San Diego Union-Tribune:The GOP tax plan could hit Southern California hard. Will the Republican House members here support it?

September 28, 2017
In The News

third of Californian taxpayers could lose thousands of dollars from the repeal of one deduction under a GOP proposal released Wednesday, setting up another political dilemma for California Republicans facing tough reelection battles next year as Democrats work to win back the House of Representatives.

The potential repeal of the state and local tax (SALT) deduction, the federal deduction for state and local taxes, would hit especially hard in wealthier areas, some of which are on the exact turf Democrats are trying to win over in Southern California.

Details of the overall tax reform plan have yet to be worked out, but so far, vulnerable California Republicans are not joining GOP colleagues in other states who have said they won’t accept the repeal, and some of them seem willing to negotiate.

GOP Rep. Steve Knight, who represents a district in the Antelope Valley where more than 40% of taxpayers use the SALT deduction, said Wednesday that Republicans from California and New York, the two states that benefit most from the deduction, have asked to sit down with architects of the plan in order to find a compromise.

“We can’t just be left out on the side of the road without fixing this,” said Knight, whose reelection battle Times editors have ranked as No. 2 on their list of the toughest races for 2018. “I don’t know that there will be a catch-all way of fixing this, but I do think we can mitigate this down.”

Another Republican in a battleground district, Rep. Mimi Walters of Irvine, represents a constituency with even more users of the deduction. She said Republican leaders seemed willing to work on the details of a tax reform bill, but people should keep an eye on the overall goal of putting more money in Americans’ pockets.

“Nothing’s set in stone yet,” she said. “What we need to look at is the overall picture.”

In any case, Congress’ decisions about tax reform “aren’t going to be based on winning or losing control of the House,” but on what’s best for the national economy, said Rep. Dana Rohrabacher, who represents a coastal Orange County district that Democrats are going after hard. Rohrabacher said he’s open to both saving and repealing the SALT deduction, which he described as a federal subsidy for California’s high taxes.

Vulnerable Republican colleagues will ultimately fight to protect the deduction, predicts Democratic Rep. Ted Lieu, whose Los Angeles-area district takes the second-highest average deduction in the state.

“The provision is dead on arrival unless the Republicans want a bloodbath next November, because many moderate Republicans live in states like California and New York where this elimination of deduction disproportionately impacts,” Lieu said. “I’d be surprised if any moderate Republicans vote for it.”

Knight on Wednesday acknowledged that Republicans feel they need to pass a tax reform plan in order to score a legislative victory this year after the majority party failed to repeal the Affordable Care Act.

“Even though we’ve done ... a lot of other, in my mind, big-ticket items, in a lot of people’s minds it’s not. They are looking at healthcare, and they are looking at taxes,” Knight said.

Some California Democrats have come out squarely against the tax plan.

“It’s bad policy and I can’t help but think that this is something for the administration to kind of slap the wrist of California. It sure feels like it,” said Rep. Anna Eshoo (D-Menlo Park), whose district gets the highest average SALT deduction in the state.

California’s senior Democratic Sen. Dianne Feinstein said she’s not willing to consider the bill with provisions such as ending the SALT deduction.

“I don’t believe California should suffer in order for President Trump to give tax cuts to the rich,” she said in a statement.