobs by seven points, and taxes by four points.
But Democrats believe the Republican bill will be a potent weapon against GOP incumbents. The Democratic Congressional Campaign Committee released polling showing a major swing in favor of the party on taxes and government spending over the last month.
In September, according to the DCCC numbers, Republicans had a four-point edge in voter trust on tax reform, and a six-point edge on taxes and government spending. In October, those numbers reversed, with Democrats holding a six-point advantage in voter trust on tax reform and a three-point lead on taxes and government spending.
“Main Street’s loss will be Wall Street’s gain if Republicans have their way, and the American people are watching closely as House Republicans prepare to walk the plank on yet another unpopular bill that hurts the middle class,” DCCC spokesman Tyler Law said.
Democrats hope to specifically hammer vulnerable Republican members in New Jersey, New York, California and other high-tax states if they support a bill partially eliminating the state and local deduction, which could be detrimental to their constituents’ tax bills. Several Republicans in competitive districts targeted by Democrats -- New Jersey Reps. Leonard Lance and Frank LoBiondo, and New York Rep. Lee Zeldin -- all came out against the plan as written on Thursday.
The issue will also be critical to control of the Senate next year. President Trump has tried to pressure Democrats up for re-election in red states next year to support his plan, hoping to either give it some bipartisan credentials or to use it as a campaign wedge against the incumbents. No Democrats came out in support of the plan Thursday. Meanwhile, Democrats are aiming to bludgeon House members running for Senate in those states if they vote for the bill.
Public polling on the measure has been mixed at best for Republicans as they begin selling the details of their plan. In a CBS News poll earlier this week, 58 percent disapproved of how Trump was handling tax policy, and only 38 percent approved. Fifty-eight percent said the Republican Party favors the rich, and only 12 percent said it favors the middle class. Based on what they’d heard so far, more than half of Americans said the rich would benefit most from the plan, while only 13 percent said the middle class would (24 percent said all would benefit equally).
More troubling perhaps is the lack of urgency from the American public. Republicans lawmakers have labeled tax reform their top issue, but only a quarter of poll respondents called it a top priority for Congress -- just 51 percent of Republicans and 24 percent of independents.
With many Americans either skeptical or uncertain about the plan, each party’s sales job over the coming months will be crucial. In an NBC News poll, 25 percent of Americans said Trump’s tax plan was a good idea while 35 percent said it was a bad idea. Nearly four in 10 Americans had no opinion. And only 19 percent thought it would improve the economy a great deal or quite a bit, which has been a central argument of Republican lawmakers.
Republicans hope that as they hurry to pass the bill before the new year, they can convince the American public of its merits. American Action Network, a super PAC allied with Ryan and House Republicans, pledged to spend $8 million in November boosting the plan, bringing its total spending on pro-reform ads to $22 million.