Bloomberg News/Landov A real estate agent shows a property in Newport Beach, California.
Last December, as negotiations over the final outline of the Republican-led tax bill advanced, the Wall Street Journal profiled Congresswoman Mimi Walters.
The Orange County Republican had voted for the draft GOP tax overhaul, and as a vote on a final version loomed, Walters was scrambling to find a way to mitigate its impacts on her constituents, many of whom depended on the ability to deduct the full amount of their state and local taxes from their federal returns.
“I’m not going to vote for a Democrat, but am I going to vote for a Republican that is going to raise my taxes? That is the question,” the Journal quoted one voter saying.
One year later, the question has been answered, sort of: Walters lost her seat to a Democratic challenger. So did Republicans Steve Knight of California, Dan Donovan of New York, and Leonard Lance, Seth Grossman and Jay Webber of New Jersey.
Those politicians are all from states that stood to lose the most when the state and local tax deduction – and, to a lesser extent, the mortgage interest deduction – was capped. And while it’s hard to unpack exactly what led voters in each of those districts to pick someone new, it’s also hard to escape the idea that a deeply unpopular, partisan tax bill that opponents spun as “economic civil war,” in the words of New York Governor Andrew Cuomo, couldn’t have played at least some role.
See: Stung by tax-law changes, Connecticut, New Jersey and New York plan to sue Washington
“When the tax bill was passed, it was clear that Republicans were going to have a hard time defending SALT deduction changes, particularly in high-tax high-income states like Illinois, New York, and New Jersey, and lo and behold, the races in those states were a total disaster for Republicans,” said Kyle Kondik, of the University of Virginia Center for Politics.
“Look, because of Trump, it may have been that the suburbs were going to abandon Republicans anyway,” Kondik said. At the very least, he said, it’s clear that the tax bill didn’t help. What’s more, it’s tempting to see it as a reversal of 2010, when Republicans who had stonewalled the passage of the Affordable Care Act painted dire warnings about what it meant for Americans’ personal finances – and trounced Democrats in that year’s midterm elections.
“If you can put the majority party on the hook for passing something that was not that popular, that gives you something to run against,” Kondik said. “This was not something that was unexpected, this was a political liability of a tax bill that was openly discussed when the bill was being passed.”
Terry Madonna, director for the Center for Politics and Public Affairs at Franklin & Marshall College, thinks Republicans on the campaign trail didn’t help themselves. “There wasn’t much of a defense for (the tax bill),” he told MarketWatch. “If you’ve got a potential negative, you’ve got to explain the positive side of what the negative is, make sure voters understand that. “
That’s particularly poignant since some analysts, like the Tax Foundation, say that the average taxpayer in every congressional district across all income groups, even those in high-tax states, make out better under the Republican bill. In part, most taxpayers will simply pay less. And ironically, more people may wind up relying on a SALT deduction now than before the bill passed, because the number of people using the alternative minimum tax will increase. (Those who use the AMT do not deduct SALT at all.)
Exit polls found voters didn’t really warm to the Tax Cuts and Jobs Act. Some 45% said they had seen no impact from it, while 28% said they’d been helped and 23% said they’d been hurt.
Related story: Exit polls suggest midterm election voters focused on health care and immigration, not the booming economy
The pundits who spoke to MarketWatch for this story were very reluctant to pin any campaign’s outcome on one issue. “I think this was an election where a lot of straight-party ballots were cast, particularly by Democrats,” Madonna said. “They were expressing their disdain and dislike for the president.”
Two places hit hard by the Trump-Ryan tax plan https://t.co/eKHFikg083
— David Frum (@davidfrum) November 15, 2018
Still, Kondik thinks it’s just as likely that negative responses to the tax bill had even more of an impact than it seems. “Even in low-tax states like Virginia, Georgia, Texas, they have different tax environments than the Northeast and the coasts but the same pattern emerged,” he said. “I wonder if there is some sort of false concern (over the personal impact of tax changes) in those places that we don’t even know about.”
Opinion: Republican tax reform is simply red states stealing from blue states
