California Republicans risk tax increases for their constituents

by Brian Leubitz

The feud over the tax deduction for state and local taxes continues after the recent House vote on the federal budget. Gov. Brown and Rep. Pelosi are mincing no words after all 14 California Republicans supported the budget. Brown went so far as to call the Republican members “like a herd of sheep” for voting for a measure that would increase taxes on Californians by ending the state and local tax(SALT) deduction.

But don’t worry, Rep. Kevin McCarthy (R-Bakersfield) has a plan for that:

“You know how you get to deduct where California continues to raise their rates? I don’t think it’s fair that somebody else subsidize poor management of California or New York policies,” House Majority Leader Kevin McCarthy (R-Bakersfield) told the California Republican Party convention last weekend.

“No longer can Sacramento say, I’m gonna raise the rates, just cause I’ll have the federal government subsidize it,“ McCarthy added as the crowd of conservative activists cheered him on. “They will have to be held accountable for when they want to raise taxes higher.“ (Capital Public Radio)

In other words, look over there, there’s a bathtub, let’s go hop into it because Grover Norquist told us to!

The California Republicans are hoping that the blame when the tax increases occur in California will be assigned to Democrats in the Legislature. But that seems somewhat of a gamble considering that those increases will be showing up on federal Form 1040 while Republicans control the federal government.

Look, SALT deductions are clearly not perfect, especially with respect to progressivity, but neither are any other of a number of tax expenditures. You know what else isn’t very progressive? Flattening the income tax structure to reduce taxes on the richest of Americans that, as Warren Buffet pointed out, don’t need a tax cut. Zeroing out this one deduction, while reducing taxes on the wealthy isn’t really what the Trump voters were dreaming of in their MAGA hats. And are the people really clamoring for reductions in the corporate tax rates that the Republicans are really focused on?

Pelosi, for her part, is calling on California Democrats to rally against the budget and the end of the SALT on November 3. For what it is worth, Capital Public Radio asked all of the California Republicans where they stand on the SALT deduction, with most not responding, but McCarthy and Rohrabacher said yes. We may get a full answer on how interested they feel in representing California as “tax reform” moves forward.