The tax-cut package is extremely unpopular, and it's not hard to see why

Key Points
  • Republicans will soon deliver a large tax-cut package to President Trump's desk. The problem is, most people hate it.
  • The GOP tax-cut effort is mainly about cutting the corporate rate, but any gains won't wind up in people's pockets for a couple of years.
  • The modestly affluent in high-tax states would actually see tax increases in the first year under the House bill.
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Republicans are well on their way to delivering a large tax-cut package to President Donald Trump's desk in the next month or two. The problem is, most people hate it.

The House passed its $1.4 trillion tax-cut package on Thursday while the Senate Finance Committee sent its version to the floor to be considered after Thanksgiving. Passage by the full Senate is not assured, with several Republicans taking issue, by turns, with the deficit impact, repeal of the Obamacare individual mandate and treatment of pass-through businesses.

Republicans can only afford to lose two votes assuming no Democrat supports the effort. But given how desperate Republicans are to score at least one legislative victory in Trump's first year in office, smart betting in Washington is that the GOP will figure out how to get to 51 votes in the Senate and then reconcile differences with the House. There's little time to get all that done this year but it doesn't really matter that much if it pushes into January.

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Republicans' biggest problem is not getting this tax-cut plan approved. Their problem is that the public mostly despises what they are doing and may give them no political reward for it in 2018 or beyond.

The latest survey from Quinnipiac out this week found that just 25 percent of voters approve of the GOP tax-cut plan while 52 percent disapprove. A majority of voters, 61 percent, believe the plan will benefit the wealthy, while just 24 percent view it as good for the middle class.

The Quinnipiac survey merely confirms previous polls showing very low support for the tax-cut plan. A recent NBC News/Wall Street journal poll also found that just 25 percent of voters view the GOP plan as a "good idea." Public opinion surveys consistently show Americans, including in Trump's blue-collar base, believe corporations and the rich should pay more in tax, not less.

There are some obvious reasons for the tax bill's dismal popularity. Rhetoric from House Speaker Paul Ryan and others aside, the GOP tax-cut effort is mainly about cutting the corporate rate from 35 percent to 20 percent on the theory that this will lead to faster economic growth and higher wages. Even if that happens — and voters are highly skeptical that it will — any gains won't wind up in people's pockets for a couple of years.

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And the benefits for individual taxpayers are mostly temporary. The House bill would cut taxes on most individual taxpayers in 2019 but some, particularly the modestly affluent in high-tax states, would see increases in the first year. By 2023, tax rates under the House bill would rise for many low- and middle-income taxpayers, according to the non-partisan Joint Committee on Taxation, the official congressional scorekeeper on tax bills.

Taxes would keep going down on the wealthiest taxpayers through gradual elimination of the estate tax, ending the alternative minimum tax and reduction in rates paid by wealthy owners of pass-through businesses.

The numbers are even worse on the Senate side, where the state and local deduction is eradicated entirely and individual tax cuts expire in 2025 while a less-generous measure of inflation remains and will push people more quickly into higher tax brackets. By 2027, according to the JCT, everyone earning less than $75,000 on average would face a tax increase. And those earning between $20,000 and $30,000 would see a 25 percent hike.

It's also not helpful to Republicans trying to sell this bill that headlines regularly feature tax changes such as a potentially massive increase in taxes on graduate students juxtaposed with goodies for the rich including favorable tax treatment for private jet owners.

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The public also has likely figured out that the pass-through rate, AMT elimination and reduction in estate taxes could be hugely beneficial to President Trump himself, no matter what Trump says about how he will get "killed" by the tax plan.

So Republicans could wind up celebrating enactment of a tax bill that the public despises. They will get some benefit of saying they got something done. And the donor class, which is leaning hard on the GOP to slam this bill through, will probably keep the money flowing to Republican candidates in ways they would not if the bill failed.

But they will also be handing a potentially powerful weapon to Democrats who are already enjoying significant momentum heading into the 2018 midterms. So far, Democrats have uniformly opposed the GOP tax plan. Not a single Democrat in the House voted for it. The Senate could be the same story.

This is because Democrats want to be able to say next year that Republicans slashed rates for the rich and corporations while offering relatively little to the middle class and hitting some voters with significant tax increases. Right now, the public is receptive to those arguments. And coupled with Trump's historic low approval ratings, this could be a ticket to sweeping midterm wins for Democrats.

— Ben White is Politico's chief economic correspondent and a CNBC contributor. He also authors the daily tip sheet Politico Morning Money. Follow him on Twitter @morningmoneyben.

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