Blue-state Republicans push tax law changes

Some blue-state Republicans are pushing for tax changes to help their constituents as Democrats seek to target the suburbs in the midterm elections.

Nearly all of the GOP lawmakers who voted against the sweeping tax-cut bill in December did so because of a cap on the state and local tax (SALT) deduction that would be particularly damaging in high-tax areas such as New York, New Jersey and California. Now that the bill is law, some of those lawmakers are offering legislation to prevent their constituents from seeing tax hikes.

Rep. Leonard Lance (R-N.J.), a top target in November, is planning to offer legislation that would allow everyone who prepaid their 2018 property taxes to deduct them on their 2017 returns.

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Lance and others also say they still want to see the full SALT deduction restored.

And a number of blue-state Republicans, including those who voted for the tax bill, are calling for Democratic state officials to lower taxes.

The midterm elections are shaping up to be challenging for Republicans. The president’s party typically loses congressional seats in the midterms, and President Trump’s approval rating in recent polls is only around 40 percent.

A number of high-profile GOP lawmakers have decided to retire rather than face potentially difficult contests — including House Foreign Affairs Committee Chairman Ed Royce (R-Calif.), who said on Monday that he would not seek reelection.

Many districts held by GOP lawmakers in blue states were being targeted by Democrats even before the tax bill passed, since Democratic presidential nominee Hillary Clinton won or only narrowly lost them in 2016. The tax bill only complicates things further.

GOP strategist Ford O’Connell said that blue-state Republicans are all making the case that they’re fighting for their constituents, though they are not all doing so in the same way.

“They’re not all singing from the same hymn book,” he said.

Lance’s bill, which he plans to introduce with Rep. Josh Gottheimer (D-N.J.), is designed to expand an IRS ruling that prepaid property taxes are only deductible if the tax was assessed and paid in 2017. Lance also sent the IRS a letter Tuesday asking the agency to allow all 2018 prepaid property taxes to be deductible, regardless of the assessment date.

“Whatever you paid in 2017, in my judgment, should be deductible,” Lance told The Hill in an interview.

Another blue-state Republican, Rep. Pete King (N.Y.), teamed up with Rep. Nita Lowey (D-N.Y.) to introduce legislation this week to restore the full SALT deduction.

Lance said he also plans to support that bill. And Rep. John Faso (R-N.Y.) said he’s interested in those efforts as well.

“I’m going to talk to my colleagues, and I think it’s important for us to stake a principle from the standpoint of federalism that the federal government should not subject the amounts of money you pay to your state and locality to taxation as well,” Faso told reporters Monday.

The prospect of undoing the SALT deduction cap is unlikely, and blue-state Republicans said their desire to push for restoration of the full deduction is based on policy views rather than the midterms.

“I don’t think we should be paying taxes on taxes,” Lance said.

But Susan Del Percio, a New York-based GOP strategist, said opponents of the tax bill will be able to tell their constituents they are working for them.

“They get to say that ‘I’m a fighter and I’m going to continue to fight with you,’” she said.

Blue-state lawmakers who voted for the tax bill are touting its benefits for their residents and the work they did to get the $10,000 SALT cap included in the legislation, when Republicans initially planned to repeal the deduction entirely. They are also criticizing state-level elected officials in their home states for not lowering taxes and instead floating options to circumvent the new law.

Some Republicans who opposed the bill also have called for their home states to rein in their taxes.

“I think it’s hugely important for our state and local governments to understand that the reason why our deduction is so high is because our state and local taxes are so high,” said Rep. Lee Zeldin (R-N.Y.). “There should be a higher priority placed on tax relief more so than just changing the way that we tax in order to circumvent federal rules. We need our state government to operate more efficiently than it does.”

Del Percio said that Republicans are going to have to swim against the current and focus their messages for their constituents.

“Their strategies are all going to have to be very tailored to their districts,” she said.

Democrats are optimistic the new tax law will benefit them in the midterms, even in districts where Republicans voted against the measure.

Jon Selib, a New York-based Democratic strategist, said blue-state Republicans are “at a special disadvantage,” regardless of their vote, because they will still be tied to the national party.

“How do you fix this bill? You fix this bill by changing Congress,” he said.