Just before Christmas, Republican lawmakers delivered a finalized tax overhaul chock full of long-standing party priorities – scoring their first major legislative victory of the year with only days left on the calendar.
That the tax plan will lower the corporate tax rate from 35 percent to 21 percent, double the threshold at which the estate tax kicks in and introduce a lower one-time rate on repatriated earnings is unsurprising. Conservative lawmakers for years vowed that such tweaks would make the country’s tax code more competitive.
But also embedded in the final bill is a smorgasbord of adjustments that appear to be driven more by political motivations, in some cases hitting more-liberal regions of the country particularly hard. USA Today’s editorial board went so far as to call the plan “partisan, even petty” in its apparent “effort to reward Republican constituencies and punish Democratic ones.” And some Trump advisers seem to say that was the intent.
“It’s death to Democrats,” Trump campaign adviser and conservative economist Stephen Moore said of the tax plan during an early December interview with Bloomberg
Even relatively small provisions, such as the elimination of a bicycle commuter subsidy that saves the government a paltry $5 million per year, appear to directly target predominately liberal urban dwellers – the “coastal elite” that the GOP railed against during the 2016 election cycle.
“This is obviously disappointing and a big missed opportunity to reform commuter benefits so that they better serve low and middle income employees who are usually not offered the current commuter benefits,” Ken McLeod, the policy director at the League of American Bicyclists, said in a statement last week.
Some of the points are more obvious.
“They go after state and local taxes, which weakens public employee unions,” Moore said. “They go after university endowments, and universities have become playpens of the left. And getting rid of the mandate is to eventually dismantle Obamacare.”
Language that strips away the Affordable Care Act’s individual mandate provisions, which require most Americans to purchase health care or face a penalty, strikes a key blow to the Democrat-constructed health care bill. The repeal, set to kick in after 2018, puts GOP lawmakers a step closer to following through on their long-standing promise to do away with Obamacare. It also represents something of a consolation prize after failing to push a complete legislative repeal through Capitol Hill earlier this year.
Similarly, opening drilling access in Alaska’s Arctic National Wildlife Refuge appears to be a slap in the face to Democrats after former President Barack Obama called on Congress to add even greater environmental and conservation protections to the area. Sen. Lisa Murkowski, R-Alaska, was a key proponent of the drilling access. She received nearly $600,000 in campaign contributions from oil and gas organizations during last year’s cycle, and Republican candidates as a whole collected 88 percent of political donations made by oil and gas organizations during the 2016 elections – totaling more than $55 million – according to the Center for Responsive Politics.
Other shots appear to be more nuanced. Republicans have argued that state and local tax deductions create an unfair playing field in which residents of high-tax states are able to write off more of their federal obligations than residents of lower-tax locales.
But the highest-taxed cities and states – the vast majority of which are also economic hubs where a considerable share of America’s business is conducted – are predominantly led by Democrats. It’s been argued that the significant adjustments to SALT deductions, which are now limited to $10,000, essentially target Democratic cities and states.
“Is it the federal government’s fault that New York taxes are so high that they’re driving people out of the state?” Office of Management and Budget Director Mick Mulvaney, who is also serving as the interim head of the Consumer Financial Protection Bureau, told reporters last month. “I don’t think it’s up to the federal government to save New York from its bad decisions.”
Also targeted in the tax overhaul are the endowments of large colleges and universities – institutions that have long faced criticism from Republicans for perceived liberal leanings. Attempts to roll back a popular student loan tax credit and begin taxing tuition waivers as income failed as lawmakers negotiated the tax bill.
Sen. Pat Toomey, R-Pa., also tried to include a provision into the Senate’s tax plan that would have shielded Michigan’s Hillsdale College from new taxes on endowments. Hillsdale is highly regarded in conservative circles and has financial ties to the family of Education Secretary Betsy DeVos and the staunchly conservative Koch brothers.
Sen. Ted Cruz, R-Texas, tried to work in an amendment that would have allowed people to open 529 college savings plans for their already-conceived but as-yet-unborn children – potentially setting the stage for an anti-abortion, fetal-personhood legislative showdown. That plan didn’t make the cut in the Senate’s proposal and was not included in the final bill.
With access to reconciliation proceedings, Republicans were able to advance their bill without need for a single Democratic vote. So it’s perhaps unsurprising that Democrats weren’t exactly winners when the tax-writing dust settled – especially considering Rep. Chris Collins, R-N.Y., was quoted earlier this year as saying his donors had told him to “get [this bill] done or don’t ever call me again.”
But the thinly veiled shots at Democrats have been difficult to ignore – and state and local officials from some of these regions have expressed concern that their constituents and ultimately their budgets will suffer from the politics in the tax bill.
“There’s obviously an undercurrent here, and a very cynical undercurrent,” New York City Mayor Bill de Blasio said in a recent interview with the Now This media organization. “Let’s punish states that weren’t with Donald Trump and weren’t with the Republicans. Let’s make their lives miserable.”