Republicans see passing tax reform as critical to their political success in 2018 and beyond, but there is little evidence that the kind of reforms sought by the president and Congress would prove popular.
Instead, an overhaul of the tax code would represent a bet that lowering tax rates would immediately stoke faster economic growth, pleasing voters, and that merely passing major legislation would boost perceptions of President Trump’s leadership.
“I think there’s great public support for it, and it’s very important for Republicans to stay at the table and deliver it this year,” said Rep. Kevin Brady, chairman of the House Ways and Means Committee, when asked Tuesday about the ramifications if Republicans fail to pass tax reform.
Faster economic growth is a political winner, and the models favored by Republicans suggest that the House Republican outline would increase economic growth and raise incomes.
So is tax simplification, which Brady alluded to in noting that families are “just sick of the current tax code.”
Beyond that, though, polling that exists on voter attitudes toward taxes is thin and suggests that the approach favored by Republicans — effectively, significant tax cuts on high incomes and rate reductions for corporations — would not prove particularly popular.
For example, recent polling from Gallup suggests that a clear majority of Americans think that high-income earners and companies do not pay their fair share. In April, a Pew survey found that the top two frustrations with the tax system were the sense that the wealthy and corporations do not pay their fair share.
As for the merits of specific Republican plans, polls vary. A May poll conducted by Quinnipiac found majorities opposed to Trump’s tax reform outline, including the idea of lowering tax rates. Yet a Morning Consult poll released around the same time revealed the opposite, that a plurality liked the sound of Trump’s rate-reduction plan.
In other words, polling on the subject of tax reform is uneven and not terribly useful in setting political strategy.
Good polling on tax reform is “sorely needed,” said John Kartch of Americans for Tax Reform, the right-wing group that maintains the Taxpayer Protection Pledge committing lawmakers not to raise taxes. His own review of polling from recent years turned up support for low taxes in some cases and strong support for eliminating the estate tax, but little else that would reassure lawmakers about the politics of cutting taxes.
“The polling I’ve seen is sparse and it isn’t great,” said Henry Olsen, a scholar at the Ethics and Policy Policy Center who researches elections and conservatism.
“I do think they’re making a political mistake,” Olsen said of the Republican focus on cutting rates on individual incomes and corporations. “There’s not a huge demand for this” outside partisan Republicans, he said.
An analysis of the House GOP outline from the Tax Foundation, an outside think tank often cited by House Republican leadership, illustrates the tricky politics. The plan would result in negligible tax cuts for most households but increase the after-tax income of the top 1 percent by more than 5 percent.
The bet underlying the tax plan is that it would stoke economic growth. Taking that growth into account, middle-class incomes would rise by 8 percent to 9 percent, according to the same analysis.
Tax economists do not universally accept the idea that the House GOP plan would accelerate growth fast enough to result in that boost to middle-class incomes. Nevertheless, Republicans have good reason to believe that their tax plans would affect the economy: On Tuesday, the group of CEOs that make up the Business Roundtable reported that most of their members would scale back hiring and investment plans if tax reform fell through. “The urgency of tax reform cannot be overstated,” said JPMorgan Chase CEO Jamie Dimon, the group’s chairman.
If the promised growth does not materialize, however, Republicans would be in trouble. Republicans enjoy an advantage on the general question of taxes, said Joseph Thorndike, director of the Tax History Project at Tax Analysts, but won’t do “necessarily all that well after the fact, after legislative changes have been made” when voters feel the results of specific changes.
Instead, the biggest political benefit to passing a major tax reform might be simply demonstrating the ability to govern.
“That hearkens back a little to the 100 days argument,” Thorndike said. “You have to show that you’re capable of doing something. Doing nothing is not a particularly compelling stance.”
President Bill Clinton paid a political price for proposing a “BTU tax” on fuels in 1993 and then failing to get it implemented, Thorndike said.
Sen. John Cornyn, the No. 2 Republican in the Senate, said before meeting with Trump this week that he would deliver a message: “We need to get some legislative accomplishments.”
