US federal tax code as a political weapon
Revised 7/12: I forgot the changes to the historic preservation and low income housing tax credit programs, which are negative.
Yes, the tax law changes passed when Congress was fully under control of the Republican Party favored the wealthy and the growth promised has not materialized.
And yes, various tax code provisions, not just in this particular version, represent political choices and the interests of various groups that are able to influence the bill drafting process.
But this bill took weaponization to a new dimension by including a number of provisions specifically targeting "blue states" and "progressive interests."
1. Reductions in deductibility on SALT, "state and local taxes." This specifically targets high cost states like California and New York, which tend to support Democrats ("
It's over: States lose fight against SALT deduction cap in tax law," Accounting Today; "Democrats said a GOP tax law provision would devastate blue states: that's not happening," Washington Post).
As Paul Krugman points out in a recent column ("The Moochers of Middle America"), the net beneficiaries are actually red states like Kentucky, who get back way more money in federal spending than they pay in taxes, while for blue states like New York and California, they are paying more out than they are receiving.
2. Massive reductions in the corporate tax rate make historic preservation and affordable housing tax credits less attractive. Cities tend to benefit "disproportionately" from the use of historic preservation and affordable housing tax credits. Cities tend to vote Democratic.
3. Changes to the historic preservation and affordable housing tax credit programs make participation more difficult and less attractive ("Understanding the New Historic Tax Credit," Architecture Resources Group; "How the Tax Cuts and Jobs Act puts affordable housing production at risk," Urban Institute).
Cities tend to benefit "disproportionately" from the use of historic preservation and affordable housing tax credits. Cities tend to vote Democratic.
(I suppose you can argue that the Opportunity Zone program created in the new tax law is supposed to help cities. But it is really focused on helping investors avoid capital gains taxes. See "I figured out why Opportunity Zones won't amount to much: no planning.")
4. Endowment tax on universities. … universities being the bastion of academics who question things, aren't hospitable to conservatives, etc. ("Feds release long-awaited rules on college endowment tax," Washington Post; "Endowment Tax Picture Becomes Modestly Clearer," Inside Higher Education).
5. Taxes on benefits and other changes making nonprofits pay federal taxes. … while all nonprofits are not "left" or progressive, imposing such taxes to fund tax cuts for the wealthy and corporations hurts such groups ("The New Tax Law and Its Impact on Nonprofits – Part 2," Nonprofit Law blog).
6. Limitations on charitable tax deductions. New reporting ("Americans slashed their charitable deductions by $54 billion after Republican tax-code overhaul," MarketWatch) says the changes in deductibility for charitable contributions has led to a $54 billion decrease in contributions. I'm sure the Republicans figured that good conservatives would still donate to their churches and causes despite the changes, but intended for charities to be hurt by the change.