Two years in, Trump tax cuts face big test with reelection bid

Two years after President Trump signed his tax cut legislation into law, the measure has not become a runaway hit with the public, posing a potential challenge for his reelection bid as workers say they haven’t seen much of a benefit. 

Democrats believe that their calls to roll back the 2017 law and raise taxes on the wealthy will resonate with voters and help them win back the White House next year.

“We have to eliminate [a] significant number of these god-awful tax cuts that were given to the very wealthy,” former Vice President Joe Biden said during Thursday’s Democratic presidential debate.

But the Trump campaign and many Republicans think the tax law can be an asset for them at the ballot box in November. They argue the tax cuts have contributed to the health of the economy, and they are attacking Democrats for their calls to undo the law.

“The undeniably strong and still-growing economy is an excellent argument for President Trump’s reelection and the tax cuts have fueled the growth,” Trump campaign spokesman Tim Murtaugh said in a statement. “Democrats and the media spent more than a year demonizing the package, but the positive results are apparent and enjoyed by all Americans.”

Trump signed his signature tax law, known as the Tax Cuts and Jobs Act, in the Oval Office before a group of reporters on Dec. 22, 2017.

The law slashed the corporate tax rate from 35 percent to 21 percent and lowered individual tax rates.

The Urban-Brookings Tax Policy Center, which is led by a former Obama administration tax official, estimated last year that for 2018, about two-thirds of taxpayers would see a tax cut as a result of the individual provisions in the law and that only 6 percent would see their taxes go up. The group estimated that those with income between $308,000 and $733,000 would get the biggest tax cut as a percentage of after-tax income.

When Trump signed the law, he said he didn’t think he was going to need to do much to sell it to the public.

But the measure didn’t prevent Republicans from losing their majority in the House in the 2018 midterm elections. An internal Republican National Committee poll conducted in the lead-up to the midterms found that most voters thought the tax law benefited corporations and wealthy individuals more than the middle class.

When Congress passed the legislation, GOP lawmakers thought it would become popular once workers saw increased take-home pay. However, polls consistently found that many people didn’t report seeing bigger paychecks.

Republicans also thought the public would come to view the tax law favorably once they filed their taxes earlier this year for the first time under the revised tax code. But several surveys released earlier this year found that less than half of adults thought they got a tax cut, even though analysts estimated that a significant majority of would receive a reduction in their tax liability.

“This is their signature accomplishment, and yet poll after poll shows that Americans are not feeling the benefits of this bill,” said Sean Eldridge, founder and president of the progressive group Stand Up America.

Democrats think that taxes will be a winning issue for them in 2020.

Throughout December, Democratic lawmakers and progressive groups have been highlighting ways the 2017 law hasn’t lived up to GOP promises on wages, business investment and paying for itself.

Several of the top Democratic presidential candidates this past week highlighted on Twitter and during Thursday’s debate a report from the left-leaning Institute on Taxation and Economic Policy that found that 91 profitable Fortune 500 companies didn’t pay federal income taxes on their 2018 U.S. income.

The Democratic National Committee (DNC) and state parties said they would be using a variety of tactics this weekend to criticize the law in battleground states.

David Bergstein, a DNC spokesman, said Democrats have been “hammering [Trump] during 2019 on this issue across the battlegrounds, and it’s is one of the most important reasons voters will reject him in 2020.”

Both moderate and progressive Democrats seeking to challenge Trump have offered proposals to raise taxes on the wealthy and corporations.

The White House hopefuls also say they want to repeal Trump’s tax cuts, though few have provided many specifics about what parts they want to eliminate and what parts, if any, they might keep. Sometimes, they talk generally about repealing the law; other times, they say they want to repeal the parts that benefit the wealthy and corporations.

“I think having a strong proposal on both taxing the rich and repealing the [2017 law] are going to serve to help candidates who embrace those policies,” said Maura Quint, executive director of the progressive group Tax March.

One prominent Republican on tax issues — Senate Finance Committee Chairman Chuck Grassley (R-Iowa) — said last week that he can understand why many Americans didn’t notice that they got a tax cut if they saw only small increases in their paychecks throughout the year.

Grassley told reporters Wednesday that he didn’t think the tax law would be a liability for Republicans but that “it definitely hasn’t been any help to us.”

Still, Grassley has praised the tax cuts. Republican lawmakers and the Treasury Department have touted the cuts on social media, and the Republican National Committee is expected to do so as well.

For the most part, Republicans argue the law will be an asset for Trump in his reelection campaign.

“This is not going to be a liability for him,” said Jon McHenry, a Republican pollster at North Star Opinion Research. He added that Trump will link strong economic data to the tax law and his rollback of regulations.

A CNN poll conducted earlier this month found that 76 percent of adults think U.S. economic conditions are very or somewhat good, the highest level to say so since February 2001.

Anti-tax activist Grover Norquist, the president of Americans for Tax Reform, predicted there will be fewer people who incorrectly think they got a tax increase under Trump’s law next year, after they file their taxes for the second time under the measure. He also noted that Republicans plan to offer a new tax proposal ahead of the 2020 election focused on tax relief for middle-class families, something the White House has teased as well.

Republicans also argue that eliminating the tax cuts would hurt the middle class.

“Every Democrat running for president has pledged to repeal the tax cuts, which means a tax increase on almost all Americans,” Murtaugh said. “When the economy is humming as well as it is, this is the dumbest thing you could do.”

Republican National Committee spokesman Steve Guest said that “the choice could not be more clear in 2020: President Trump cut your taxes, Democrats will raise your taxes.”

Democrats are skeptical that GOP arguments touting the tax law in the context of the broader economy will prove successful, saying the economic data isn’t as strong as Republicans think it is. They also argue voters are unlikely to equate repealing the tax law with higher taxes.

“If you didn’t feel like you got a tax cut, then you’re not going to believe anything the Republicans tell you,” said Frank Clemente, executive director of the progressive group Americans for Tax Fairness.