Politics

Trump's tax plan could hit Southern California hard. Will GOP House members here support it?

A third of Californian taxpayers could lose thousands of dollars from the repeal of one deduction under a GOP proposal released Wednesday, setting up another political dilemma for California Republicans facing tough reelection battles next year as Democrats work to win back the House of Representatives.

The potential repeal of the state and local tax (SALT) deduction, the federal deduction for state and local taxes, would hit especially hard in wealthier areas, some of which are on the exact turf Democrats are trying to win over in Southern California.

Use of the State and Local Tax deduction in California's GOP districts

District Incumbent Hometown Percent of filers who use Average deduction
District1 IncumbentLaMalfa HometownRichvale Percent of filers who use32% Average deduction $3,078
District4 IncumbentMcClintock HometownElk Grove Percent of filers who use42% Average deduction $5,213
District8 IncumbentCook HometownYucca Valley Percent of filers who use32% Average deduction $2,861
District10 IncumbentDenham HometownTurlock Percent of filers who use31% Average deduction $2,933
District21 IncumbentValadao HometownHanford Percent of filers who use23% Average deduction $2,304
District22 IncumbentNunes HometownTulare Percent of filers who use27% Average deduction $2,743
District23 IncumbentMcCarthy HometownBakersfield Percent of filers who use30% Average deduction $2,929
District25 IncumbentKnight HometownPalmdale Percent of filers who use42% Average deduction $5,323
District39 IncumbentRoyce HometownFullerton Percent of filers who use37% Average deduction $4,647
District42 IncumbentCalvert HometownCorona Percent of filers who use39% Average deduction $3,851
District45 IncumbentWalters HometownIrvine Percent of filers who use45% Average deduction $8,794
District48 IncumbentRohrabacher HometownCosta Mesa Percent of filers who use38% Average deduction $8,264
District49 IncumbentIssa HometownVista Percent of filers who use46% Average deduction $10,024
District50 IncumbentHunter HometownAlpine Percent of filers who use39% Average deduction $5,281
2014 Internal Revenue Service Data

Details of the overall tax reform plan have yet to be worked out, but so far, vulnerable California Republicans are not joining GOP colleagues in other states who have said they won’t accept the repeal, and some of them seem willing to negotiate.

GOP Rep. Steve Knight, who represents a district in the Antelope Valley where more than 40% of taxpayers use the SALT deduction, said Wednesday that Republicans from California and New York, the two states that benefit most from the deduction, have asked to sit down with architects of the plan in order to find a compromise.

“We can’t just be left out on the side of the road without fixing this,” said Knight, whose reelection battle Times editors have ranked as No. 2 on their list of the toughest races for 2018. “I don’t know that there will be a catch-all way of fixing this, but I do think we can mitigate this down.”

Here's why Trump's tax plan will hit Californians especially hard »

Another Republican in a battleground district, Rep. Mimi Walters of Irvine, represents a constituency with even more users of the deduction. She said Republican leaders seemed willing to work on the details of a tax reform bill, but people should keep an eye on the overall goal of putting more money in Americans’ pockets.

“Nothing’s set in stone yet,” she said. “What we need to look at is the overall picture.”

In any case, Congress’ decisions about tax reform “aren’t going to be based on winning or losing control of the House,” but on what’s best for the national economy, said Rep. Dana Rohrabacher, who represents a coastal Orange County district that Democrats are going after hard. Rohrabacher said he’s open to both saving and repealing the SALT deduction, which he described as a federal subsidy for California’s high taxes.

Vulnerable Republican colleagues will ultimately fight to protect the deduction, predicts Democratic Rep. Ted Lieu, whose Los Angeles-area district takes the second-highest average deduction in the state.

“The provision is dead on arrival unless the Republicans want a bloodbath next November, because many moderate Republicans live in states like California and New York where this elimination of deduction disproportionately impacts,” Lieu said. “I’d be surprised if any moderate Republicans vote for it.”

Knight on Wednesday acknowledged that Republicans feel they need to pass a tax reform plan in order to score a legislative victory this year after the majority party failed to repeal the Affordable Care Act.

“Even though we’ve done ... a lot of other, in my mind, big-ticket items, in a lot of people’s minds it’s not. They are looking at healthcare, and they are looking at taxes,” Knight said.

Some California Democrats have come out squarely against the tax plan.

“It’s bad policy and I can’t help but think that this is something for the administration to kind of slap the wrist of California. It sure feels like it,” said Rep. Anna Eshoo (D-Menlo Park), whose district gets the highest average SALT deduction in the state.

California’s senior Democratic Sen. Dianne Feinstein said she’s not willing to consider the bill with provisions such as ending the SALT deduction.

“I don’t believe California should suffer in order for President Trump to give tax cuts to the rich,” she said in a statement.

Support our journalism

Please consider subscribing today to support stories like this one. Already a subscriber? Your support makes our work possible. Thank you. Get full access to our signature journalism for just 99 cents for the first four weeks.

sarah.wire@latimes.com

Follow @sarahdwire on Twitter

Read more about the 55 members of California's delegation at latimes.com/politics

ALSO:

Trump, Republican tax plan could be a big hit to many Californians

Trump pitches tax plan as 'once-in-a-generation opportunity,' but leaves many issues unresolved

Updates on California politics

Copyright © 2017, Los Angeles Times
EDITION: California | U.S. & World
79°