This Florida city shows how Trump tax cuts may buoy Republicans

Democrats counting on an angry, anti-Trump vibe to propel them to victory in November’s congressional elections may be in for a surprise as voters begin to see the effects of last year’s tax overhaul in their paychecks.

In Homestead, Florida—a battleground city where Hillary Clinton trounced President Donald Trump by 16 points in 2016—incumbent Representative Carlos Curbelo has been called “the most endangered Republican in Congress” by a hometown paper. But interviews with more than a dozen potential voters indicate that some are feeling more positive about the GOP thanks to their revamp of the tax code.

Isabel Valencia, 34, said she’s seeing about an extra $50 a month from the tax cuts—no small sum for a mother of two earning $25,000 a year in a local pediatrician’s office. Valencia’s husband lost his job recently, so her family moved in with her brother. She didn’t vote in the 2016 elections because she said she doubted that her vote mattered.

President Donald Trump holds up a tax-overhaul bill after singing it into law in the Oval Office.
U.S. President Donald Trump holds up a tax-overhaul bill after singing it into law in the Oval Office of the White House in Washington, D.C., U.S. Photographer: Pool/Bloomberg

“Yes, absolutely, it does encourage me to vote, and, yes, it makes it more likely to vote Republican,” Valencia said, referring to the tax cuts.

The effects of the GOP tax overhaul are starting to trickle through the economy. Large employers changed withholding amounts in January and all were required to use the new tables by Feb. 15. An employee with taxable earnings of about $40,000 annually received a biweekly paycheck increase of about $28, said Pete Isberg, vice president of government relations for Automatic Data Processing, which handles paychecks for one in six workers in the U.S. An employee with taxable earnings of $75,000 got a boost of about $70, he said.

Trump and Republican lawmakers have highlighted the paycheck bumps as evidence that their cuts are working and middle-class Americans are benefiting. Democrats have called the changes “crumbs” relative to the billions of dollars in savings for corporate America under the new tax plan. And top Democrats have expressed concern that the new tables would underwithhold income taxes for 2018 to boost workers’ pay before the midterm elections but could leave them owing federal income tax when they file in 2019.

Still, some Homestead residents who previously voted for Democrats are starting to view the GOP more favorably following the tax code changes. Annette Padilla, a 37-year-old mother of six, voted for Clinton and President Barack Obama before her, but said she likes Trump’s emphasis on creating jobs even if he comes across as a bully. She recently lost her job, so her family is relying on her husband’s $40,000-a-year job fixing equipment for a swimming pool company.

“If we start seeing more in our checks, then yes, that’s a start,” she said regarding her inclination to vote Republican in future elections.

Outside of Florida, Republicans in high-income, high-tax states like New York, New Jersey, California and Illinois—where the new $10,000 cap on state and local tax deductions will be felt acutely starting next year—could face more pressure. Democrats in those states are trying to get voters to look beyond the immediate benefit of higher take-home pay.

A University of Michigan survey showed consumer sentiment rose unexpectedly in February to its second-highest level since 2004. The survey’s director cited consumers’ greater awareness of tax savings as companies start to use the new withholding tables. The Bloomberg Consumer Comfort Index also improved in February to the second-highest level since March 2002.

Voter sentiment about the tax overhaul itself has also been improving. Fifty-one percent of Americans said they approve of the new law while 46 percent disapprove, according to a New York Times poll taken between Feb. 5 and Feb. 11 by SurveyMonkey. Support for the change stood at just 37 percent when the law was passed in December, the Times reported. Polls that once showed huge likely gains for Democrats in the midterms have started to level off, too.

“If you are an average worker, you are getting paid more and there is less withholding,” said Joseph Lavorgna, chief Americas economist for Natixis. “Most people are going to notice the difference. A lot of people live paycheck to paycheck. If it’s $25 or $50 or $100, that’s important.”

Still, the paycheck increase may not be enough to convince some voters to support Republicans. Jade Boyd, 26, who makes around $75,000 a year managing a Florida City mattress store, initially supported Vermont Senator Bernie Sanders for president. “My initial thought was it sounded like something that could be positive,” she said of the tax cuts. “Once I looked at it, I didn’t feel that same gung-ho-ness.”

2009 Stimulus

Another Floridian, Jerry Blanton, a writing tutor at Miami Dade College’s Homestead campus, made more than he ever has last year after publishing a historical novel. He paid more than $24,000 last year in taxes and expects to get half that back this year after falling into a different tax bracket because of the cuts.

“I detest Trump,” Blanton said. “So I find it ironic that I’m benefiting from his tax cut. It’s not like I’m going to give it back.”

It’s also possible some taxpayers won’t notice their boosted pay. The 2009 economic-stimulus bill contained a one-year tax break worth $800 for married couples in 95 percent of working households—a little over $15 a week. A February 2010 poll found that just 12 percent said their taxes had been reduced. More than half, 53 percent, said they saw no change. A remarkable 24 percent thought their taxes had increased.

Working Poor

Democrats hope to persuade voters that the savings they may see in their paychecks is negligible and pales in the face of women’s issues, immigration and other hot-button topics. Doing so could be crucial to winning tight races in the upcoming midterm elections, including the seat for Florida’s 26th congressional district, which stretches from southwest of Miami to the Florida Keys and includes the Homestead area.

“While some people might see some additional money from the tax act, it doesn’t change that 45 percent of our population in Florida are considered working poor,” said Juan Penalosa, executive director of the Florida Democratic Party, who sees Curbelo as especially vulnerable.

Joanna Rodriguez, a spokeswoman for Curbelo, said the lawmaker was reelected in 2016 by double digits against his Democratic opponent and cited a Politico story about his strong popularity in the district currently.

“Tax reform has already started benefiting hard-working families and businesses in South Florida,” Rodriguez said. “Some may call this crumbs, but for those who have been struggling to get by it can make a major positive difference.”

Bloomberg News
Trump tax plan Tax reform Tax cuts Tax credits Payroll Payroll taxes Donald Trump Bernie Sanders
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