GOP tax message hits a snag

The following article by Naomi Jagoda and Niv Elis was posted on the Hill website March 30, 2018:

Credit: Alex Edelman/picture-alliance/dpa/AP

More than three months after the passage of the GOP’s tax-cut law, new surveys suggest that many people don’t think they are getting bigger paychecks, which could cut into support for Republicans in this fall’s midterm elections.

A CNBC poll this week stated that just 32 percent of working adults reported having more take-home pay due to the new law, a problem for Republicans hoping to run on the measure and the health of the economy in November.

The GOP has made the tax-cut law the centerpiece of its campaign message, arguing that Republican control of Congress and the White House led to legislation that is putting more money in people’s pockets and stimulating an economy with low unemployment.

Yet the CNBC poll suggested that many people aren’t noticing much of a change from the law, a sentiment that could feed into Democratic arguments that it is helping the rich while doing little for the middle class.

Conservatives say their problem is about messaging. They say they simply have to do more to deliver the news about the tax bill and its benefits.

“Republicans have to discipline themselves to stay on message,” said Americans for Tax Reform President Grover Norquist. “Somebody says ‘Korea and steel,’ you say ‘tax cuts.’”

Republicans publicly and privately have criticized President Trump for distracting from a party message centered on taxes and the economy.

The CNBC poll wasn’t the first one to show few employed people reporting seeing paycheck boosts due to the tax law. A Politico–Morning Consult poll conducted in mid-February found that 37 percent of employed voters noticed more take-home pay, while 53 percent hadn’t.

And more generally, the GOP is already facing stiff headwinds.

A CNN poll released this week found Democratic voters enjoy a significant enthusiasm gap over Republican voters — although the poll also saw Democrats’ advantage on the generic House ballot narrowing.

Tax experts said there are a number of reasons why people might not be reporting seeing an increase in their take-home pay.

One reason is that many taxpayers won’t end up receiving a particularly large tax cut, especially if the benefit is spread out over the course of the year.

For example, the Urban-Brookings Tax Policy Center has estimated that people with incomes between $48,600 and $86,100 will, on average, receive a tax cut of $930 for 2018, which is around $35 per pay period if divided equally among 26 pay periods. The group said that people with income of below $25,000 will, on average, get a tax cut of only $60 over the course of the whole year.

“The tax bill just doesn’t provide much benefit to most people,” said Vanessa Williamson, a fellow in governance studies at the Brookings Institution.

The CNBC survey seemed to confirm that result. It showed that people with higher incomes were more likely to notice an increase in take-home pay than low-income individuals — an outcome that Democrats could use against the GOP in their midterm campaign.

Another reason why people may not be reporting seeing paycheck boosts is that some of the benefits of the new tax law, such as the larger child tax credit, aren’t reflected in the new withholding tables.

“There are benefits of tax reform that aren’t necessarily reflected in the new withholding tables, and this is the last year Americans will have to file their taxes under the old code,” said Julia Slingsby, a spokeswoman for House Ways and Means Committee Chairman Kevin Brady (R-Texas.).

Experts also said that there are other reasons why people may see changes in their paychecks besides the tax cuts, such as larger 401(k) contributions or health insurance premiums.

“There’s just a lot of moving parts to people’s take-home pay,” said Gordon Gray, director of fiscal policy at American Action Forum.

The GOP must also contend with people’s pre-existing political views, which color their perception of whether the tax plan has affected their income for the better.

Among the employed adults in the survey, Trump voters were more than twice as likely to say they had more take-home pay as a result of lower federal taxes (48 percent) than people who voted for Democratic presidential nominee Hillary Clinton (22 percent). Nearly twice as many Clinton voters said they didn’t see a wage bump in comparison to Trump voters (62 percent to 35 percent, respectively).

That could indicate that Republicans will have a hard time reaching Clinton voters, even if their paychecks are increasing as a result of the tax overhaul.

Still, polls have shown that support for the tax law has increased since its enactment as companies have announced wage increases, bonuses and new benefits following the law’s passage. According to GOP internal polling, the tax law has a positive image in competitive House districts.

“The Republican-led tax reform plan becomes more popular by the day as people learn about the positive effect it has had on their paychecks, family budgets and our thriving economy,” said Jesse Hunt, a spokesman for the National Republican Congressional Committee.

Only a small subset of adults surveyed by CNBC said that they saw their paychecks go up and it was significantly beneficial.

Of those surveyed in the CNBC poll, only 60 percent were employed to begin with. Among those, only 32 percent said that they noticed their income go up as a result of tax changes.

Breaking that group down further, just 38 percent thought the amount their wages went up helped a fair amount or a great deal. That means only 12 percent of employed adults thought the tax plan helped them in a significant way, which amounts to only 7.2 percent of the overall sample.

The poll comes after employers were supposed to have adopted guidance from the IRS that adjusted the amounts withheld from people’s paychecks for federal taxes in light of the new law.

The withholding guidance took into account three key parts of the tax law: the lower rates, larger standard deduction and repeal of personal exemptions. Treasury Secretary Steven Mnuchin said that 90 percent of wage earners would see more take-home pay due to the guidance.

Conservatives said that GOP lawmakers should do more to highlight the tax law’s benefits.

“The amplification needs to go up. If a congressman is only talking about it once a week, he needs to talk about it twice a week,” said Ryan Ellis, senior tax adviser for the Family Business Coalition.

April 17 filing deadline to tout the benefits of the new law, according to a spokeswoman.

One bright point for Republicans in the CNBC poll is that, despite many people brushing aside the tax bill’s positive effect on their income, a large number maintained an overall positive outlook about their wages.

Of the 60 percent of respondents that were currently employed, 41 percent said they expect their wages to increase in the next year — a moderately high level by historical standards.

And the good economic news keeps on coming. On Thursday, the Labor Department announced that jobless claims have fallen to their lowest level since 1973.

Focusing on overall economic satisfaction could be a winning approach for Republicans, even if people aren’t feeling a big effect from the tax cuts.

“People are always skeptical about their getting higher pay and tax or other benefits,” says pollster Mark Penn, a former strategist for President Clinton.

“The key point is how are they feeling about the overall economy. A party should never run on tax cuts but on economic performance, employment and wage gains. Tax cuts by themselves would not be a winning message,” he added.

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