For months, Republicans have been trying to sell Montana voters on the $1.5 trillion tax cut passed in December. Now they've brought their big gun, Grover Norquist, the conservative dean of tax reform, to speak at the MTGOP platform convention in Billings.
The godfather of anti-tax pledges and president of Americans for Tax Reform, Norquist told Lee Montana that Republicans should be in good shape for the 2018 midterm elections with tax cuts in the bag and economic growth strengthening. Unemployment is decreasing.
All those things should be working in favor of Republicans as they prepare to defend control of the House and Senate. “Should” is the operative word; it’s unclear voters are receiving the message.
The reasons voters might not be seeing the tax benefits as Republicans do are multiple, and some are simpler than others. Take payroll, for example.
“People just don’t look at their paychecks anymore because 83 percent of people have direct deposit,” Norquist said, speaking in Billings. “In February when they change withholdings, then people will go ‘whoa, what is that?’”
In the meantime, Republicans are going have to continue to sell voters on the Tax Cuts and Jobs Act. Corporate tax rates were permanently cut from 35 percent to 21 percent, while income tax reductions for individuals were smaller and temporary. Democrats have argued the rich individuals and corporations saw the biggest benefits from the tax bill. The bill did offer other perks — an increase in the child tax credit, for example, and 20 percent federal deduction for pass-through businesses, which tend to be small and of which Montana has many. Montana’s Republican Sen. Steve Daines authored the pass-through business deduction.
“Pass-through income tax — 28 million companies are pass-throughs,” Norquist said. “Some of them are one-person, married couples. About 75 million people work for the 28 million. It’s a huge deal for them. It should become clearer this year that people are seeing lower marginal income tax rates for their businesses. It should be easier to get investments.”
A Gravis poll of Montana voters conducted this month shows approval of Republican tax reform underwater, with 34 percent of those polled approving of the Trump tax cuts and 38 percent disapproving. The remaining 28 percent of the people asked were uncertain about the $1.5 trillion tax bill. Those responses were similar to a Monmouth University Poll this month that had 34 percent of Americans approving of the tax cuts. Approval seemed stuck in the high 30s in other recent polls, as well.
President Trump rarely gets through a week without pulling the national conversation away from tax cuts. Either by incendiary tweet or trade war, by separating refugee children from their parents or denying all knowledge of hush money to mistress Stormy Daniels, Trump keeps going off message.
The president’s threats of trade wars with multiple countries have rattled Montana farmers, who anchor counties that strongly supported Trump’s election in 2016. Tariffs and counter tariffs with China are giving farmers heartburn. In 2017, China bought $19.6 billion worth of U.S. farm products, according to the U.S. Department of Agriculture's Foreign Agricultural Service.
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China buys about $26 million worth of hard red spring wheat shipped from Pacific Northwest ports. Half of that grain comes from Montana, and the other half comes from North Dakota, according U.S. Wheat Associates, which markets American wheat. Sales to China are an eight-figure contribution to Montana’s annual wheat sales, which for several years have averaged about $1 billion.
Norquist sees the trade distraction as avoidable, although Trump wanting to get better trade terms for Americans is understandable. Along the way of establishing tariffs on foreign steel and aluminum to shore up U.S. production of those materials, the president has made things more expensive for U.S. consumers and manufacturers who buy foreign products. Trump has also passed up concessions made by China and other nations attempting to avoid a trade war.
“My concern is there’s stuff on the table Trump could take and announce ‘I won.’ Remember the Chinese offered him $50 or $70 billion. If you’re Trump you go, ‘I won’ because he does that even when he didn’t necessarily win. And then the Germans just announced, or maybe the entire EU, ‘we could go zero, zero on cars.' And since our cars get more than theirs, it’s exactly the kind of fix he’s looking for.”
The tax cuts, improving unemployment numbers, a strong stock market, and increasing economic growth should all be working in Republicans’ favor right now, Norquist said. Americans for Tax Reform has started listing tax cut benefits on its website. The examples include individual businesses that offered pay increases to employees and also regulated utilities that by law were obligated to share their tax cuts with customers.
Montana’s regulated utilities NorthWestern Energy and Montana Dakota Utilities are both on the list. Their customers received a share of the utilities’ tax cuts.
From the start, Democrats have with confidence attacked the Republican tax reform law.
Montana’s Democratic Sen. Jon Tester attacked the bill in a YouTube video before the tax cuts were passed. The video went viral. His GOP challenger this midterm, state Auditor Matt Rosendale, reminds voters frequently that Tester opposed the tax bill.
Under Democratic Gov. Steve Bullock, Montana’s Department of Revenue had initially predicted the state would lose millions of dollars in needed revenue because of the way federal tax law influences state income tax collections. They suggested a special session of the state Legislature might be necessary to fill a deficit of $122 million. Eventually, the state had to shrink those claims after legislative analysts challenged DOR’s interpretation of tax policy.
Americans for Tax Reform penned an opinion column last week criticizing Bullock for not supporting the federal tax cuts.