The tax reform plan that is on the road to passing Congress sets up an interesting dynamic for the 2018 elections in California. Democrats will argue that those Republican congress members who voted for the tax plan and ended deductions raised taxes on many Californians. On the other hand most state Democrats will be protecting the need for gas tax increase against a repeal effort if one qualifies for the ballot. Reverse the script for Republicans.
GOP members of Congress support the gas tax repeal hoping the repeal effort will drive voters to the polls and be sympathetic to Republicans in Congress. But some of those congressional Republicans will have a nuanced argument on the federal tax plan. They will argue that the overall tax reform will boost the economy to the benefit of their constituents who may be paying higher taxes.
Three California congressional members, Tom McClintock, Dana Rohrabacher and Darrell Issa voted against the tax plan when it passed the House. Will they hold that position and will other California Republicans join them when the final version reconciled with the Senate bill comes before them? McClintock was clear that he would not vote for tax increases on his constituents.
Republicans may have trouble making the economic improvement argument to California voters. The heart of the tax reform is a big reduction in business and corporate tax that supporters claim will encourage business investment, create jobs, bring overseas money U.S. companies have stashed away back to this country, and boost economic activity.
All that may eventually happen but can GOP congressional candidates convince the state voters that those goals will be achieved when they campaign next year? Looking at the results of questions in the recent Public Policy Institute of California poll, they will have an uphill fight.
PPIC asked: Do you think that lowering taxes on large businesses and corporations will help the economy, hurt the economy or make no difference?
Only 29% of all adults thought the tax cut would help the economy. 44% said it would hurt the economy. 22% said it made no difference. The partisan divide was not surprising. While 65% of Republicans felt corporate tax cuts would help the economy, only 12% of Democrats agreed. 32% of Independents believe the economy would be helped.
PPIC noted that the Pew Research Center survey in October found that nationally a plurality of adults found that tax cuts for corporations would aid the economy by 36% to 29%.
Once again California has a different view from the rest of the country.
Other questions in the PPIC poll found that four out of ten Californians believed they would be worse off if the GOP tax plan passed with six in ten expressing opposition to the plan.
Congressional Republicans fighting for re-election in 2018 will have to hope for the promised economic boost to come quickly.
Balancing the tax arguments on both the federal plan and the state gas tax could prove tricky.