The GOP Tax Bill Punishes Blue States…..So What

Sunday morning I was scrolling through my news feed and came across this gem.  Written by a contributor to USA Today, the article was mostly the standard “Republicans tax the poor to give to the rich.”  But, the larger premise was the bill was a declaration of war by red states on blue states.  You know, the author actually is right on this one the more I thought about it.

Of course, the primary point of the editorial was Republicans are nihilist, hate education and blah, blah, blah.  The standard fair.  But move beyond that and you start to see in the details of the bill it benefits red vs. blue states.  You know, the meaningless middle of the country the Democratic nominee for President said was full of deplorables.

Economically, the tax bill merges tax policy with cultural ones.  The capping of the mortgage interest deduction at $500K (House bill) or $1 million (Senate bill) might impact some well off voters in red states but it will impact far more in blue NY State and California.  Why else would California Senator Dianne Feinstein suddenly start defending the million dollar mansions of “the rich?”

Likewise, the capping of the SALT deduction at $10K eliminates the salve of many blue state voters living in high tax states.  Republicans in Middle America shrugged at this and probably privately said voters can now see how much the blue state model costs.  Only blue state Republicans and Democrats collectively gasped at such a concept.  Now, blue state voters get to see just how much it costs to support massive government bureaucracies and out of control public education and governmental sector unions.

Economics are not the only place where blue states get checked.  Whereas in the Obama years blue states got to shove their cultural values and attitudes down the throats of those in rural Ohio the shoe is now on the other foot.  Policies codifying blue state values in the Obama years are now being undone.  Or, in this case, have alternative values shoved down their throats.

The Senate bill manages to grant tax-exempt status to churches that engage in political activity, throws in tax-exempt status for unborn children (meaningless but symbolic) and repeals the Individual Mandate (okay, arguably an economic policy as well).

I’m sorry, okay, maybe I am not, but the argument that blue states actually pay for their cultural and economic ways while red states do not is ludicrous.  Blue state leaders get to hide how much their policies cost voters by negotiating behind closed doors with unions and supporting the SALT deduction.  Funny, how red state voters don’t get so large a deduction on their taxes due to the SALT deduction.

Likewise, a majority of America’s soldiers, you know, the ones that protect blue states from people who want to attack us, come from red states.  Still waiting on NYC sending thousands of their young ones overseas to fight.

In truth, blue states lose out on this tax bill.  Just like red states lost out on Obamacare.  This is nothing new in American politics.  As voters become more polarized and fewer states send Senators and Congresspeople of the opposite party of the President that won their state to Congress the incentive to actually try to write their policy preferences into bills drops.  Chuck Schumer cared as much about what Idahoans wanted in the ACA as Mike Crapo cared about what New Yorkers wanted in the tax bill.  Welcome to politics circa 2017.  It would be nice if we were not living in this political arena but we are.

This is not the only calculation that went into this tax bill.  Republicans want blue states to lose out more than red states but they also want upper middle class Republicans and swing voters to benefit.  Obviously, they were paying attention to 2016’s results where blue-collar voters shifted to the GOP on cultural issues and white-collar voters did the same with Democrats.

Republicans seem to be gambling they can throw just enough economic benefit and cultural policies in to appeal to blue-collar workers while trying to woo back some white-collar voters on economic appeal.  It is an interesting gamble considering cultural appeals often are far stronger than even the best policies.  It is why there are so many Clinton-Republican Congressmen/women and eleven Trump Democrats.  Obviously, their cultural appeals worked.

Still, the only people hyperventilating about this bill are predictably liberals and Democrats who apparently see the bill as a declaration of war against their way of life.  Well, now you know how social conservative viewed being told if they opened a business they would always have to bake cakes for people who violate their most deeply held beliefs (except that’s all they wouldn’t do) or forced to subsidize abortions through state exchanges.  Pretty sure they already viewed America as at war.  Between red and blue.



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