GOP tax overhaul passes House with help from a dozen California Republicans, even some facing tough reelection battles

Despite weeks of consternation from some California House Republicans, a dozen joined their colleagues to pass a tax overhaul Tuesday, saying the plan would give most of their constituents a tax cut even as it slashed popular deductions.

Two — Darrell Issa and Dana Rohrabacher — voted against the plan.

Polls show the plan is unpopular in the state — only about 20% of Californians in a recent survey said they thought the $1.5-trillion plan would have a positive effect on their lives — but several members who face potentially tough battles for reelection signed on in order to help pass the party’s only major legislative achievement this year.

The Senate was also expected to pass the bill Tuesday, but, because of procedural hiccups, the House will have to vote on the bill again Wednesday before sending it to President Trump for his signature. The divisive bill passed with no support from House Democrats, including the 39 from California.

Reps. Mimi Walters of Irvine and Steve Knight of Palmdale were among the vulnerable Republicans who had concerns about the final bill because of new caps on longstanding federal deductions that have softened the impact of California’s high income taxes and expensive homes. Both worked behind the scenes to retain a portion of the deductions for state and local taxes and increase the cap for the mortgage interest deduction.

The bill caps the interest deduction for new mortgages at $750,000 of the loan, down from $1 million, but up from an initial $500,000 proposal. It also caps the previously unlimited state and local tax deduction to $10,000, far below the $22,000 average deduction taken by a third of California taxpayers.

Though many California taxpayers are expected to see an initial income tax cut under the plan, a significant number will probably have higher taxes because of the lost deductions. Analysts also expect the biggest cuts to flow to corporations and the state’s wealthiest residents.

Knight said the changes turned what would have been a tax increase into a tax cut for his constituents. While a Times analysis of new mortgages in his district this year shows a tiny fraction would be worth more than the deduction cap, about 42% of his constituents took a state and local tax deduction in 2015.

“We just couldn’t find anywhere where people were going, ‘Look, this is a tax increase,’” he said. “It works out.”

Almost half of Walters’ constituents take the state and local tax deduction. But she said she thinks the deduction changes, and subtle shifts the bill makes to the income ranges in each tax bracket, mean more people in the middle class will pay less in taxes, “which has always been my goal.”

“I had said from the very beginning, if the middle-income Americans in my district are going to benefit from this tax package, then I’m going to support it,” she said.

California’s Democrats have complained that the plan disproportionately punishes the state, and have lashed out at California’s House Republicans.

“Today, 12 California Republicans betrayed their constituents and their state to perpetrate a monumental theft from hard-working Californians. The GOP tax scam has particularly devastating consequences for middle class families in our state, and Californians will not forget the Republicans who pushed this monstrous bill over the finish line,” House Minority Leader Nancy Pelosi (D-San Francisco) said in a statement Tuesday.

Republicans brushed off attacks from Democrats over many aspects of the bill, including big provisions such as the elimination of the Affordable Care Act requirement that all people purchase health insurance, and lesser-known cuts such as slashed deductions for disasters and clean-energy vehicles. California members who helped write the tax plan have said the state should lower state and local taxes if they want to help Californians.

“This is America’s comeback. This is the beginning, this is the opportunity,” Majority Leader Kevin McCarthy of Bakersfield told reporters before the vote.

Though McCarthy has been credited with keeping the California delegation relatively united on the tax plan, two California Republicans from wealthy districts decided the tax plan would do too much damage to their voters. They joined the majority of Republicans in the similarly high tax states of New York and New Jersey to vote against the bill.

Before voting against the bill, Issa of Vista, who is considered to be among the most vulnerable Republicans running for reelection next year, called the state and local tax cap “minuscule” and said changes to the final version didn’t do enough for his constituents.

"I still fear that, even in the revised proposal, many in my area could face higher taxes under this plan," Issa said in a statement. "Californians have entrusted me to fight for them. I will not vote to make the incredible tax burden they already endure even worse.”

Another vulnerable member, Rohrabacher of Costa Mesa, said the bill had not been improved enough to help many of his constituents along the coast.

“The leadership and the House Republicans did a lot to improve the bill … but it wasn’t good enough,” Rohrabacher said. “This truly will raise the taxes of a substantial number of my constituents and I have never run for Congress on the promise that I would raise my constituents’ taxes.”

Concerns that the bill would raise taxes on their constituents also prompted Issa, Rohrabacher and Rep. Tom McClintock (R-Elk Grove) to vote against the initial House version.

McClintock, who voted for the plan, said Monday night he was satisfied with the changes made during negotiations between the House and Senate, known as a conference. He was the only House Republican who changed his vote on the final bill. McClintock’s suburban Sacramento and rural Sierra Nevada district isn’t expected to see as big of a hit from the lost deductions.

“I have always believed that this bill would be good for the overall economy. The changes the conference report has made now makes me confident to look every one of my California constituents in the eye and say, ‘This is also going to be good for your families,’” McClintock said.

In the Central Valley, where lower home prices mean less effect from the mortgage interest cap, Reps. Jeff Denham of Turlock and David Valadao of Hanford have said the changes to the tax code — especially the near doubling of the standard deduction — constitute a win for their constituents. Both are among Democrats’ top targets in 2018.

Democratic activists and candidates are gearing up to hold the vote against vulnerable California members next year, especially in the traditionally conservative bastion of Orange County, where Democrats must pick up a seat or two in order to win back control of the House.

They’ve blanketed the state with ads and held protests against the tax bill for weeks, and the bill has become a constant topic in fundraising requests. As the vote wrapped up Tuesday, the Democrats’ campaign arm announced new digital ads on the tax vote targeting the California Republicans, including Orange County’s Issa and Rohrabacher.

Fred Smoller, associate political science professor at Chapman University, said taxes are such an important issue for Orange County voters that the vote will be “millstone” around vulnerable members’ necks.

“In Orange County, among Republicans, taxes are it. You could almost live or die by how you stand on taxes,” Smoller said. “It’s a real tough vote.”