Tax Overhaul Battle Spills Into Midterms

Now Republicans need to pitch the new law to voters.

House Ways and Means Committee Chairman Kevin Brady, R-Texas, steward of the GOP tax bill, is joined by Senate Majority Leader Mitch McConnell, R-Ky., left, speaks before the final version of the legislation is signed during an enrollment ceremony at the Capitol in Washington, Thursday, Dec. 21, 2017.
AP Photo/J. Scott Applewhite
Jan. 15, 2018, 8 p.m.

The tax bill may be the law of the land, but selling the public on the $1.4 trillion overhaul of the code will reverberate into this year’s competitive midterm season.

There are few other major bills that the GOP can hang its midterm hopes on—and as November gets closer, Congress may grow less ambitious about advancing sweeping legislation. That means voters will likely give a great deal of weight to the overhaul, passed in December, as they evaluate the performance of the Republican-led 115th Congress.

“It’s incumbent on Republicans to make the sale,” said Alex Conant, a Republican strategist and campaign veteran. “They really need to spend the next 10 months selling tax reform and making sure that people see the benefits of tax reform.”

But the tax bill’s backers are still facing headwinds in winning over the public. A Quinnipiac University poll released Thursday found that voters disapproved of the tax bill by a margin of 52 percent to 32 percent, with 66 percent of respondents saying the tax plan will mostly benefit the wealthy.

Kevin Brady, chairman of the tax-writing Ways and Means Committee, said Thursday that the polling was the product of a “misinformation campaign” by the bill’s opponents. “I think over time, this year, we are going to make the case successfully, because Americans are already seeing it,” Brady said.

Conservative groups will be pushing that case all year with multimillion-dollar campaigns promising bigger paychecks, lower tax rates, and more jobs.

The American Action Network, which has close ties to Republican leadership, has launched a $10 million campaign to boost the tax bill, starting with a $2 million ad buy in 23 key Republican districts. Many of those districts—such as in Rep. Peter Roskam’s wealthy suburban Chicago district and others in high-tax states such as California, New York, and New Jersey—could be hit hard by the tax bill’s limitation on the federal deduction for state and local taxes.

The Koch brothers’ network, which includes Freedom Partners and Americans for Prosperity, rolled out a multimillion-dollar campaign in December to tout the overhaul bill using advertising as well as phone banking and other grassroots organizing.

On Capitol Hill and in the White House, Republicans are promoting corporations that have credited the tax bill with driving new bonuses or pay raises—moves that the White House is dubbing “Trump Bonuses.” Walmart said Thursday that it would raise its pay rate, issue bonuses, and expand maternity- and parental-leave benefits for its million-plus workers. Hours after that announcement, however, the company also announced the shuttering of 63 Sam’s Club stores.

But Not One Penny, a coalition of progressive groups that fought tax cuts for corporations and high earners last year, is coming back with its own election-year campaign to capitalize on the bill’s weak polling, according to a group planning document.

The group will roll out a $10 million digital and television campaign targeting more than two dozen Republicans in key regions such as New York’s 24th district, occupied by Rep. John Katko, and California’s 21st, home to David Valadao, both competitive districts Hillary Clinton won in the 2016 presidential election.

The group will also target GOP senators such as Dean Heller, Lisa Murkowski, and Susan Collins.

The battle over public perception of the bill is also spilling into the administrative space as the IRS ramps up implementation of the measure. On Thursday, the IRS released its 2018 withholding tables, which instruct employers how much federal tax to withhold for paychecks. The tables—set to take effect by Feb. 15—reflect the new tax law, and Republicans have promised workers will see bigger paychecks this year.

Republicans rolled out the new tables in high-profile fashion, with Treasury Secretary Steven Mnuchin delivering a presentation to reporters at the White House.

“We’re estimating that 90 percent of wage earners will experience an increase in their take-home pay because of the tax-cuts act,” Mnuchin said at the press conference Thursday.

The IRS puts out withholding tables every year, but with the tax bill’s passage it has become a political issue. Democrats have criticized the process, saying the administration has pressured the IRS to under-withhold income tax from paychecks to “juice” the tax cuts in an election year.

Senate Finance Committee ranking member Ron Wyden and House Ways and Means Committee ranking member Richard Neal said in a letter to the IRS last week the move could result in taxpayers owing federal income tax in 2019 to pay back what they call a “phantom windfall” the year before. The ranking members have asked the Government Accountability Office to review the tables.

Mnuchin denied any political influence over the withholding tables.

To make the tax bill benefit Republicans in November, Conant said they will need to stay on message touting the new law. But with the seemingly weekly distractions coming from the White House, it can be difficult, he said.

“Our frustration is that these last two weeks, the national conversation should have been about these tax cuts and how businesses are giving out bonuses and pay raises and making investments. Instead, it’s about tweets and outrageous comments,” Conant said. “And as somebody who’s trying to help elect Republicans, that is very frustrating.”

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