Friday, April 28, 2017

Backing Trump's Tax Proposals Will Be Very Costly For Scores Of Republican Incumbents


One deduction that Trump's tax plan seeks to eviscerate just happens to focus primarily on blue states. If his plan passes, deductions of state and local taxes from federal income taxes will be eliminated. There are 7 states with no state income tax-- Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming-- and neither Tennessee nor New Hampshire taxes wages, so those 9 states won't be impacted at all. But states where state and local taxes are high and where the deductions are considerable include California, New York, New Jersey, Connecticut, Massachusetts, Maryland, Minnesota, Oregon, Vermont, Iowa, Wisconsin, Hawaii and Rhode Island.

This one hurts the upper-middle class worst of all, transferring $1.8 trillion in the next decade from their bank accounts into paying for tax cuts for multimillionaires, billionaires and corporations. Organizations representing state and local entities-- the National Governors Association, the National Association of Counties, the National League of Cities, the U.S. Conference of Mayors, the International City/County Management Association, the National Conference of State Legislatures and the Council of State Governments-- are up in arms and make the case that the deduction should be preserved because it gives municipalities the flexibility to provide services to residents. "Any alterations to the deduction would upset the carefully balanced fiscal federalism that has existed since the permanent creation of the federal income tax over 100 years ago... We urge Congress to maintain the state and local deduction and the tax exemption for municipal bond interest. We will work with Congress to ensure that states and local governments have the tools we need to foster healthy, safe and vibrant communities."

California taxpayers will be probably hit the hardest. I haven't heard a peep out of California Republicans-- particularly not House Majority Leader Kevin McCarthy. Are California Republicans going to stand up for the state's residents or for Trump? There are 14 Republicans in the 53-member California congressional delegation, 7 in electorally very vulnerable seats. This is the whole GOP state delegation and the percentage in parenthesis was what Trump won in each district:
Doug La Malfa (56.2%)
Tom McClintock (54.0%)
Paul Cook (54.7%)
Jeff Denham (45.5%)
David Valadao (39.7%)
Devin Nunes (52.1%)
Kevin McCarthy (58.1%)
Steve Knight (43.6%)
Ed Royce (42.9%)
Ken Calvert (53.4%)
Mimi Walters (44.4%)
Dana Rohrabacher (46.2%)
Darrell Issa (43.2%)
Duncan Hunter (54.6%)
We asked Wendy Reed, the Berniecrat running against Leader McCarthy in the Trumpiest district in the Golden State. "The desire to tax our taxes displays how clueless Trump and the Republican leadership are about American tax policy," she told us. "Regressive and just plain clueless." Just next door is the most endangered of all the state Republicans: Steve Knight. Katie Hill, who runs a non-profit for homeless vets is taking Knight on. She told us that "Getting rid of the state and local tax deduction will have a huge impact on middle class Californians-- most of the people in the 25th district. The Trump tax plan will also mean a tax increase for nearly 8 million families-- including the majority of single parent households. Surely Steve Knight won't support a tax increase for so many of his own constituents." So far Knight is keeping his opinion to himself.

And as we said, it's not just California where this transfer of wealth from the middle class to the billionaire class is going to cause real pain. Although Trump won with 49.7% in IL-13, a district that goes south from Bloomington and Champaign through Decatur and on into the outer suburbs north and east of St. Louis, GOP incumbent Rodney Davis is being targeted by Dr. David Gill who nearly beat Davis once before, 46.5% to 46.2%, just 1,002 votes. As long as the DCCC doesn't interfere, Gill is likely to beat Davis in 2018. He told us that "The plan proposed yesterday by the president is a huge gift to large corporations and the wealthiest Americans. These groups have already avoided paying their fair share of taxes for the past few decades, and this tax plan will only exacerbate that problem. And ironically, this plan would add trillions of dollars to our deficit, the same deficit which has been of such concern to conservatives. And we would lose the deduction for state and local taxes, resulting in a significant financial hit to many middle-class families. There is truly a need for significant tax reform in this country, but the plan proposed yesterday by the president moves us further in the wrong direction. The resulting loss of revenues will inevitably lead to further cuts in services, and the economic inequality which has brought so much pain to so many Americans over such a long period of time will expand at an even faster pace, resulting in a society with a small number of 'haves' and an overwhelming number of 'have-nots.'"

Another Illinois candidate endorsed by Blue America, Geoff Petzel is running in IL-06, a suburban district west of Chicago that Hillary won in November 50.2% to 43.2%. Ryan ally Peter Roskam represents the district now and Geoff hasn't be reluctant to point out how his and Ryan's agenda fly in the face of middle class families in the district. "The reality is that the 'tax plan,' he told us, "is just smoke and mirrors. It will never get done. If Democrats are even going to consider a compromise here, they should agree to go along with corporate tax rate cuts only in exchange for an increase in the tax rate for top income earners, closing all corporate tax loopholes and establishing a national $15/hour minimum wage. Even then, it may be giving too much away to corporate America. The reality is that the rich and big companies don't need a tax break. Trickle down economics don't work. The Trump plan will just make the rich richer and give big corporations more opportunity to take advantage of the consumers and workers who made them successful."

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