If you told Republicans a month ago that when they unveiled their tax cut bill it would be widely unpopular, you probably would have gotten one of two responses. The first would have been denial — after all, don’t all Americans yearn for tax cuts? So how could they greet it with anything less than joy and gratitude? The second would have been blithe dismissal: Whether they want it or not, they’re going to get it, and they’ll thank us later when a wave of blessed prosperity rolls across the land.
But contrary to what Republicans believed and hoped, that unpopularity might — just might — pose a real threat to the bill’s survival.
Let’s start with the lay of the land as it is now:
Republican lawmakers face a skeptical public as they embark on selling a major tax overhaul plan with tepid support before its release and most Americans critical of President Trump’s tax restructuring efforts so far, a Washington Post-ABC News poll finds.
A third of Americans support Trump’s tax plan, while 50 percent oppose it, a 17-point negative margin driven by overwhelming opposition from Democrats and skepticism among political independents and people with lower incomes. The poll was conducted Sunday through Wednesday, completed before House Republican leaders released their bill Thursday.
Six in 10 say Trump’s proposals on cutting taxes favor the rich, a perception that has dogged Republican efforts in pursuing tax restructuring for months. That opinion is not fatal, as a similar share said the same about George W. Bush’s tax proposals in 2003, though his 70 percent job approval ratings provided more political capital than Trump’s standing, which is at or below 40 percent in recent polling.
The comparison with Bush’s tax cuts is revealing, for a number of reasons. Then as now, Republicans tried to convince the public that the tax cuts 1) were really about helping the middle class, despite the fact the wealthy were getting most of the money, and 2) would produce an explosion of growth in GDP, jobs, and wages that would benefit everyone. The first was a lie, and the second was proven spectacularly wrong. But at the time, the reaction of the public to those cuts was something like “Whatever,” because while they understood that the cuts were a giveaway to the wealthy, the average person wasn’t being harmed by them in any way they could see, so they weren’t going to march in the streets against them. As a result, you had a kind of passive opposition that didn’t make Republicans afraid to pass the cuts.
That’s very different from something like their attempt to repeal the Affordable Care Act, which promised widespread misery in the form of tens of millions of people losing their health coverage and the protections the ACA had provided them. The potential losses people perceived were immediate, clear, and terrifying. So they got really mad and let their representatives know.
If you’re a Republican member of Congress today, you may be looking at the tax bill and thinking it’ll be received the same way as the Bush tax cuts were. But it may not be, because this attempt at tax reform is much more complicated than the Bush tax cuts, and it also — and listen closely here — will raise taxes for many Americans.
The reason the bill does that is that Republicans started with a few massive tax cuts they wanted to offer (especially slashing the corporate income tax rate and reducing individual income tax rates), and then tried to alleviate some of the cost by eliminating deductions people now enjoy. It’s not precisely clear who is going to wind up paying more, because the rejiggering they’re doing is so complicated. For instance, they nearly double the standard deduction, but eliminate the personal exemption, and introduce a temporary increase in the child tax credit…you can see how this gets complex very quickly.
The tax policy experts I’ve spoken to in the last two days are still trying to sort it all out, but here are some ways you could see this new bill increase your taxes:
- If your state has high income taxes, you’ll be losing your deduction; this is the big one. For instance, if you’re in California and you make $100,000, you paid about $6,000 in state income tax, which you’ll no longer be able to deduct. If you made $150,000 — which makes you middle class if you live in incredibly expensive places like San Francisco or Los Angeles — you paid more than $10,000 in state income taxes. That’s a serious deduction you’re losing.
- If you buy a house with a big mortgage (over $500,000), you’ll lose part of your deduction.
- If you have high medical expenses, you’ll no longer be able to deduct them.
- If you’re paying off student loans, you’ll no longer be able to deduct the interest.
- There are also lots of small deductions that are being eliminated (for tax preparation expenses, moving expenses, alimony payments, gambling losses), which may not be huge but add to the negative side of the ledger.
The fact that some people will see a tax increase from this bill — and the number who do will not be trivial — gives Democrats a large opening. You can bet they’re going to change their argument from “This is a giveaway to the wealthy and corporations” to “How dare Republicans raise taxes on hard-working families so they can give a tax break to the wealthy and corporations?”
But how many people will actually see their taxes go up? Jim Tankersley of the New York Times puts the number at 13 million. We’ll have to wait for other analyses, but it’s going to very hard for an individual person without an accounting degree to determine whether their taxes are going to go down, stay the same, or go up. If you live in a state with high state income taxes — not all of which are blue states, by the way — you’re going to be getting pretty nervous. And you might start complaining to your congressman.
All along, I’ve assumed that even if they got pushback on some of the provisions of their bill, in the end Republicans would pass it. But once you start talking about raising some people’s taxes, the conversation shifts. There are a whole bunch of blue state Republicans who are already facing unusually tough races in 2018. It’s possible that this bill could become controversial enough for some of them to decide that their own survival is threatened more by a vote in favor of the bill than by the bill’s failure. If Republicans lose 23 votes in the House or three in the Senate (presuming Democrats stay united in opposition), the bill goes down.
Is that likely? Maybe not. But now that we’ve seen what the bill does, it looks a lot more plausible than it did last week.