Republican tax win in 2017 could cost control of Congress in 2018

Republican tax win in 2017 could cost control of Congress in 2018
© Greg Nash

According to the latest Monmouth University Poll, the 2017 tax law may do to the Republicans what ObamaCare did to the Democrats: cost them control of Congress. Right now, the Democrats need to flip about two dozen seats to wrest control of the House, and the much fêted tax law looks like it the answer to the Democrats prayers.

The Republican tax bill caps the amount of deductions that may be legally deducted for state and local taxes at $10,000, while raising the standard deduction for a married family to $24,000. In red states, that may sound fine, but in blue America that’s a problem, particularly for higher-wage earners. They stand to get hosed, they know it, and they sure are angry.

In New Jersey, the Democrats lead by 19 points on the generic ballot. That’s not simply a blue wave. No, think of those numbers as the typhoon that decimates the beach, a storm that could even cost the Republicans all five of the Garden State’s House seats, making the possibility of a Democratic gain of 23 seats nationwide more than just conjecture. About one in five New Jerseyans report taking a $10,000 state and local taxes deduction on their federal income tax returns. Roughly 20 percent take the same deduction in both Democratic and Republican districts.

So in places like New Jersey, the question isn’t simply whether or not voters love or hate Donald TrumpDonald John TrumpGiuliani says he is unaware of reported federal investigation Louisiana's Democratic governor forced into runoff Lawmakers focus their ire on NBA, not China MORE. Rather, it’s also about whether or not taxpayers enjoy getting fleeced to pay for a corporate tax break or to subsidize the donor class. For most voters negatively affected by the change in the tax code, the answer would appear to almost reflexive.

Indeed, the numbers tell a story. Among New Jerseyans, 43 percent say that the tax law will have a major impact on their vote, 49 percent expect their tab to Uncle Sam to rise, and 75 percent expect to be negatively impacted. Worst of all for Republicans, a clear majority of New Jerseyans expect to their state to come off worse than other parts of the country.

Can you say a blue to red wealth transfer? Exactly. Because it’s wealth transfer, anger in New Jersey will likely be contagious to other places on the map that are similarly situated, states like California and New York for starters. In California, the average state and local taxes deduction exceeds $18,000, and among higher-income residents that figure jumps to more than $64,000. In New York, the number is more than $84,000.

Already in the Golden State, two Republican-held seats are leaning Democratic, another three are toss-ups, and two more are merely leaning Republican. In New York, a similar story emerges. There, two Republican districts are regarded as toss-ups, and a third seat held by an incumbent Republican is only leaning red.

Although the Democratic progressive wing may have little sympathy for tony suburbia, they have unvarnished antipathy for Wall Street and the Fortune 500, and that’s how coalitions are built. In that vein, corporate banks have emerged as the big winners under the tax bill. Citigroup recently reported that first quarter profits rose by 13 percent from a year earlier, with earnings of $4.62 billion, thanks to the tax law.

By anyone’s calculation that’s a lot of money, and in some quarters much reason to be grateful. But elsewhere, the new tax law has folks gnashing their teeth as 2018 emerges as a year of tax hikes. For Republicans, that’s far from ideal. For Democrats, it’s an opportunity.

Lloyd Green was the opposition research counsel to the George H.W. Bush campaign in 1988 and later served in the U.S. Department of Justice. He is now the managing member of research and analytics firm Ospreylytics.