Outside the Beltway

Tax Cuts Not Helping Republicans Heading Into November

Contrary to what they believed back in December. Republicans are finding that the tax reform bill is not helping them in the midterm elections.

Doug Mataconis · Tuesday, September 25, 2018 · 10 comments

Bloomberg News is reporting that an internal Republican poll is revealing that the party is not benefiting politically from the tax cut that was passed in December:

A survey commissioned by the Republican National Committee has led the party to a glum conclusion regarding President Donald Trump’s signature legislative achievement: Voters overwhelmingly believe his tax overhaul helps the wealthy instead of average Americans.

By a 2-to-1 margin — 61 percent to 30 percent — respondents said the law benefits “large corporations and rich Americans” over “middle class families,” according to the survey, which was completed on Sept. 2 by the GOP firm Public Opinion Strategies and obtained by Bloomberg News.

The result was fueled by self-identified independent voters who said by a 36-point margin that large corporations and rich Americans benefit more from the tax law — a result that was even more lopsided among Democrats. Republican voters said by a 38-point margin that the middle class benefits more.

When it comes to approval for the tax overhaul, American voters remain torn — 44 percent favor it and 45 percent oppose it.

“Voters are evenly divided on the Tax Cuts and Jobs Act,” the RNC-commissioned report said. “But, we’ve lost the messaging battle on the issue.”

A survey commissioned by the Republican National Committee has led the party to a glum conclusion regarding President Donald Trump’s signature legislative achievement: Voters overwhelmingly believe his tax overhaul helps the wealthy instead of average Americans.

By a 2-to-1 margin — 61 percent to 30 percent — respondents said the law benefits “large corporations and rich Americans” over “middle class families,” according to the survey, which was completed on Sept. 2 by the GOP firm Public Opinion Strategies and obtained by Bloomberg News.

The result was fueled by self-identified independent voters who said by a 36-point margin that large corporations and rich Americans benefit more from the tax law — a result that was even more lopsided among Democrats. Republican voters said by a 38-point margin that the middle class benefits more.

When it comes to approval for the tax overhaul, American voters remain torn — 44 percent favor it and 45 percent oppose it.

“Voters are evenly divided on the Tax Cuts and Jobs Act,” the RNC-commissioned report said. “But, we’ve lost the messaging battle on the issue.”

The tax law slashed the corporate tax rate permanently to 21 percent from 35 percent. It also reduced individual tax rates, doubled the standard deduction, eliminated or capped some itemized deductions, most notably for state and local taxes, and created a special break for pass-through businesses like partnerships until the end of 2025. That year, 25 percent of the gains will go to the top 1 percent while 66 percent of the benefits will go to the top one-fifth of earners, according to an analysis from the Urban-Brookings Tax Policy Center.

Taxes are reduced on average for all quintiles of Americans through 2025, although some would pay more due to the limitation of tax deductions. By 2027, after the individual changes have sunset, 83 percent of the benefits will go to the top 1 percent.

Trump signed the law on Dec. 22, after it passed Congress without a single Democratic vote.

The RNC study says Americans worry the tax law will lead to cuts in Social Security and Medicare, concluding that “most voters believe that the GOP wants to cut back on these programs in order to provide tax breaks for corporations and the wealthy.” It attributes that finding to “a fairly disciplined Democrat attack against the recent tax cuts.”

All of this comes as the GOP faces considerable headwinds heading into the midterm elections. In addition to the historical fact that the President’s party tends to lose seats in Congress in midterm elections, there are plenty of other signs that the GOP faces serious challenges to its control Congress. The first, of course, is the Generic Congressional Ballot which continues to show a rising Democratic advantage as we get closer to Election Day, with the numbers at the present time suggesting that Democrats could pick up as many as 40 seats in the House of Representatives when all they need to flip control is a net change of 24 seats. Additionally, President Trump’s job approval continues to be mired in the same historically low levels. Combined with indications that Democratic voters are more enthusiastic heading into November than Republican voters and the prospect for electoral disaster is easy to see.

This should hardly come as a surprise to Republicans or anyone observing the elections, of course. Even when the tax cut bill was being debated in December, polls were showing that the overall bill was not nearly as popular with the general public, as evidenced here, here, and here. Notwithstanding these numbers, party leaders assured members of the House and Senate who may have been reluctant supporters that the tax bill would be for the party in 2018 once it was passed and the benefits of the bill became apparent. As it turned out, the exact opposed happened. By April, the support that had existed for the bill had virtually evaporated and Republicans were blaming that fact not on the bill itself, but on President Trump. More recently, a poll by NBC News and The Wall Street Journal in August found that just 27% of respondents supported the tax reform bill while 36% called them a bad idea. The RealClearPolitics average meanwhile finds that an average of 39% of those polled approve of the bill, while 42.5% disapprove.

From the beginning, Republicans have contended that this bill would boost economic activity and lead to boosts in wages and economic activity that would enure to the benefit of pretty much the entire American workforce to such an extent that it would help them at the ballot box. At least initially, it appeared that they might be right about this. In the immediate aftermath of the passage of the new tax law, several large American employers announced wage increases or bonuses to employees that they said were tied to the new tax bill. In retrospect, it appears that many of the critics of the tax bill who said these announcements that bonuses and wage increases were due to the tax bill were mostly meant to curry favor with President Trump may have been correct, especially in light of reports that most corporations seem to be recycling the increased revenue they’re seeing from lower taxes into stock buybacks rather than wage increases, new hiring, or expansion of their businesses. It appears that voters are noticing that the promises of tax reform, and Republicans are left looking for some other way to save their majority in November. Odds are that, at least in the House, they probably aren’t going find one.