Red states are utilizing blue states as their new piggy financial institution within the GOP Congress.
On huge legislative points resembling tax reform and ObamaCare repeal, Republicans within the Senate have sought to redistribute federal funds from New York, New Jersey and different blue states dominated by Democrats to the crimson states within the South, Midwest and Great Plains which are largely represented by the GOP.
The most up-to-date instance is a GOP tax plan that might restrict native and state gross sales, revenue and property tax deductions — which might harm suburban taxpayers in blue states with excessive property taxes.
Republicans are casting off the deduction as a result of they should decrease the price of their tax invoice, which reduces the company tax fee to 20 p.c. It simply so occurs that the key deduction getting the axe delivers huge advantages to blue-state taxpayers.
“I think my observation would be yes,” House Democratic Caucus Chairman Joe CrowleyJoseph (Joe) CrowleyStay protection: Day two of the Ways and Means GOP tax invoice markup Dem rep: Trump has ‘underestimated’ Americans House pbades payments to boost IRS oversight MORE (D-N.Y.) stated in response to a query about whether or not he thought Republicans had been focusing on blue states.
“It is unfortunately a further attempt to divide America when we should be trying to bring it together. The president is dividing America. The Republican Congress and the Ryan-McConnell tax scam bill is going to further divide America if enacted.”
While the House invoice preserves a most $10,000 property tax deduction, the Senate tax invoice would go even additional by fully eliminating the deduction.
The extra stringent Senate invoice displays a political actuality: There are not any Republican senators from the states of California, New York and New Jersey, whereas within the House, blue-state Republicans received a concession.
Six states declare greater than half of the worth of the deduction nationwide, in accordance with the Tax Foundation, and 4 voted for Hillary ClintonHillary Diane Rodham Clinton5 takeaways from the Virginia governor’s race Dems mull huge adjustments after Brazile bombshell Dem ousts incumbent Republican in Manchester mayoral race MORE in final yr’s presidential election: California, New York, New Jersey and Illinois.
Republicans whose districts can be harm by the elimination of the tax deduction have been vocal in opposing it.
“I look at the idea of eliminating the state and local tax deduction as a geographic redistribution of wealth because you’re taking money from a place like New York to provide deeper tax cuts elsewhere,” Rep. Lee Zeldin (R-N.Y.), certainly one of a handful of GOP opponents to the House invoice, stated on Fox News final week.
A couple of different Republicans have questioned the knowledge of the technique, even when their very own states won’t be harm by the adjustments.
“There are some taxpayers who are losing exemptions, particularly in high-tax states like New York or California, that could conceivably be paying higher taxes. I think that’s a mistake,” Sen. Ted CruzRafael (Ted) Edward CruzIn a single day Finance: GOP criticism of tax invoice grows, however few no votes | Highlights from day two of markup | House votes to overturn joint-employer rule | Senate panel approves North Korean banking sanctions GOP criticism of tax invoice grows, however few able to vote towards it Anti-gay marriage county clerk Kim Davis to hunt reelection in Kentucky MORE (R-Texas) stated of the House tax-reform invoice.
Tax reform is the second high-profile instance of GOP laws that has dramatically shifted advantages from blue states to crimson states.
The ObamaCare repeal invoice sponsored by Sens. Bill CbadidyWilliam (Bill) Morgan CbadidyIn a single day Health Care: Trump officers to permit work necessities for Medicaid GOP senator: CBO transferring the goalposts on ObamaCare mandate CNN to air badual harbadment Town Hall that includes Gretchen Carlson, Anita Hill MORE (R-La.) and Lindsey GrahamLindsey Olin GrahamCNN to air badual harbadment Town Hall that includes Gretchen Carlson, Anita Hill Trump wrestles with dealing with American enemy combatants Flake: Trump’s name for DOJ to probe Democrats ‘not regular’ MORE (R-S.C.), which GOP senators nonetheless hope to deliver to a ground vote subsequent yr, would have redistributed cash from states that expanded Medicaid, which are usually Democratic, to states that didn’t.
Some say Republicans aren’t deliberately attempting to take cash from blue states to shift it to crimson states.
“I think it’s too extreme to say that the policy proposals are specifically designed to basically be like Robin Hood, taking from blue states and giving to red states,” stated American University professor Capri Cafaro.
For instance, she stated, crimson states that expanded Medicaid would lose federal funding underneath the health-care invoice — together with Ohio, Arizona, Arkansas and Louisiana, all of which voted for Trump final yr.
Still, the most important losers underneath the health-care plan can be blue states like California, New York, Washington and Oregon.
“It just looks like the Republicans are taking the money from the Democrat states and giving it to the Republican states,” GOP Sen. Rand PaulRandal (Rand) Howard PaulIn a single day Finance: GOP criticism of tax invoice grows, however few no votes | Highlights from day two of markup | House votes to overturn joint-employer rule | Senate panel approves North Korean banking sanctions McConnell expects Paul to return to Senate subsequent week Cruz: It’s a mistake for House invoice to lift taxes MORE (Ky.) stated in September, including that it’s a “game of Republicans sticking it to Democrats.”
Elections have penalties, and it’s hardly uncommon for a Republican authorities to enact insurance policies that ship advantages to their constituents.
Dan Holler, vice chairman of Heritage Action for America, a conservative advocacy group in Washington, D.C., stated typically insurance policies disproportionately harm states as a result of Republicans and Democrats have completely different views of presidency.
“It’s not surprising that those come in conflict with state policies that are run by the opposing party,” he stated.
“To the extent any of these blue states rely more heavily on certain facets of current law, then I guess I understand why those blue states feel this way. They built their model of government around the federal code, but bad provisions of the federal code.”
He additionally famous the Obama administration’s insurance policies on coal that had a unfavourable impression on crimson states like West Virginia.
“The Obama administration’s crusades to get rid of fossil fuels had a mbadive impact on red states. I don’t think they were trying to punish red states. They were just trying to get rid of fossil fuel usage. The impact on that was disproportionate on red states,” he stated.
Jacob Leibenluft, a senior adviser with the Center on Budget and Policy Priorities, stated the GOP ways have a political logic.
“The ideological argument Republicans have against Medicaid and Medicaid expansion, that Republicans have against [the state and local tax deduction] … they can marry that ideological argument with policies that are going to disproportionately hurt states more represented by Democrats than Republicans,” he stated,
But the confluence of the health-care and tax payments strike some observers as being one thing new.
“It feels to me like it’s a new strategy, certainly at the national level. I can’t think of previous reform efforts that had such a wide distributional effect across the states,” stated Topher Spiro, the vice chairman for well being coverage and a senior fellow for financial coverage on the liberal-leaning Center for American Progress in D.C.