When it comes to tax cuts, most of the states that President Donald Trump won in the last election fared better than the national average – giving Republicans a valuable rallying point for the 2020 campaigns.
“This helps Trump and the Republican Party,” said Doug Kaplan, president of Gravis Marketing, which conducts polls in Kentucky and other states.
Republicans will need that support as the debate over the value of the $1.5 trillion tax cut becomes a political flashpoint during the 2020 campaigns.
Most taxpayers began to see the impact of the tax law when they filed their 2018 tax returns by the mid-April deadline.
Nearly two-thirds of the nation’s households were estimated to see lower income taxes this year as a result of the new law, according to a 2018 study by the Urban Institute-Brookings Institution’s Tax Policy Center.
The study’s co-author said those estimates are largely holding in a new analysis done this year, but the center won’t see actual results from the tax season until later this year. “Nothing has really changed all that much,” said Frank Sammartino, a senior fellow at the center.
Trump states did particularly well. In 22 of the 30 states he won, a higher percentage of households are expected to have lower income taxes than the national average of 64.3 percent last year. So are households in 13 of the 20 states won by Democrat Hillary Clinton, as well as the District of Columbia, which she also won.
The tax law signed by Trump in December 2017 went into effect last year and the biggest impact is showing up for the first time in individual returns that were filed earlier this year.
The law lowered most marginal income tax rates through 2025, suspended the personal exemption, curtailed some popular tax breaks and dramatically increased the standard deduction. .Democratic presidential candidates decried the cuts during Tuesday night’s debate, with former Colorado Gov. John Hickenlooper calling the changes an “incredible tax cut to the rich.”
Trump is already popular with the sizeable conservative populations in the 30 states he won in 2016 due to his immigration, health care and social policies. By being able to show most of those states disproportionately benefited from the tax cut is a “win-win” for Trump, Kaplan of Gravis said.
Tax cuts have long been crucial for Republicans to gather election support. When President George H. W. Bush backed higher taxes in 1990, he was challenged for the Republican presidential nomination two years later — a challenge that arguably weakened him politically, recalled Spencer Kimball, director of Boston-based Emerson College Polling.
Championing tax cuts continues to matter. “The economy is still a driving influence in who people vote for,” said Kimball, who polls in several states, including North Carolina, South Carolina, Texas and Pennsylvania.
“To tie tax cuts to the economy makes sense, and Trump gets to run on tax cuts,” he said.
The tax cut legislation passed Congress in 2017 without any Democratic votes, and Democrats continue to blast away that the cuts tilt to the wealthy.
Gallup in April found that 78 percent of Republicans liked the cuts, while 16 percent of Democrats approved. Among independents, 32 percent approved, and 45 percent were unsure whether the new law caused their taxes to go up or down.
In the states Trump needs most to win a second term, the tax cut figures tilt his way.
The big reason for the difference between the Trump and Clinton states rests largely with changes in how state and local taxes can now be deducted from federal income tax returns.
Republicans are aggressively promoting the tax cut as they campaign. The president sprinkles his economic speeches with references to what he calls the “historic” cuts.
Congressional Republicans eagerly join the chorus.
“What has happened since that tax bill passed when not one Democrat supported it?“asked House Republican Leader Kevin McCarthy of California.
“We are now living in an economy that in the last 50 years is the strongest economy we have ever lived in,” he said.
Such arguments are helping to solidify the Republican base.
Two years ago, prior to the tax cut’s passage, Republicans and Democrats had roughly the same views of whether the tax system was fair, Pew Research Center polling found.
But in March, as individual returns dealing with the tax cuts were being filed, the percentage of Republicans viewing the tax system as fair jumped 21 points to 64 percent. The percentage of Democrats feeling that way dropped 9 points to 32 percent.
Seventy-one percent of Republicans approved of the new tax law. Ten percent of Democrats liked it.
“Assuming (steady economic) growth and unemployment remain on their current paths, I expect GOP politicians will have a persuasive argument to those individuals with a reduced tax bill that their economic policy has been strong,” said Jason Husser, director of the Elon University Poll in North Carolina.
The big variable, he said, is “how people go about thinking in regards to year-over-year household tax change.”
Until last year, taxpayers who itemized their deductions could deduct state and local taxes. Under the new tax law, that deduction was capped at $10,000 per return.
Democrats see the law as a potential boost for their candidates, pointing out that the tax cuts were skewed so that the wealthy did disproportionately better.
“We see churches and charities having taxes that they never had before all to give wealthy people — extremely wealthy people — $1.5 trillion tax break,” said House Majority Whip Jim Clyburn, a South Carolina Democrat. Under the tax cut law, churches and charities now pay tax on fringe benefits such as parking.
The Democratic-run House could consider in this Congress a new tax package that boosts tax breaks for child care expenses and lower-income taxpayers.
While its prospects in the Republican-run Senate are uncertain, Democrats made it clear they’re making a statement.
The bill “provides an important economic boost for middle-class families who continue to struggle in this economy – something Republicans failed to do with their failed tax legislation two years ago,” said House Ways and Means Committee Chairman Richard Neal, a Massachusetts Democrat.