Before Republicans like Rep. Steve Knight of Palmdale voted on the tax bill, business groups were issuing dire warnings.
There are “provisions in H.R. 1 that would damage the economy of California, our taxpayers and our prospects for future growth,” read a statement from the Los Angeles Area Chamber of Commerce to all members of the California delegation.
Other business groups were just as explicit.
“The rushed passage of the tax bill by Republicans in Congress directly contradicts California’s interests by choosing to pursue tax reform that significantly hurts job creators and middle-income residents of our state,” read part of an opinion piece penned by the leaders of both the California Black Chamber of Commerce and the California Hispanic Chambers of Commerce.
Those groups were specifically concerned about the state and local tax (SALT) deductions, because eliminating or curtailing those would mean higher taxes for California residents.
Knight promised his constituents that the issue of tax increases related to SALT was his “number one priority.”
In fact, Knight told the LA Times that “he’s been assured that a fix will be made to the tax plan that will address or offset the potential tax increase caused by the elimination of the tax deduction.”
Knight turned his back on business leaders from his home state. And economists are predicting negative impacts for California.
“I think it shifts industries, resources and people away from California,” said Edward McCaffery, a tax law expert at the University of Southern California.
Other economists also note that while the fundamentals of the economy are still robust, the tax bill will be “a restraint on growth.”
“It won’t necessarily lead us to a turnaround or heading to a negative direction, but it will certainly pull back some of the positive things,” said Dave Smith, an economist at the Pepperdine University Graziadio School of Business and Management.
Knight promised voters that “if we can’t get it fixed [SALT provisions] then we’re going to have problems.”
Knight was right. Without fixing the SALT provisions, California businesses will likely see many problems, including slower growth. And residents will see a higher tax bill in the near future.
Unfortunately, Knight is primarily responsible for ushering in those problems. If he and his fellow California Republicans had listened to California business leaders and opposed the bill, it would not have had the votes to pass.
But instead, Knight decided to cast his lot with Donald Trump and House Speaker Paul Ryan, ignoring the pleas of his own constituents, who opposed the bill by huge margins.
While Knight ignored their voices in the past, he will not be able to ignore their voices — or votes — come November.