Friday’s House vote to approve a second round of big tax cuts is aimed squarely at helping Republicans — but it could boomerang and hurt vulnerable GOP candidates in California.
The second tax cut bill would make cuts for individuals enacted last year permanent, instead of slowly phasing them out over the next decade. It would also make a $10,000 cap on state and local tax deductions permanent rather than expiring in 2025, which creates a political problem for California Republicans struggling to get re-elected.
Republican senators have publicly said the new tax cut bill does not have the support to pass the Senate, and Democrats are accusing House Republicans of engaging in blatant political messaging. Republicans tend to see tax cuts as giving them an important political boost.
But not in all parts of California, where taxes in many key congressional district are higher than in most of America.
More than a million Californians claim more than $10,000 for the state and local deduction, with the average claimed deduction $18,517 in 2016.
That means on average, Californians who use the deduction will have about $8,500 more in taxable income, amounting to an average of $2,000-$3,000 more per year in taxes. For many, that’s more than the benefit they receive from the tax cuts.
And that gives Democrats a weapon to use against Republicans just weeks before the election. Rep. Linda Sanchez, D-California, said a lot of those people in areas such as Los Angeles are middle-class Americans.
“These aren’t wealthy people, because L.A. is a high cost of living area,” Sanchez said. “Average families who are trying to save money will have their futures affected.”
Voters in some California districts will care much more than others. In farming-heavy districts such as those of Republican Reps. Jeff Denham, David Valadao and Devin Nunes the tax cut bill is popular. Most of those districts have very few people with a high enough income to hit the $10,000 cap.
In Valadao’s district, for a family with the median income of about $41,000 and a home at the average price of $168,000, state and local taxes would be around $2,700, well below the $10,000 cap.
Denham publicly supported the tax cuts in a statement last week, saying median income in his district is $63,223 — also not nearly enough to hit the $10,000 deduction cap.
“Tax reform is working for the Central Valley,” Denham said.
Outside the Central Valley, in the districts of Republican California Reps. Steve Knight, Mimi Walters, Dana Rohrabacher and Tom McClintock, the number of people claiming the deductions is in the hundreds of thousands. Knight, Walters and Rohrabacher represent districts that Democrat Hillary Clinton win in the 2016 presidential election.
Rohrabacher voted against last year’s tax cut bill as well as Friday’s legislation. Knight and Walters both voted to approve the 2017 and 2018 bills.
McClintock voted against the original House version of the 2017 bill partially because it completely eliminated deductions on state and local taxes, but ultimately voted for the final version of the bill because it increased the deduction cap to $10,000.
McClintock voted to approve the second tax bill, saying even though he’d like the $10,000 cap removed the individual tax cuts are still a net win for his constituents.
“The average family in my district got about $1,900 in tax relief as a result of this bill,” McClintock said. “I’d love to see the cap removed, but getting that $10,000 deduction was really important, and we got it.”
When asked if he was concerned about the deduction cap in his district, Knight said “We’re always concerned about what’s going on in our district.”
“But the deduction cap isn’t a concern for you before voting for it?” a reporter asked.
“Absolutely,” Knight responded before the elevator doors closed behind him.
Correction: An earlier version of this story incorrectly stated those who claim more than $18,000 in the state and local tax deduction owe $8,000 more in taxes per year under the tax cuts.