J.D. Vance's record scant on muni priorities but reveals some clues

Former President Donald Trump's pick for vice president for the 2024 presidential election ticket, Sen. J.D. Vance, R-Ohio, has a brief and unorthodox legislative history that touches lightly on municipal market priorities, including aversion to the state and local tax deduction, federal housing grants for sanctuary cities, green energy tax credits and environmental, social and governance policies.

Vance, 39, sits on the Senate Banking, Housing and Urban Affairs Committee and serves as the junior senator from Ohio. He became famous for his 2016 rags-to-riches memoir "Hillbilly Elegy," served as a Marine in Iraq, went to Yale Law School, and worked as a venture capitalist before running for Senate in 2022.

The outcome of November election will help shape tax reform next year as key provisions of the 2017 Tax Cuts and Jobs Act expire. Trump has said he wants to make the TCJA permanent.

"2025 is going to be a massive debate," said Adam Michel, director of tax policy studies at the libertarian think tank Cato Institute. "For Republicans who want a pro-growth tax code, it represents a big opportunity. You can expect Trump and Vance to champion the success of the TCJA reforms as a case in point that we should extend them and then build on them further, continuing to cut the corporate tax rate."

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Trump has floated lowering the corporate tax rate to 15% from 21%. In contrast, Vance has been reported as saying he opposes further cuts in the corporate rate, part of his general anti-corporate stance. "The people on the left, I would say, whose politics I'm open to — it's the Bernie Bros," Vance told the New York Times in May, referring to the following of Vermont Senator Bernie Sanders, an independent who caucuses with the Democrats.

During his two-year Senate term, the Rust Belt native has voiced a populist vision that's broadly pro-labor, pro-tariff, pro-antitrust regulation, and anti-environmental, governance and social policies. He's focused heavily on railway safety after the Norfolk Southern train derailment in East Palestine, Ohio, and has repeatedly urged the Biden administration to "use the powers of the federal government to do the things necessary to help the people in this community."

If Vance becomes vice president, he may introduce "more of a focus on family policy" during the tax debate, Michel said. "Making the child tax credit permanent or expanding it, for example," he said. "But beyond those types of things, I would suspect that policy will still be driven by Trump and Congress, and it would have to go through reconciliation and will be driven very heavily by the Senate Finance Committee and House Ways and Means Committee."

Vance has sponsored three tax bills during his Senate tenure, according to Roll Call, two of which relate to universities. The College Endowment Accountability Act would raise the excise tax on endowment investment income to 35% from 1.4% for secular, private colleges and universities with at least $10 billion in assets under management. The Encampments or Endowments Act would impose a 50% excise tax on the endowments of universities that fail to remove encampments from their campuses.

Neither measure advanced in the Democrat-controlled Senate.

Vance has several times departed from orthodox Republican positions to team up with Democrats, targeting big banks and credit companies.

He and Sen. Elizabeth Warren, D-Mass., crafted legislation to claw back compensation for executives of failed banks. The duo also sent a letter to Federal Deposit Insurance Corporation head Martin Gruenberg criticizing the sale of First Republic Bank to JPMorgan Chase. He teamed up with Sen. Dick Durbin, D-Ill., on a bill that would crack down on credit card fees. Vance and Sen. Sheldon Whitehouse, D-R.I., introduced the Stop Subsidizing Giant Mergers Act, which would raise eliminate which would tax exemptions for reorganizations of companies above a certain asset threshold. He also supports a Democrat-sponsored bill that would appropriate $7 billion to help lower-income and rural households afford high-speed internet.

Vance has voted against every major appropriations bill that's come up during his time in Senate. That includes the April 2023 debt ceiling deal and both fiscal 2024 appropriations packages.

Vance's record includes no mention of a position on tax-exempt municipal bonds, which are considered vulnerable next year as lawmakers search for revenue. His most recent financial disclosure forms on his portfolios show two minor positions in municipal bonds, in Schwab's California Muni Money Fund and Schwab Municipal Money Fund.

Elsewhere on the muni agenda, he has called for eliminating any deduction, even one that's capped, for state and local taxes, or SALT.

The TCJA capped the SALT deduction at $10,000 a year, a provision that will sunset at the end of next year. It's an important issue to high-tax states and other municipal issuers that say the cap infringes on their ability to levy future taxes. Repeated efforts to overturn or lift the cap since 2019 have failed.

Vance has said the SALT deduction goes to "almost exclusively wealthy people" and "coastal elites." In a March interview with Politico, Vance called the deduction "massively redistributive toward the lower- and middle-income brackets."

On the city front, in March he introduced legislation that would ban so-called sanctuary cities from receiving federal housing grants, money that cities consider key to affordable housing needs.

"Our government sends hundreds of millions in federal housing grants to sanctuary cities each year. Those funds are now on the chopping block," Vance said in a press release for the Community Development Block Grants for Sanctuary Cities Act. "With this legislation, the local officials who undermine America's border security can say goodbye to these federal housing grants."

Vance has criticized the tax credits in the Inflation Reduction Act, some of which for the first time will go to state and local governments to encourage their clean energy investment. He told Politico that the IRA has "added a lot of costs out there and a lot of federal spending that's forced the inflation prices." There is "a lot of bad policy in there ... And I'd like to see a lot of it gotten rid of."

He has pushed hard against ESG issues as part of the culture war that has ensnared public finance. Among other measures, Vance co-sponsored a resolution for Congressional disapproval of the rule submitted by the Securities and Exchange Commission relating to "The Enhancement and Standardization of Climate-Related Disclosures for Investors." Last month, he introduced legislation that would eliminate all diversity, equity and inclusion programs from federal agencies.  

He told Breitbart last year that ESG is "a massive racket to enrich Wall Street and enrich the financial sector of the country, at the expense of the industries that actually employ a lot of Ohio's workers for middle-class jobs."

As an economic populist and member of the "new" Republican guard, Vance has "principles but not an ideology," said Henry Olsen, senior fellow at Ethics and Public Policy Center, speaking on a July 18 American Compass podcast.  

"This is a guy willing to use government power to discipline corporations that are spreading woke ideology," Olsen said. "This is a guy who is willing to raise taxes on corporations if they outsource jobs to other countries. This is a guy who is not wedded to free market fundamentalism in the least."