GOP Tax Plan Would Affect Trump and Clinton Voters Differently

The House Republican tax bill is set to be released Wednesday and the changes it will bring to the tax code, if it becomes law, are likely to vary across the country.

A full accounting of the potential impact won't be possible until the GOP announces tax rates and tax brackets. But some of the most popular breaks believed to be on the chopping block are most heavily used by high-income areas that typically vote for Democrats.

Taxes and the Political Divide

The Wall Street Journal analyzed county-level tax-return data for 2015, the most recent year available, in three types of places: counties that President Donald Trump won convincingly, those that Hillary Clinton won convincingly, and those that voted for Mr. Trump after twice voting for President Barack Obama.

This analysis includes 2,219 of the nation's 3,111 counties (and doesn't count Alaska, where county-level election results aren't available). Solid-Clinton counties, primarily centered around large metro areas, account for about 40 million tax filers, while the more widely spread solid-Trump counties are home to about 32 million. Nearly eight million tax filers live in the Obama counties that flipped to Trump counties. These political divisions reveal numerous contrasts among individual tax returns.

State and Local Tax Deductions

Republicans have been talking about repealing the deduction for state and local taxes, which tend to be higher in Democratic-controlled places such as New York and California. They have the most to lose. The GOP's proposal to keep a deduction for property taxes may change this calculation.

Mortgage Interest and Charitable Donation Deductions

Nearly doubling the standard deduction would erode the benefit of the deductions for mortgage interest and charitable contributions. Use of those breaks is concentrated in coastal areas with high-income households.

Child Tax Credit

The child tax credit is expected to rise -- by an undetermined amount -- in the GOP plans. That credit is more evenly distributed across the country. But it is most frequently claimed in Trump-friendly pockets of Utah and Arizona, where more than one-quarter of taxpayers use it.

Earned Income Credit

An early draft of the GOP plan provided no details on the fate of this credit, which is claimed by low-income filers at nearly equal rates in Democratic and Republican strongholds.

--Note: Child tax credit figures don't include the expected higher credit. Sources: Internal Revenue Service (tax returns, rates); David Leip's Atlas of Presidential Elections (election results).

Write to Max Rustat max.rust@wsj.com and Richard Rubin at richard.rubin@wsj.com

(END) Dow Jones Newswires

October 31, 2017 17:16 ET (21:16 GMT)