WSJ: The Next Dilemma of the GOP Tax Overhaul

While the broad strokes of the House Ways & Means Blueprint are promising, there are still potential pitfalls in the details, well beyond the DBCFT fight. I spoke with Richard Rubin from the Wall Street Journal about the treatment of pass-through business income:

Republicans want to lower the tax rate for these businesses in conjunction with corporate rate cuts. But they haven’t decided what should be taxed at 25%, as a firm’s business income, and what should be taxed at 33%, as the owner’s wages at the firm.

They have a few choices, said a House GOP aide. One is a pure numerical split, allocating, say, 70% of pass-through income to wages and 30% to business profits. That is simple but politically toxic.

“It’s not a real 25% rate. That’s more like a 31% rate, in which case you’ve got trouble,” said Liam Donovan, director of legislative and political affairs at Associated Builders and Contractors, a trade group. “Using a blunt instrument is a non-starter.”

You can read the full piece by clicking here.

Continue Reading

The Atlantic: How Trump Could Rearrange the U.S. House

I spoke with The Atlantic‘s Ron Brownstein about the 2016 presidential map as a window into the congressional electoral future.

The vividly contrasting voting patterns of 2016, with Trump posting big gains over Romney in heavily blue-collar House districts and Clinton improving over Obama in a broad swathe of white-collar districts, may have offered a fast-forward preview of how the House may evolve in coming years. “It was like looking decades in the future, and this is what it looks like,” said GOP strategist Liam Donovan, referring to the 2016 results. “If you just push down the gas and let it rip [on the class resorting], this is what it is going to look like.”

“Where Hillary enjoyed a big bump in these congressional districts, it was clustered in the affluent ’burbs of Dallas, Atlanta, D.C., Chicago, L.A.,” said Donovan, the GOP strategist and director of legislative and political affairs for the Associated Builders and Contractors trade association. “The question for the long run is: What is more likely, that those people fully evolve into Democratic voters or do they snap back to the Republicans?”

As education and diversity levels both rise, Republicans are divided over whether the long-term demographic swap in each party’s House caucus is a good bet for the party. Patrick Ruffini, a GOP consultant who specializes in demographic trends, said House Republicans can offset any Trump-era losses in white-collar and diverse districts with even deeper gains among blue-collar voters or by finding creative ways to separate themselves from him. “To what extent are you going to see the non-college white population … feeling even more alienated and therefore voting more Republican?” he said. Stephen Bannon, Trump’s top White House strategist, also pointed to a blue-collar GOP future when he told The Washington Post in an email Tuesday that the administration is “developing populist nation-state policies that are supported by the vast and overwhelming majority of Americans, but are poorly understood by cosmopolitan elites in the media that live in a handful of our larger cities.”

Tom Davis, by contrast, is dubious Republicans will ultimately benefit from this rolling class realignment: “It didn’t surprise me that Trump saw this [resorting] and put an exclamation point on it,” Davis said, “but it’s still a loser for Republicans long-term.” Donovan largely agrees: “Even as these Trump [blue-collar] gains happened, the share of the non-college white vote actually dropped and the college vote increased. So if you are handicapping the future … going all in on the Trump path is a dangerous proposition.”

Full piece here– recommended reading.

Continue Reading

NRO: The Blue Wall Crumbles

My latest at National Review on demographics as destiny, Obama’s hidden WWC strength, and the Clinton campaign’s folly:

The failure of Hillary Clinton to excite, turn out, and sustain Obama margins with the so-called Rising American Electorate hurt her badly. But even more fatefully, the Clinton campaign — and Democrats generally — appear to have misread the very make-up of their coalition, and in doing so ignored the apparent glue that was holding together the deceptively fragile Blue Wall. In the end, a little more than 100,000 votes separate genius and glory from folly and failure.

Full piece here.

Continue Reading