Another Bad Idea for the Tax Conferees

by Ramesh Ponnuru

A political drawback of the Republican tax bills is that they raise taxes on a significant number of voters by curbing the deduction for state and local taxes. A lot of these voters are in households that make between $100,000 and $500,000 in taxable income. About 40 million tax returns come from that group, and its members are disproportionately likely to face higher taxes as a result of Republican tax legislation.

Would Republicans make these households happier if they cut taxes more for households richer than they are?

The editors of the Wall Street Journal would have congressional Republicans believe that the answer is yes. Once again, they are arguing that cutting the top income-tax rate will salve the pain of voters who are currently slated for tax increases.

The Journal wants a top income-tax rate of 35 percent. In both the House and Senate bills, the only people who pay more than that are singles making more than $500,000 and couples making more than $1 million. Around 1.7 million returns report taxable income above $500,000, and even many of them would not see any benefits from the Journal’s proposal.

Whatever else a deeper tax cut for the country’s highest earners would accomplish, it can’t do much to help with the political problem that concerns the Journal.

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