Republicans face first test of tax cuts' power to sway voters

By Tim Reid

WASHINGTON, Penn (Reuters) - Mark Marran, an operations manager for a Fortune 500 company, voted for Donald Trump. Two weeks ago he noticed an extra $100 in his bimonthly pay check, courtesy of sweeping tax cuts passed by the Republican Congress late last year.

Marran says the extra cash is nice, but it will not change his life.

"A lot of people around here think (the tax cuts) were a giveaway to the rich," said Marran, 56, a resident of this city of 14,000 about 30 miles southwest of Pittsburgh.

Just up the street, George Smith, an optician who makes $55,000 a year, echoed that sentiment. Taking a pull from a cigarette, the Trump voter said he is now getting an extra $120 a month in his paycheck. But he says it is the wealthy who really scored.

“It’s almost like being thrown a bone," said Smith, 59.

These are worrying words for the GOP, which is banking on the tax cuts pushed by President Trump to help Republicans retain control of the House and Senate in midterm elections this November.

A crucial early test is set for March 13 here in western Pennsylvania. Republican candidate Rick Saccone, a conservative Trump loyalist, is vying to win a special election for a congressional seat in a district that the president won by 19 points in 2016.

Yet recent polls show a tightening race in Pennsylvania's 18th district, where Republicans typically enjoy a double-digit advantage.

Political analysts point to a number of factors fuelling a competitive race, including Trump's low approval ratings and heightened Democratic enthusiasm. Democratic challenger Connor Lamb, a retired Marine and former federal prosecutor, is running as a moderate in a district where liberals are viewed with suspicion.

Saccone, meanwhile, has been touting Trump's signature legislative achievement as a boon for the middle class. "Tax cuts are changing lives," says one of Sac cone's TV spots. But it remains to be seen whether the four-term state representative can persuade tax-cut sceptics such as Marran and Smith.

Such doubts are reflected in a new nationwide Reuters public opinion poll that shows a plurality believe the legislation is a windfall for the wealthy and big businesses.

Some 36 percent of respondents said the rich would benefit most, while another 22 percent said it would be U.S. corporations. Just 13 percent said they believed that the middle class would be the main beneficiaries.

The poll also suggests that the tax plan alone may not fuel Republican turnout in November. Some 55 percent of respondents said the tax plan “makes me more interested in voting for Democrats” or “will not change my interest in voting.”

In interviews with 30 voters in Pennsylvania's 18th district, Reuters found most were ambivalent about the tax cuts. Most acknowledged they would keep more of what they earned. But that did not necessarily translate into support for the legislation or for Saccone, the Republican congressional candidate.

Trump voters Marran and Smith said they were still undecided about next month's contest. In Upper St. Clair, a wealthy Pittsburgh suburb, Republican Bill Hartman, 59, said he plans to cast a vote for Lamb. This despite the fact that Hartman's top tax bracket will drop to 25 percent from 28 percent.

“The tax cut was meant to show (the GOP) did something," said Hartman, who earns more than $100,000 a year selling advertising. "But it was just to help the wealthy.”

In contrast, Glen Lauder, a food service worker in nearby Bethel Park, says he is thrilled about the extra $120 he saw in his paycheck last month. He said he is voting for Saccone.

"This gives the middle class more money, which will make people more willing to spend money," Lauder said.

Tax cuts should play well with voters here, most of whom will benefit. The predominantly white district stretches from wealthy southern Pittsburgh suburbs in Allegheny County, down through the middle class community of Washington and into the coal mining and farming territory of Greene County bordering West Virginia.

Pennsylvania's 18th district is wealthier than the national average with median household income of $64,000 in 2016. An analysis by the left-leaning Tax Policy Centre has concluded that the top fifth of U.S. earners will get a 2.2 percentage point tax cut from the legislation, compared to a 0.4 percentage point reduction among the poorest fifth.

In a telephone interview, Saccone, the Republican candidate, said small business owners and voters he has met are pleased with the extra income.

“A lot of the benefits have only just begun to accrue,” Saccone, 59, said.

Indeed, tax experts said that because employers had until Feb. 15 to start using the new tax-withholding tables issued by the IRS, some employees may not start seeing a difference in their paychecks until early March.

"By the time November comes around people are going to be dancing in the street," Saccone said.

But with only a few weeks left until the Pennsylvania contest, Trump is not leaving anything to chance in a seat that Republicans have held since 2002. The president is planning a rally later this month in Pittsburgh and is expected to praise Saccone and the tax overhaul.

The special election, which will fill a seat left vacant when incumbent Republican congressman Tim Murphy quit amid personal scandal, is an early litmus test for the GOP tax message, said Ford O'Connell, a Republican strategist.

It is "a trial run," heading into November, he said. “Trump obviously wants to hold the seat and Trump wants to find out if he has delivered enough to keep voters happy.”

Meanwhile Lamb, the 33-year-old Democrat, is trying to walk a fine line in this conservative district. He tells voters he is not against tax cuts, but opposes what he sees as legislation designed to give the biggest breaks to the wealthiest Americans and large corporations.

“I would have liked people in the middle to be the sole beneficiaries", Lamb said. “We know who that bill was for.”

Republican groups, meanwhile, have already spent nearly $5 million on ads tying Lamb to Democratic House leader Nancy Pelosi, who derided the bigger paychecks that many Americans are now seeing as "crumbs."

O’Connell, the Republican strategist, is optimistic the tax message will gain traction. Middle-class voters could well warm to the tax cuts by November, he said. And he believes Saccone will win next month.

Several western Pennsylvania voters who spoke to Reuters were enthusiastic. Jefferson Hills residents Steven Broader, 59, and his wife have annual income of around $750,000. Broader, an insurance agent, figures the couple will save an extra $45,000 a year under the new tax legislation.

“I’m really happy,” Broader said. “That’s why I voted for Trump.”

(Reporting by Tim Reid; Additional reporting by Jason Lange and Makini Brice; Editing by Damon Darlin and Marla Dickerson)