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If Democrats are to retake the U.S. House, California is likely to play a big part. And near the top of any list of toss-up races is California’s 45th Congressional District, an Orange County seat held by incumbent Republican Rep. Mimi Walters.
Hillary Clinton carried the district in 2016 by five percentage points, and Democrats have nominated UC Irvine law professor Katie Porter to challenge Walters this November.
One big issue in the race: President Donald Trump's 2017 tax overhaul.
While the tax bill, which Walters supported, cut taxes for many, Porter claimed in a recent television ad that it will actually raise taxes on "middle-class Californians."
"Mimi Walters votes with Donald Trump 99 percent of the time and Mimi Walters raised taxes on middle-class Californians," Porter’s ad claims.
Here, we’re focusing on Porter’s claim that Walters "raised taxes on middle-class Californians." Porter campaign manager Erica Kwiatkowski said the claim stems from Walters’ vote for the Trump tax bill.
The tax bill, signed into law by Trump in December 2017, cuts corporate taxes across as well as income taxes for many Americans.
But residents in higher-tax states like California will be hurt by changes to the state and local tax deduction. Previously, California residents could deduct the amount they pay in state and local taxes from their federal tax bill. As part of the 2017 tax bill, deductions will be capped at $10,000. The provision is set to end after 2025.
About 6.1 million Californians filed for the deduction in 2015, reducing their federal tax income by an average of $18,438, according to the Urban Institute-Brookings Institution Tax Policy Center, an independent group that models the effects of tax legislation.
A report prepared by the Government Finance Officers Association, a group made up of government finance officers, shows similar numbers. The average deduction in California, New York and New Jersey are all over $17,000. If the state and local tax deduction were eliminated, "an average taxpayer in New York who currently itemizes SALT (state and local tax) would face a tax increase of almost $5,500."
That figure wouldn’t be far off for a decent chunk of Californians.
First, the 1 million California taxpayers who may have to shell out more tax money next year, as seen in Porter’s ad, are not all middle class.
The Sacramento Bee reported that while Californians will lose a collective $12 billion because the new law caps the state and local tax deduction, the lion’s share of that money will be paid by wealthy residents earning more than $1 million a year, with 43,000 of them paying a combined $9 billion.
Still, some middle-class California families are predicted to pay more, too, according to an analysis by the state’s Franchise Tax Board.
The board has been releasing reports on the tax bill in waves since it was signed into law in December.
Notably, the tax board found that while most Californians should see a tax cut, about 751,000 households with incomes under $250,000 will likely owe more tax. Taken together, these taxpayers are estimated to owe an extra $1.1 billion.
Regardless, it’s still hard to tell how it will affect each family as every tax return is different. And in a state with more than 39 million people, many middle-class Californians will see a tax cut — not an increase.
"In general, tax situations are unique for everyone, and it's difficult to assess a broad-ranging effect on future years, without having specific information about a person's return," a spokesperson for the tax board told PolitiFact.
The Los Angeles Times also reported that Walters spent weeks pushing House leaders to alter the bill to lower the burden on her constituents before deciding to support it. She told the organization that she believes the "changes to deductions" and "tweaks to the income ranges" would mean a tax cut for her constituents.
"I campaigned on tax reform. I’ve always been a big proponent that we need to have tax reform in this country, and I think we have a very good package that we are presenting to the American people," she told the Times.
It is worth noting that Walters’ Republican counterparts in nearby districts, Reps. Dana Rohrabacher and Darrell Issa, both voted against the measure.
Porter’s ad says, "Mimi Walters raised taxes on middle-class Californians."
That's misleading. While a provision in the tax bill will result in tax increases for some middle-class Californians, it won't for many more. The ad ignores all that context, along with the fact that lion's share of the tax increases Porter is talking about will be paid for by wealthy Californians.
Porter's statement contains an element of truth but ignores critical facts that would give a different impression. We rate it Mostly False.
Katie Porter’s campaign ad, Aug. 20, 2018
Mimi Walters’ campaign ad, Aug. 14, 2018
Votesmart.org, Mimi Walters’ voting record, accessed Aug. 28, 2018
Congress.Gov, H.R. 1, Tax Cuts and Jobs Act, Dec. 22, 2017
The Sacramento Bee, "Trump's tax cut not for everyone: 1 million Californians will owe $12 billion more next year," April 17, 2018
The Orange County Register, "House plan would raise taxes for many in So Cal; two area GOP reps vote against it," Nov. 16, 2017
The Los Angeles Times, "The GOP tax plan passed. Now Democrats have another big issue to use in the midterms," Dec. 20 2017
The Los Angeles Times, "These maps show why some California Republicans are nervous about changes to the tax code," Nov. 30 2017
Government Finance Officers Association, "The Impact of Eliminating the State and Local Tax Deduction," Accessed Aug. 29, 2018.
Tax Policy Center, State and Local Tax Deduction by State, accessed Aug. 29, 2018
PolitiFact, "What's in the final version of the tax bill?" Dec. 18, 2017
California Franchise Tax Board, "Preliminary Report on Specific Provision of the Federal Tax Cuts and Jobs Act," March 20, 2018
California Franchise Tax Board, "Summary of Federal Income Tax Changes," May 21, 2018
The Mercury News, "Top seven ways the GOP tax plan will affect Californians," Dec. 5, 2017
Joint Committee on Taxation, "Distributional Effects Of The Conference Agreement For H.R.1, The Tax Cuts And Jobs Act," accessed Aug. 28, 2018
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