Swing-seat Republicans squirm over GOP tax plan

Republicans are feeling antsy over a key provision in their tax plan that could put some of the party’s most vulnerable members in the House in deeper jeopardy. 

The GOP tax plan would raise $1.3 trillion over the next decade by eliminating a deduction for state and local taxes. 

The provision would help Republicans pay for lower rates, but could hit people hard in high-tax states such as New York, New Jersey and California. 

In the House, Republicans in swing districts disproportionately represent constituencies where the tax deduction is important, creating an immediate campaign ad for Democrats. 

A few Republicans are already warning that they’ll oppose their party’s tax overhaul if the deduction is a part of the plan. 

“I believe it is critically important to continue the deductibility of state and local taxes. I believe that this is essential to continue this in the code,” said Rep. Leonard Lance (R-N.J.), who represents a swing district where Hillary ClintonHillary Diane Rodham ClintonDems make history, and other takeaways from Tuesday's primaries Establishment-backed Vukmir wins Wisconsin GOP Senate primary Ironworker and star of viral video wins Dem primary for Speaker Ryan's seat MORE narrowly defeated Donald TrumpDonald John TrumpDems make history, and other takeaways from Tuesday's primaries Pawlenty loses comeback bid in Minnesota Establishment-backed Vukmir wins Wisconsin GOP Senate primary MORE in 2016. 

“I am a ‘no’ ” on tax reform unless it preserves the deduction, Lance added.  

Lance is among the eight GOP lawmakers who represent the top 20 House districts with the greatest percentage of people claiming the state and local taxes deduction in 2014, according to a report from the Tax Policy Center, a think tank that has faced some criticism from Republicans. 

The other seven Republicans, like Lance, are all top targets in 2018: Reps. Lee Zeldin (N.Y.), Rodney Frelinghuysen (N.J.), Peter Roskam (Ill.), Randy Hultgren (Ill.), Erik Paulsen (Minn.), Mimi Walters (Calif.) and Barbara Comstock (Va.). 

But the problem for Republicans goes well beyond those eight seats. 

Thirty-five Republicans serve in four large blue states — New York, New Jersey, California and Illinois — where the state and local deduction is used by a significant number of taxpayers. Many of those Republicans also represent districts that Democrats think they have a shot at winning in 2018. 

It’s also possible the issue could be used in districts in Minnesota, Pennsylvania and Colorado. 

“I think it’s going to be a very tough issue for them,” said Rep. Ben Ray Luján (N.M.), the chairman of the House Democrats’ campaign committee. 

Rep. Steve Stivers (Ohio), the National Republican Congressional Committee chairman, acknowledged some concern among members about the provision. 

“Because we haven’t released enough information yet, there’s some people concerned,” Stivers, whose job is to elect House Republicans and protect the GOP majority in 2018, told The Hill on Tuesday. 

He projected confidence however, saying he believed Republicans would rally around the plan. 

“But once they see the brackets and the rates, I think it will be OK. I think it’s going to work out. It’s going to be fine,” he said. 

GOP leaders already are responding to the concerns. Rep. Kevin BradyKevin Patrick BradyTreasury releases proposed rules on major part of Trump tax law Republicans happy to let Treasury pursue 0 billion tax cut Trump weighs big tax cut for rich: report MORE (R-Texas), chairman of the tax-writing Ways and Means Committee, hosted a dinner with GOP lawmakers Monday night where possible solutions to the intraparty dispute were discussed. 

Republican leaders have sought to repeal the deduction because it would raise revenue that could pay for lowering tax rates. 

Under current law, taxpayers who itemize their deductions can deduct their state and local taxes from their federal taxable income. Taxpayers can deduct their state and local property taxes as well as either their income taxes or sales taxes. 

The deduction largely benefits high earners, so repealing it also helps Republicans argue that their plan isn’t a boon to the wealthy. Additionally, key Republicans have said the deduction should be repealed so the federal government stops subsidizing states.

Key GOP negotiators this week signaled that the tax plan is a work in progress and that they’re open to addressing blue-state Republicans’ objections. 

“We’re working with and listening very closely to our lawmakers, Republicans and Democrats alike, who are in the high-tax states,” said Brady. 

Vulnerable Rep. Chris Collins (R-N.Y.), Rep. Claudia Tenney (R-N.Y.) and Zeldin were part of a group of lawmakers who had dinner with Brady and raised the issue. 

In light of that dinner, “I feel there will be an accommodation for us,” Collins said Tuesday, adding that he floated ideas such as allowing people to either deduct their state and local property taxes or their mortgage interest, or capping the deduction for property taxes. 

Collins said there were potential “common-sense solutions” that would fall “well short of just an outright repeal of them, and I’m confident after [Monday’s] dinner that Republicans in New York, New Jersey and California will be able to vote for this tax proposal.” 

Collins, who is on the Democratic Congressional Campaign Committee’s target list, also expressed confidence that he would win reelection next year. 

“I have said time and again, I’m going to have an opponent, and I just hope that our governor and [House Democratic Leader] Nancy Pelosi will come campaign with whoever they choose,” Collins said.

Expecting a tough general election, Lance has already been burnishing his bipartisan credentials. This week, he appeared alongside liberal Rep. Bill Pascrell (D-N.J.) in Newark to rail against nixing the state and local taxes deduction.

The bipartisan news conference came on the same day Democrat Tom Malinowski, a former Obama administration official, jumped into the race against Lance. But the moderate Republican said he was unfazed by the latest challenge.

“I believe there are five or six Democrats who are running for the Democratic nomination, and I will comment on the winner of the primary when that occurs next June,” Lance said.

In a statement, Malinowski dismissed the GOP tax framework as a “tax cut for the wealthy” and called on Congress to “start from scratch with bipartisan tax reform that is fiscally responsible and fair to everyone.”

“Taxpayers in New Jersey, particularly in the 7th District, would be hit especially hard if we eliminate the state and local tax deduction,” Malinowski said. “Of course I oppose it.”