Which GOP Lies on Tax Reform are the Most Effective?

A few weeks ago, we marveled at how the GOP has been using populist messaging on their tax reform bill, which is a massive giveaway to wealthy individuals and profitable corporations. We recently stumbled across a poll which sheds some light on exactly why the GOP can't simply be honest about their bill. The poll was conducted by the American Action Network, a conservative nonprofit issue advocacy group. To get an idea of what the AAN is all about, check out this attack ad they ran against the Consumer Financial Protection Bureau using Soviet imagery. If you are not familiar with the CFPB, it is a independent agency whose creation was largely the work of Massachusetts Senator Elizabeth Warren and investigates predatory practices in the financial industry. 

Aside from being commissioned by a right wing organization with a habit of comparing basic consumer protections to the gulag, only conservatives from Republican districts were surveyed. So if there is any popular support for tax reform, then this is where we should find it. In this group 77% thought that Congress should cut taxes for individuals and 54% thought that Congress should cut taxes for individuals and businesses. A bare majority of support for tax cuts on individuals and businesses is pretty terrible when the group you are polling is the group that should be the most enthusiastic about tax reform. This number is consistent with recent pew polling which found that only 48% of conservative Republicans and 41% of Republicans overall thought taxes should be lowered on large businesses. The same Pew poll also found that 36% of Republicans want taxes cut for households incomes over 250k.

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The GOP's Populist Messaging on Tax Cuts for the Ultra Wealthy

The GOP's Populist Messaging on Tax Cuts for the Ultra Wealthy

GOP messaging on tax reform has been interesting to say the least. Tax cuts for the wealthy are very unpopular, except among the GOP donor class. 'Trickle Down' economic theory, which asserts that low taxes on corporations and wealthy individuals spurs economic growth that ultimately benefits everyone in society, is also a tough sell. Empirical studies have shown that in reality, such cuts do the opposite of what trickle down theory says they should; they increase budget deficits (which Republicans supposedly care about), and even diminish economic growth. The abject failure of high tax cuts in Kansas serves as a recent warning of just how damaging these policies can be to the economy.

At the end of the day, the GOP donors want their tax cuts though, so it is up to the GOP to pitch them to the American people. They have set up a website fairandsimple.gop to make their case. Read the whole site if you have time, it is truly fascinating, and the way they talk about elimination of various tax deductions is particularly interesting. Elimination of certain itemized deductions are discussed under the heading: "Eliminates loopholes for the wealthy, protects bedrock provisions for middle class."

This clearly invokes some of the populist messaging that has been used by various candidates that appeals to the sense that many have that the wealthy in the country do not pay their fair share in taxes. Combine that with the fact that the GOP plan doubles the standard deduction, which lowers the tax liability for those who do not have very many itemized deductions, and it seems like perhaps the GOP is really making an honest effort to lower taxes for the middle class.

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Rodney Frelinghuysen's Voters Take A Lot of SALT Deductions

Rodney Frelinghuysen's Voters Take A Lot of SALT Deductions

The GOP controlled House of Representatives recently passed a budget resolution, which is regarded as one of the first steps toward passing a proposed overhaul of the U.S. tax code. The Republicans have not released a complete version of their plan, which seems to be a fairly transparent ploy to dismiss critics by saying that the plan is incomplete and will be modified later. Additionally, since there are winners and losers in any reform of the tax code, floating a partial plan lets republicans test the waters to see what kind of pushback they get and from where. As the plan stands now, the federal income tax deduction for State and Local Tax (SALT) paid is to be eliminated. This will potentially increase the tax liability for middle to upper middle class families, especially in blue states where State and Local Taxes are relatively high. A recent analysis by NJ Spotlight computed estimates of the how much in SALT deductions New Jersey residents stand to lose by zip code, using data compiled from individual tax returns by the IRS.

Among the Yea votes for the budget resolution was Congressman Rodney Frelinghuysen of New Jersey's 11th district, whose constituents, and in particular his voter base, take a lot of state and local tax deductions. The plan is incomplete and elimination of SALT deductions is only one among many changes of the tax code. Therefore estimating the change in someones tax liability is very complex, and critics such as ourselves can't claim that elimination of someones SALT deductions means their taxes will go up. However, being a grown adult and an experienced legislator, if Congressman Frelinghuysen believes that a GOP tax plan that includes elimination of SALT deductions will be a net benefit to his constituents, then it is up to him to make his case. We have a feeling that a many of his constituents, and even many of his lifelong supporters will want these details about the changes in their tax liability clarified as soon as possible.

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