Capitol Alert

Pelosi: Vote for the budget would make Republicans ‘accomplices’ in a California tax hike

After weeks of silence, California’s 14 Republican members of Congress will have to weigh in for the first time this week on a tax plan that could hit millions of Californians.

Republicans vote Thursday on their budget, which paves the way for the party to advance its tax overhaul. As it’s currently framed, the overhaul would eliminate the state and local tax deduction, a write-off that disproportionately benefits taxpayers in high-tax, high-cost states like California. While the state’s Republicans have avoided taking a position on that proposal, Democrats are prepared to paint any Republicans voting for the budget as “accomplices” in the push to eliminate the deduction, warns House Minority Leader Nancy Pelosi.

“It is really an urgent time for the state of California,” the powerful San Francisco-area congresswoman told McClatchy, noting that the state’s residents saved more than $100 billion in taxes by taking the deduction in 2015.

President Donald Trump and Republican leaders have pitched their tax overhaul as a boost, first and foremost, for the middle class. And tax experts note that the vast majority of the savings from the state and local deduction go to households that earn more than $100,000, which is considered wealthy in many parts of the country.

But as the state’s Democratic delegation noted in an Oct. 23 letter to the leaders of Congress’ tax-writing committees, roughly 83 percent of California households claiming the deduction in 2015 earned under $200,000. Given the high cost of living in much of the state, that qualifies as solidly middle- or upper-middle class, Pelosi and other Democrats argue.

Pelosi also points out that Republicans represent many of those Californians – on average, more than one-third of Republicans’ constituents used the deduction in 2015, IRS data shows. In seven GOP districts – those represented by Reps. Tom McClintock, Steve Knight, Ed Royce, Ken Calvert, Mimi Walters, Dana Rohrbacher and Darrell Issa – more than 40 percent of constituents took the state and local tax write-off. Knight, Royce, Walters, Rohrbacher and Issa all face competitive reelection races next year.

Supporters of the tax proposal say their plan to lower rates and provide a larger standard deduction would lower most Americans’ taxes, even without the state and local deduction. But until Republicans offer more details, including who falls in which tax bracket, it’s hard to evaluate how it will ultimately balance out for California taxpayers.

Republicans in other high-tax states aren’t buying their pitch. Several GOP lawmakers from New York and New Jersey are publicly threatening to vote against the budget Thursday unless Republican leaders can assure them the deduction will remain in any new tax legislation, Politico reported Wednesday. Negotiations continue.

Yet California Republicans have been noticeably absent from the public pushback. In fact, they seem to be actively avoiding the issue. McClintock, Knight, Royce, Walters, Issa and Denham did not respond to McClatchy’s requests to speak about taxes this week, or whether they are involved in the ongoing negotiations in the House. Bakersfield-area Congressman Kevin McCarthy’s spokeswoman, Erin Perrine, said he has been involved in the discussions as a member of the House GOP leadership and acknowledged the issue’s importance to California, but did not respond when asked to clarify McCarthy’s position on the deduction.

And not one California Republican signed onto their Democratic colleagues’ Oct. 23 letter, which called on congressional leaders to preserve the deduction.

Without the support of its New York and California members, Republicans won’t have the votes to pass their budget. Pelosi is calling on her home state colleagues to use that leverage to save the state and local deduction. They can “change the bill by not voting for it,” Pelosi says, forcing Republican leaders to cancel the vote and start over. But “if they’re voting for the budget, they’re voting for (ending SALT).”

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