In the movie, Quentin Tarantino plays a maniac sex killer, who is also a bank robber, and brother to George Clooney, who plays his usual role as the brainy head thief. After executing a robbery and kidnapping (and sundry other crimes), the brothers take their money and hostages to a rendezvous with their fence at a Mexican honky-tonk bar.
There, Tarantino is served by an oh-so-luscious Latina waitress, a bar patron’s dream of pulchritude (~Republican representatives, tax cuts).
A mishap with a knife leads to spilled blood. Instantly the beautiful waitress transmogrifies into a hideous, snarling vampire (~suburban voters whose taxes have been hiked). Unbeknownst to George Clooney et al., every employee at the bar seems to be a vampire. That “bar” has been a death trap for millennia. The movie proceeds to its predictable climax from there.
It’s a gripping scene, where that sweet young waitress turns into a horrifying vampire, revealing the predicament in which Clooney et al. are trapped. I’m afraid Republican representatives from affluent suburban districts may soon live that scene, in New York and New Jersey of course, but not only there.
The fateful move: that deductions for state and local taxes (SALT) can no longer be taken.
The Fallacy of “Only a Few Taxpayers…”
Not to worry, sooth the consultants. Only a few taxpayers will be worse off after the standard deduction doubles even as SALT deductions end.
After all, most taxpayers don’t itemize. And most taxpayers have families with children under 18. These taxpayers will do fine under the Republican tax bill. For them, the standard deduction doubles, and the child tax credit doubles (Senate bill). Yah, it’s not much of a tax cut, net (because at the same time, personal exemptions, $4150 apiece, go away), but mega-corporations need relief, okay? Are you on the side of the job creators, or do you run with those Big Gummint tax-and-spend liberals?
Alas, you’ve heard the saying: “All politics is local.”
According to IRS statistics, maybe 10% of taxpayers nationally report incomes over $100,000, where itemization of deductions starts to appeal. Fewer than 4% earn between $200,000 and $500,000, the upper middle class tax bracket, where itemization is a godsend, and state and local taxes, including property taxes on the family home, provide tens of thousands of dollars in deductions, and hence, many thousands of dollars in Federal taxes saved.
Republicans in the House might console themselves: “Hey, so we pissed off 10% of the voters—most of them in blue states—and royally ticked off 4% of voters—almost all of them in blue states. Big-a deal. We Republicans gave tens of millions of voters, in red states and blue states alike, measurable tax relief, causing each to pay hundreds of dollars less in taxes. What’s not to like?”
Onto the fallacy: it’s true that in this great nation, fewer than 10% of taxpayers report income over $100,000. Yah, fact.
Now let’s develop that bare fact. Let’s zero in on some one suburban district, somewhere in the environs of New York city—one of a dozen such districts within a 150 mile radius of Manhattan. Here, the lawns are green, the houses are spacious, the cars in the driveway are new, the children are well-scrubbed, their faces are mostly white, yada yada.
What percent of this County’s residents earn over $100,000? Oh, let’s say 25% (it’s not Greenwich, it’s not Princeton; but it’s not rural Kansas either. It’s an affluent suburb in the Northeast).
But that’s not the number of interest. Try this: what percent of voters in off-year elections (e.g., 2018) are in the more affluent group, earning more than $100,000? Let’s say these affluent voters are 50% more likely to vote than the hypothetical average resident.
Next, what percent of these affluent residents are over 50? Oh, let’s say 50% again, one half. Those fat salaries tend to come with age. And let’s agree that older voters are 50% more likely to vote in an off year election.
You see where this is going.
Last, what is the probability that a suburban affluent voter over age 50, as described, reliably votes Republican? Let’s say again that the probability of voting Republican is 50% higher for individuals in this economic stratum, relative to the hypothetical average resident.
Now let’s do our sums. The affluent suburban voter in a district outside New York city represents 25% of the residents (as opposed to <10% of taxpayers nationwide). The cost of living is high here, but so are many salaries.
But this group is 50% more likely to vote than the average registered voter. So that makes them 37.5% of voters, as opposed to 25% of residents.
But also, half of these 25% are over 50, and we agreed these middle-aged voters are 50% more likely to vote in an off year election. So that’s 12.5% X 1.50, or 18.75%; less the likelihood of increase for being affluent (25% X 0.50 = 12.5%). Net, that adds another 6.25% to the 37.5% initial estimate of likely voters. If you’ve been following the math, it appears that 43.25% of likely voters—in this Representative’s district—fit the affluent suburban profile, the little corner of the taxpayer universe who unfortunately take it on the chin in the Republican tax bill.
But we’re not quite done. How likely is one of these voters—suburban, affluent, older—to be, historically, a loyal Republican voter? Let’s say 25% more likely.
Bottom line: in this suburban district, repealing the deduction for state and local taxes could alienate (43.25% X 1.25) = 54.06% of voters who would otherwise have been stalwart Republicans.
Lovely, loyal Republican voters who will transmogrify into horrifying harridans. And who can blame them? They didn’t vote Republican in order to pony up thousands of more dollars in taxes.
Imagine being a Democrat insurgent running this campaign message, against an incumbent Republican in one of these suburban districts: “The Republican who raised your taxes.”
And that attack ad will have the power of truth.
Only a Few Will Pay More …
That’s true at the national, aggregate level. But is it true in every district now represented by Republicans? And what will be the consequences if a Republican, a member of the party of tax cuts, instead hikes taxes on thousands of his constituents?
Can that be spun, as a sacrifice in favor of the entrepreneurs, the job creators, the Big Men, the ones who can make our nation great again?
We shall see, next November, in just under a year. After the increased withholding takes hold, and these voters have watched their take home pay drop.