GOP tax cuts are campaign fodder in race between Erik Paulsen, Dean Phillips

Voters in Minnesota's Third Congressional District were targeted with campaign ads this election season promoting "historic tax cuts" for the middle class.

"And Congressman Erik Paulsen made them happen," claimed the ad by the Conservative Leadership Alliance, which ran the same spot in a handful of other congressional races that, like the Third, will determine which party controls the House next year.

The tax code rewrite, shepherded by congressional Republicans and signed by President Donald Trump at the end of 2017, was supposed to be the GOP's signature accomplishment as the party seeks to maintain its political grip on Washington. In a new ad this week, Paulsen says he's cut taxes by $5,081 a year on average for families in the district. His Democratic opponent, Dean Phillips, criticizes the GOP tax bill for not directing more relief to the middle class and for eliminating deductions that often benefited taxpayers in higher-tax states like Minnesota.

As a member of the House Ways and Means Committee, Paulsen worked on the legislation as it moved through Congress. In an interview, he talked up the benefits of the tax law and said people are better off than they were two years ago.

"The economy is booming," said Paulsen, who also chairs Congress's Joint Economic Committee, which makes recommendations on economic policy.

But polls show a mixed picture of how the public feels about it. In September, a Morning Consult/Politico poll found that 39 percent of registered voters support the tax measure while 37 percent do not; polls over the summer found a similar split. A Gallup poll this month found that 64 percent of Americans say they had not seen as an increase in take-home pay as a result of the law. Trump recently suggested that Republicans will work to pass a new round of tax cuts aimed at the middle class, even as he emphasizes immigration more than tax relief as Election Day approaches.

Some Republicans in higher-tax states like New Jersey, New York and California voted against the legislation and have not used it as a campaign selling point. The law includes a $10,000 cap on popular state and local tax deductions, known as the SALT cap.

Phillips said he's been hearing more about the tax changes from voters as they start to assess their tax liabilities for 2019 and realize they may face increases. Paulsen's claim of more than $5,000 in savings comes from an estimate by Republicans on the Ways and Means Committee, but critics dispute that the savings will be that large.

Phillips is using words like "fiscal responsibility" and "handouts" to make his case against the tax bill — lines of attack that have traditionally been associated with Republicans against Democrats. The nonpartisan Congressional Budget Office estimates that the tax cuts will add $1.9 trillion to the federal deficit.

"To moderate Republicans who demand fiscal responsibility from Congress, they are as disappointed as I am about the explosion of national debt and the significant increase now in the portion of our federal budget that is going to cover interest on that debt," Phillips told the Star Tribune.

"This was a handout to some of the wealthiest Americans," he added.

The House Majority PAC, which works to elect Democrats, has run TV ads attacking Paulsen over the bill and funded billboards touting Phillips as a businessman fighting for "real tax relief." On the other side, the Conservative Leadership Alliance's ad accuses House Minority Leader Nancy Pelosi of trying to raise taxes. Paulsen himself has run ads saying that he voted to lower taxes on families by over $2,000 a year, citing an estimate by the Ways and Means Committee last year.

Phillips does not oppose the entire tax law. He supports a reduction in the corporate tax rate, which the law includes — though he said he would have reduced it more gradually and not as significantly. And he favors the tax law's move to have corporations repatriate foreign profits.

The DFLer calls Paulsen's assertions that Phillips wants to raise taxes "a lie, and you can quote me on that."

Similar dynamics are playing out in the neighboring Second Congressional District, where U.S. Rep. Jason Lewis is highlighting his support for the tax bill. His Democratic challenger, Angie Craig, has repeatedly argued that 80 percent of the tax breaks went to corporations and the wealthy.

But Phillips, a wealthy businessman, and Craig, a well-off former health care executive, have both been attacked by their Republican opponents for their positions in the moneyed class.

"Dean's in the 1 percent, so he may be critical of some of the changes because he lost a lot of deductions," said Paulsen. "But lower and middle-income folks are now getting tax cuts and wealthier individuals are paying a higher percentage of federal revenue."

Maya Rao • 202-662-7433