Republicans capped a popular deduction for state and local taxes to pay for the tax bill. That may have hurt some House Republicans in the midterms.
President Trump signed a $1.5 trillion tax cut into law last December. The law capped a popular tax break used by high-earning taxpayers in high-tax states. Credit: Doug Mills, The New York Times
President Trump’s $1.5 trillion tax cut was supposed to be a big selling point for congressional Republicans in the midterm elections. Instead, it appears to have done more to hurt than help Republicans in high-tax districts across California, New Jersey, Virginia and other states.
House Republicans suffered heavy Election Day losses in districts where large concentrations of taxpayers claim a popular tax break — the state and local tax deduction — which the law capped at $10,000 per household. The new limit resulted in an effective tax increase for high-earning residents of high-tax states who claim more than $10,000 per year in SALT.
Democrats swept four Republican-held districts in Orange County, Calif., where at least 40 percent of taxpayers claim the SALT tax break, defeating a pair of Republican incumbents and winning seats vacated by Representatives Ed Royce and Darrell Issa. Those districts include longtime Republican strongholds, like Newport Beach, and rank among the country’s largest users of the state and local tax break.
Trump and Republicans promised their massive tax cuts for the rich and big corporations would create jobs and raise wages, but that never happened. Voters know the truth: the Trump tax law hasn’t benefited them.
The Trump tax law has not created jobs. The 1,000 largest public companies eliminated nearly 140,000 jobs since the tax law was passed.
New York Times: “Many companies also said they would use tax savings to create jobs. But the Just Capital research finds that, since the tax cuts were passed, the 1,000 largest public companies have actually reduced employment, on balance. They have announced the elimination of nearly 140,000 jobs.”
After instituting a $1.5 trillion tax cut and signing off on a $675 billion budget for the Department of Defense, Senate Majority Leader Mitch McConnell said Tuesday that the only way to lower the record-high federal deficit would be to cut entitlement programs like Medicare, Medicaid and Social Security.
“It’s disappointing, but it’s not a Republican problem,” McConnell said of the deficit, which grew 17 percent to $779 billion in fiscal year 2018. McConnell explained to Bloomberg that “it’s a bipartisan problem: Unwillingness to address the real drivers of the debt by doing anything to adjust those programs to the demographics of America in the future.” The deficit has increased 77 percent since McConnell became majority leader in 2015.
New Treasury Department analysis on Monday revealed that corporate tax cuts had a significant impact on the deficit this year. Federal revenue rose by 0.04 percent in 2018, a nearly 100 percent decrease on last year’s 1.5 percent. In fiscal year 2018, tax receipts on corporate income fell to $205 billion from $297 billion in 2017.
‘At the end of the day, this is a question of priorities. The GOP continues to make it painfully clear that their first priority is to make the rich even richer, at the expense of the middle class.’
This morning, Republican Senate Majority Leader Mitch McConnell told Bloomberg News what we’ve long suspected: the GOP’s only plan to address the ballooning federal deficit is to make deep and painful cuts to Medicare, Medicaid, and Social Security. His statement comes on the heels of yesterday’s announcement that the deficit has reached a six-year high of $779 billion, due largely to the trillion dollar tax cut for billionaires and wealthy corporations the GOP pushed through earlier this year.
The federal deficit swelled by nearly 17 percent largely because of a sharp decline in corporate tax revenues after the Trump tax law. Trump said his tax law would pay for itself, and he claimed he would quickly eliminate the national debt and balance the budget. We now know those were all lies.
LIE: The Trump administration claimed the tax law would “pay for itself” and even suggested it already has.
Secretary Mnuchin: “‘This will be the most significant change to the tax code since Reagan,’ he said, adding that the plan ‘will pay for itself’ by boosting economic growth.”
A new poll shows that nearly two-thirds of Americans say they have not seen their take-home pay increase as a result of the Trump tax law. The truth about the Trump tax law is that it’s not benefiting working families — it has only increased the gap between the richest Americans and everyone else.
Americans have not benefited from the Trump tax law. It’s clear why more Americans still disapprove than approve of the law.
64% of Americans say they have not seen an increase in their take-home pay from the Trump tax law.
A majority of Americans say the Trump tax law has not helped their family financially.
Richard Lattanzi, mayor of Clairton, Pa., and a safety inspector for a nearby U.S. Steel plant, poses for a portrait Tuesday. Credit: Michael Henninger, The Washington Post
Clairton, PA — When President Trump imposed tariffs on steel imports in June, Richard Lattanzi thought of dozens of his fellow steelworkers who have for years put off badly needed repairs of their cars and homes.
“There was a lot of excitement here; there were a lot of us saying, ‘It’s about time someone is looking out for us,’ ” said Lattanzi, the mayor of this town of 7,000 and a safety inspector at the U.S. Steel plant in nearby West Mifflin. “A lot of people around here were saying, ‘We’re going to be okay.’ ”
Four months later, Lattanzi is less optimistic. Production at U.S. Steel’s facilities have ramped up, and the company announced this summer that, thanks in part to the tariffs, its profits will surge. But in interviews in recent weeks, Lattanzi and other steelworkers said they’re no longer confident they’ll take part in the tariff bounty.
Republicans left middle-class families behind with a tax scam aimed at making the rich richer.
Credit: Greg Nash
Mountains of evidence continue to expose the the Republican tax scam as terrible deal for working-class families but a boon for rich corporations.
Case in point: Some 99 percent of companies said the tax scam was not prompting them to increase minimum wages for employees, according to Aon, a human resources consulting firm.
Aon’s survey of 1,000 companies was reported by the Wall Street Journal, and is consistent with other surveys of how companies are using the massive giveaway orchestrated by Trump and Republicans in Congress.
Later this week, the House of Representatives will vote on a second round of tax cuts once again favoring the rich. This new tax plan is a sequel to the tax law that the Republican-led Congress enacted in December, which is informally known as the Tax Cuts and Jobs Act (TCJA). The TCJA was badly skewed to wealthy Americans, exacerbating the decades-long trend toward greater inequality of income and wealth. The law created new loopholes for well-heeled taxpayers to exploit. Moreover, its massive cost was financed by higher budget deficits that will put even more pressure on vital programs that serve all Americans. The newly proposed tax plan shares each of these failings. Congress should reject it. Instead, federal lawmakers should work toward real tax reform, beginning with undoing the damage caused by the TCJA.
Tax Scam 2 is just more of the same
During the week of September 24, Republican leaders plan to bring up a package of three bills that they call “Tax Reform 2.0”—that critics rightly call Tax Scam 2—for a vote in the House. The centerpiece of this package is H.R. 6760, a bill to permanently extend the individual and estate tax provisions of the TCJA beyond their scheduled expiration at the end of 2025. The reason these provisions were made temporary was that congressional leaders chose to move the TCJA through Congress using the process known as budget reconciliation, which enables bills to pass the Senate with a simple majority but only if they are not estimated to increase deficits over the long term. Under these procedural constraints, the TCJA’s authors chose to make the legislation’s corporate tax provisions permanent and its individual and estate tax provisions temporary (with some exceptions). H.R. 6760 would permanently extend both the provisions of the TCJA that cut individual taxes, including the reductions in individual tax rates and higher standard deduction, and the TCJA’s tax increasing provisions, including the elimination of personal exemptions and the cap on the deduction for state and local taxes (the SALT deduction).
The House Ways and Means Committee reported H.R. 6760 along straight party lines on September 13. The bill has been scored by the Joint Committee on Taxation (JCT) to increase deficits by $631 billion over 10 years. As discussed below, the cost over a longer time horizon would be much greater.
