Republicans Full Speed Ahead On Tax Reform, Election Consequences Be Damned

WASHINGTON Despite a growing sense that a Democratic wave could be coming in 2018, House Republicans showed little sign of letting up on their tax proposal Wednesday, with a bill set to move out of committee on a party-line vote Thursday and onto the floor as early as next week.

The way Republicans have gone about drafting their legislation so far, with closed-door GOP-only negotiations producing sudden wholesale changes, suggests that nothing will stop them from pushing this bill through the House. GOP leaders look ready to discard any provision or make any deal to get the votes they need.

The House Ways and Means Committee, which oversees tax legislation, plans to advance a revised version of the measure after adopting an amendment that would, among other things, cut a tax on multinational corporations and clamp down on some low-income workers claiming a tax credit.

Even before committee members began consideration of the bill which was just the day after it was introduced  the author of the legislation, Ways and Means Chairman Kevin Brady (R-Texas), had changed how soon income brackets would move from a standard adjustment for inflation to one that rises more slowly. Using a slower inflation measure raises more money for the government (in this case, an additional $128 billion over 10 years) as people are pushed into higher brackets.

The House bill still pays for significant cuts to the corporate tax rate and some reductions to individual income taxes in part by eliminating sundry personal exemptions and slashing the state and local tax deduction, which allows taxpayers to write off their local taxes. But GOP leaders have cut a deal to allow people to write off the first $10,000 of their state and local taxes.

The latter would go a long way toward making sure voters in high-tax blue states like New York, New Jersey and California don’t see a big increase in their tax bills. Still, some Republicans don’t think the deal is good enough.

Rep. Peter King (R-N.Y.) has been leading the opposition to the elimination of the state and local tax deduction. Even with the changes, King knows that his Long Island district would be among those financing a tax cut for the rest of the nation.

“It’s great to get something done,” King said of tax reform on Wednesday, “but not if it’s something that’s going to hurt you. And not just politically, it would hurt us governmentally.”

After Democrats beat Republicans soundly in off-year elections on Tuesday, congressional Democrats thought their colleagues might hesitate  to push through a partisan tax reform bill, especially one that could raise taxes in places with vulnerable Republican lawmakers.

“If you think the results [in Tuesday’s elections] were terrible for you, wait till you pass a bill that raises taxes on middle-class families in your district,” Senate Minority Leader Chuck Schumer (D-N.Y.) told reporters on Wednesday.

But instead of thinking twice, GOP lawmakers may be even more intent on passing a measure now. Republicans may want something big they can to point to next year, rather than just running on unfulfilled promises or the culture war tactics that failed on Tuesday.

At the very least, the election results seem to be confirming to Republicans what they already thought of the tax bill.

For Rep. Chris Collins (R-N.Y.), the first member of Congress to endorse Donald Trump for president and a staunch supporter of tax reform, Republicans have no choice but to pass their tax proposal. “The pressure is so intense, I don’t think you could put more pressure on us,” Collins said.

But for King, his New York colleague, the poor GOP showing on Tuesday is evidence that Republicans can’t afford to put vulnerable members in a position where they raise taxes on some of their own constituents.

“If you get a tax cut which is going to raise taxes on your constituents, it makes no sense,” King told HuffPost on Wednesday.

King has been whipping up opposition among other Republicans whose districts, like his, benefit significantly from the state and local tax write-off. He has more than a half-dozen Republicans with him from New York and New Jersey, although he’s had little luck getting California Republicans to speak against the tax bill.

“Must be something in the water,” King said of his Pacific coast colleagues.

Rep. Darrell Issa (R-Calif.) has come out against the tax bill, citing concerns over the state and local tax deduction among other issues. But most of the other California Republicans have shown a remarkable willingness to go along with their leadership’s plans, even if it means tax increases on some of their constituents.

It’s true that not all congressional districts in the Golden State are affected to the same degree. Yet their GOP representatives seem to be grading the tax bill more gently than some other Republican lawmakers, with all California Republicans voting twice for budgets that set up consideration of the tax legislation even when New York and New Jersey Republicans voted no.

After a state delegation meeting on Tuesday, Rep. David Valadao (R-Calif.) said the reaction from his GOP colleagues was, “for the most part,” pretty positive although he did caution that it was hard to get read on everyone without asking directly.

Valadao reported that he was “leaning positively” on the bill. When HuffPost asked whether it was fair that taxpayers from some states would see bigger tax cuts than those from other states, he suggested his standard was whether his constituents would benefit on average.

“The way I’ve always looked at tax policy is how it affects the average constituent and how it affects job growth and the ability for a business to be successful,” he said.

Valadao is right that his district wouldn’t be as adversely affected as others in California, but Republicans from other high-tax states are less persuaded by this argument. They fear a trickle-down effect from eliminating the state and local tax deduction.

On Wednesday, Rep. John Faso (R-N.Y.) made the point to reporters that, even though his own district wouldn’t be affected that much by the deduction’s loss, getting rid of that write-off could drive extremely wealthy people out of the state and thus cause New York to suffer lost business and lost tax collection.

House Democrats seem to be taking that same bigger-picture approach to the state and local deduction question, with many wondering why their Republican counterparts don’t see it the same way.

Rep. Jared Huffman (D-Calif.) told HuffPost that he gave some Republicans from New York and New Jersey credit for voting the interests of their state. “California Republicans have forgotten they represent California and have just been marching right off the cliff like lemmings,” he said.

Huffman also argued that Tuesday’s elections ought to be a “wake-up call” for his state GOP colleagues, particularly because there are so many competitive Republican-held districts in California. He said that if Republicans continued this “party-line nonsense against the interests of our state, I think the voters at some point are going to help them find a new job.”

The bottom line, however, is that most House Republicans seem to think they are voting for the interests of their state in supporting the tax bill. Republicans insist this is a pro-growth tax cut that will pay for itself . And there may not be enough Republicans from high-tax areas whose votes are in question to force GOP leaders to change the bill. On the last budget vote, only about a dozen Republicans voted no because of the state and local tax issue. Almost another dozen Republicans could vote no over other concerns, and leadership could still pass the bill out of the House.

While GOP leaders are sensitive to their party potentially losing seats next year, key Republicans also doubt that the poor election showing on Tuesday was a result of the House trying to eliminate a specific tax deduction.

As Rep. Mark Meadows (R-N.C.), chairman of the conservative House Freedom Caucus, told HuffPost on Wednesday, Republican losses were “not based on state and local tax issues.”

“The fact of the matter is, that wasn’t an issue in Virginia last night,” he said.