Walden tells a half truth.

Walden's story is partly true, but not true.  It is not the whole truth.  It is not nothing but the truth.

Walden is a Oregon Rotarian. Oregon Rotarians are the kinds of people he hurt the most: business and professional people.

It probably won’t matter.  The Republicans will still vote for him.

Click: Walden sells it: It's a Middle Class tax cut.

Greg Walden is in an interesting spot.  He is a Republican in a nice safe Republican rural mountain-west type district in Oregon.  Because Oregon is a blue state that took advantage of the Medicare expansion under the ACA his District has the nation's highest number in the country of constituents who profited from the Medicaid expansion--the expansion he and the GOP worked to repeal.  Hospitals in his district would be particularly vulnerable to those people losing coverage. Yikes. Moreover, he is the sole Republican congressman in a state that is number two in the nation (behind California) in being a state whose prosperous citizens will find their taxes raised by the tax bill he just passed.  The cap on deductions is brutal on two-income Oregon families.

Double whammy for his state and district.

He isn't on the outside looking in, a scrappy fighter saying "Don't do this!"  He is a leader in the GOP.  He is on the inside.

Lobbying was very effective

But Walden can pull this off.  He has a reputation and manner as a nice genial guy.  That is a huge asset.  He looks and sounds sincere.  Earnest, not angry.  It's a Republican District and a lot of voters are inclined to believe him. Unlike Trump, he does not brag about the enemies he smashed.   He does the opposite.  He minimizes, he misdirects, and he fibs.

First, Walden says something we would like to be true, but is not. 

        "We’re closing the loopholes and making filing your taxes as easy as filling out a postcard. The Washington special interest lobbyists lost, and the hard-working American taxpayers and job creators won."

Media reports on the tax bill report the direct opposite.  It was paradise for special interests.  They helped write the bill, the bill was rushed through without hearings, and the proof is in the pudding.  Special interests came out great.  

Even Walden's own explanation of the bill reveal the handiwork of interest groups jiggling the fine print.  Walden noted that there is a special provision for wineries and craft breweries.  Special provision for medical deductions, home mortgage deductions, and for Oregon farmers for whom a $11 million dollar tax free inheritance wasn't enough, so it was raised to $22 million.

He spoke to the doubling of the standard deduction but not the end of personal exemptions which reverse the value of that.  He spoke to the increased standard deduction but not its effect on donations to churches and nonprofit organizations.  He spoke to the modest tax reductions on some Oregonians but not to how small it was compared to the tax benefit to corporations, inheritors of large estates, and real estate investors like Donald Trump.  He said nothing about retention of the "carried interest" loophole, the one that allows hedge fund principles earring tens or hundreds of million dollars a year to pay lower tax rates than do nurses or truck drivers.

Pass Through Loophole

A fascinating loophole got put into the bill as the final senate votes were being rounded up. There is a special exemption for income earned by business people whose income is earned by a pass-through entity (i.e. S-Corp) rather than as an individual.  This enables a giant tax shift onto employees and away from employers.  Regular working middle income employees don't have this option.  They get W-2 income, payment from their job.  Pass through entities will deduct an immediate 20% from their income.  Here is a Forbes article that helps explain it:  Click: Forbes

Many Oregonians will see a significant tax hike.  The $10,000 cap on deductibility of state income tax--presented by Walden as generous--actually means a tax hike on most Oregonians with two-incomes.   Many Congressmen from states with an income tax rebelled, saying the tax code cannot do that to them.   Not Walden.

Click, Atlantic: Enemies punished

The Atlantic's David Frum has just published an article giving details on the special punishment for enemies--blue states and disfavored professions.  Those two-income families and most professionals were made ineligible for that "pass through" loophole. The loophole is available to real estate owners, but not health, law, brokerage, athletics, performing arts and other personal service professionals. 

Will it matter politically?  Isn't this too complicated to hurt Walden? 

 

Yes, probably.

After all, who understands S-Corp loopholes and the interplay between lower tax rates--but higher taxable income-- and estate tax exemptions, other than accountants and lawyers?   . Every family's situation is different and it will be hard to compare back and forth just exactly went wrong when a person discovers their taxes seem no less than last year.  

Walden seems like a mild nice guy, not out to hurt anyone.  And he is saying something that is partly true: that many working people's taxes will go down a little.  Accentuate the positive, ignore the negative.

Oregon's two-income families and professional people are the people most aggrieved.  Walden will face them when he gives Rotary speeches, but these are people who are generally succeeding in the current environment and may well vote on issues other than taxes.  Besides, a lot of them are Republicans.  They might believe him and not their accountant.

Solid professional and business people used to be the essential donor class for Republicans, but this is a new era.  The GOP gets its money from the multimillionaires and PACs, not the merely comfortable and prosperous.  It gets its votes from the working class and from cultural conservatives.  

Walden doesn't actually need Rotarian-type professionals to hold his seat.  They got sacrificed.