Democrats Not Pleased With Trump’s Plan to Ax Popular Tax Deduction
Maybe lower your state and local taxes?
Democrats in some blue states do not like that President Donald Trump’s tax plan includes eliminating the ability to deduct state and local taxes.
Just a thought…maybe the states should not tax their citizens so much? Instead, they complain about the burden placed on the citizens from the federal government. From The Wall Street Journal:
At the center of the fight is New York, home of Mr. Trump, Mr. Cohn and Senate Democratic Leader Charles Schumer, who says killing or scaling back the break would be “devastating for middle-class families in New York and elsewhere.”
In New York, the deduction equals 9.1% of adjusted gross income, the highest in the nation, according to an analysis of government data by the Tax Foundation, a Washington group that favors a simpler, flatter tax system. New York residents thus face a particularly heavy state tax burden, which gets mitigated by the deduction.
The Republican tax plan is “very anti-New York in many ways,” says Rep. Joseph Crowley, a Democrat from Queens. “It’s going to cost more for New Yorkers. It’s going to be more federal taxes for them. And that simply isn’t right.”
But it’s not just New York. From The Hill:
In Oregon, lawmakers are trying to close a billion-dollar budget hole as revenues fall short of projection. New Jersey lawmakers grappled with their own billion-dollar shortfall last year. And in his initial projections, California Gov. Jerry Brown (D) said his state would have to cut costs to avoid a $2 billion deficit this year.
“The states that have higher progressive taxes and higher income residents who benefit from deductibility tend to be blue states,” said Iris Lav, a senior fellow at the left-leaning Center on Budget and Policy Priorities.
“This discount is pretty important, especially for states that want to have a somewhat higher and more progressive income tax.”
More progressive? What’s so progressive about placing high taxes on your citizens?
Secretary of Treasury Steven Mnuchin explained why the administration took this approach:
“It’s not the federal government’s job to be subsidizing the states,” Mr. Mnuchin said. “We’re not looking to necessarily raise taxes on the top 1% but we want to get the federal government out of the business of what’s the state’s business.”
National Economic Council Director Gary Cohn told the media it’s about leveling the playing field:
“We also think about being fair. We’re being fair,” Gary Cohn, the director of Mr. Trump’s National Economic Council, said at the briefing with Mr. Mnuchin. “And there are those that argue that allowing state and local taxes to be deductible is not fair because certain states are subsidizing other states, and this is a field-leveler.”
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Comments
Trump thinks it’s a good idea to tax us twice on the same earnings?
How very progressive of him.
why should LOW TAX states subsidize HIGH TAX states ?
The blue states want fed to keep out of their bidznets –
Trump is doing EXACTLY that – so it’s a win-win-win
Alaska, Nevada, Florida, Texas, South Dakota, Wyoming and Washington are subsidizing California, Illinois, New York, etc.
Why?
I agree.
And I live in California.
Agreed!
Arguing that “low tax” states are “subsidizing” “high tax” states is some really contorted logic. We’re ALL in high tax states, we’re getting taxed into oblivion.
That our Republican administration is resorting to these types of Orwellian arguments in order to justify raising MY taxes makes me sick and leads me to observe (again) that Trump is more progressive than he is conservative.
But I suppose that is a re-hash of arguments from last fall.
No, it’s a rehash of idiocy.
You do not understand the tax code, or the proposed changes. Or your a prog / nevertrumper, just making s**t up.
If the people in the high tax states object to the elimination of the Federal state tax deduction they should insist to their state representatives that their taxes need to be reduced. The reps won’t do it because that would be a reduction in state funds that they could skim.
That’s not how it works. You’re still being taxed “twice” because you’re merely allowed to *deduct* the amount from your income, so you’re only “getting back” a percentage of the state tax paid equal to your tax rate.
With the standard deduction doubling- this is only taxing the higher earners more. Presuming you are paying 10% in state income tax, this only hits families with incomes over about 120k. It doesn’t smack you hard until you hit the 150k.
So either you are FOR the rich paying their fair share or you aren’t.
I could care less about NY, MA, IL, MN, or CA or any other high personal income tax State. Move to a no state income tax State like Florida las others are doing in droves. I pay much more than my fair share to the Feds. (35%) so put me in the camp that wants my federal taxes lowered.
My math presumes you were already maxing out your deduction. Depending on how you add it up— the pain might actually come in for families with over 200k.
I’m a New Yorker’ and this state has done nothing to curb the true cost of the taxes we pay. New York Income taxes are used to support a state budget that is currently on track to spend $5,000 a second in 2018 for an inept progressive state agenda.
Where the rubber meets the road in the proposed Federal Tax Reform is the amount of excessive New York Property Taxes which will be disallowed yet are paid as tax revenue to support government budgets. Budgets which have to cover the cost of mandated STATE enacted regulations and compliance laws but are passed down with out benefit of state level funding causing the taxing agents of school systems, county, city, town and village governments to balance their budgets with property tax rate increases. No it isn’t fair that those living in any of the more tax friendly states to have to subsidize New Yorkers’ because they use more fiscally sound practices.
New York is the most progressive state 2nd to California but for the competition to see which can be the best at doing the worse job of governing. As a Federal Tax payer, I hope the reform goes forward. As a State Tax payer, I’ll rejoice in seeing this State being taken down a notch and see Cuomo justify the progressive programs he puts on the locals to underwrite. And as a retiree, I’m looking at being one of the masses leaving N.Y. to a tax friendly states such are Tenn., Fla., WY., Del. S.Carolina. if Cuomo can’t put together at the state level to own the oats sown by providing an additional line item credit property tax line adjustment to AGI.
So it messes with California and New York? That’s a FEATURE, not a bug! (hm, remind me how they voted in that last election)
I would even give up the home mortgage interest deduction, even though I make good use of it, just for the knowledge that it would raise taxes so much more on Californians than it would on me. Yeah, maybe that’s a sorry attitude – too bad.
Don’t Worry. I am sure the Democrats are already preparing an Appeal to their one Special Judge.
Won’t do any good.
This is tax accounting, and could only be protested in the IRS tax court imo.
On what grounds? Tax laws are determined by the legislature by Amendment. Judges can’t find that this deduction is allowed but that one isn’t. Remember when we lost the deduction for interest on credit cards? Well this is no different – there is no given deduction that is protected by the Constitution.
We definitely shouldn’t be taxed on the income that we’ve already had to pay as taxes. The best idea would be a flat tax. Your state gets a certain percent from everybody regardless of income. Then the net from that is taxed at a flat rate by the Feds. Come to think of it, I would rather more of my money went to state and local governments than the Feds. I would have much more control over how it is spent that way.
Better yet – end all Fed support of local and state functions.
The locals and state can tax themselves to support those local functions if they can.
That cuts out so many Fed gov middle fat cats.
I mean why have all that money sent to DC (where the Fed Fat Cats enrich themselves with it) only to have it dribbled back to the loco states?
let’s see 9th circuit rule on this issue – then we will see
governance by judicial overreach
Under the current law, those in low tax states are subsidizing those in high tax states.
Do the states grant deductions for federal income taxes paid? The answer is usually no. Do these same states accept the same, or greater, federal revenue sharing than states which do not have a personal income tax? You betcha they do. So, to be fair, a state with a personal income tax, which wishes to maintain the federal state and local tax deductions, should either grant the same deductions for federal income taxes paid, or reduce their share of federal revenues by the percentage of income deducted.
The federal government should collect taxes to operate the federal government, not the states. There should be no federal revenue sharing with the states. If the states wish to set up additional taxes on their residents to off-set this shortfall, fine and dandy. The voters of those states can determine how, and to what extent, those taxes are collected and how they are used. But, a resident of Florida should not be paying for state and local government operations in New York or California.
I think this is just an initial position to be used in negotiations with the dims. Want to keep your deductions? Fund the wall.
Do I dare say it?
LOL
“If you want to keep your Deductions, you can keep your Deductions.”
(and stuff them!)
I like that! Clever.
He should also (1) eliminate withholding to force everyone to write a check to the government 4times a year and (2) make one of those checks conveniently collected at voting stations simultaneous with voting day.
Might make folks a little more prone to vote for candidates that vow to make that check smaller.
I’ve been saying that for years. If we ended employer withholding and people actually had to pay their taxes like the self employed, they’d be marching on DC with pitchforks.
as a life long resident of #Failifornia, i think this is a GREAT idea…
i can’t wait to hear the screaming from all my idiot neighbors who have apparently never met a tax hike they didn’t like.
(except this one, of course.) 😎
I hear ya.
It’s time to “really” level the playing field.
And if that means the Dem-crat strongholds of Evil are leveled too, then so much the better.
Eliminate the property tax deduction too.
That would help to cut the criminal financiers down to size.
Agree on the real estate tax deduction. I live in Ca, but have lived in Texas. Real estate taxes (percentage) are really high comparatively. Seems it should be all state taxes eliminated not just state income taxes.
What’s so progressive about placing high taxes on your citizens?
Actually, it’s one of the fundamental features of Progressivism. The permanent personal income tax was inflicted on the Land of the Free and the Home of the Brave during the original “Progressive Era” of circa 1890 to 1920.
(Incidentally, it was inflicted by Republicans in Congress who had some bizarre hope of—apparently—bluffing Woodrow Wilson, who was not himself in favor of it. But Wilson signed the bill anyway, and the Republicans let us all down … as they would so often do in subsequent years.)
What isn’t included in most of the coverage is that Trump also proposed doubling the standard deduction. Since approximately 50% of income earners don’t pay any income tax and 70% of filers claim the standard deduction currently, it stands to reason that more filers will claim the SD leaving the highest earners paying more tax because of the loss of that deduction. Haven’t we been hearing, for years, from the left that the rich need to pay their “fair share”? Well, here you go. The typical two income family of four is not going to have $25,000 in state and local taxes, so there won’t be any massive exodus from high tax states because of this since their federal tax burden will decrease. As has been said before, it’s not how much you make that counts but how much you keep. Local politicians will now actually have to make those “hard decisions” they talk about so much each year when they pass budgets.Fewer bureaucrats, administrators,assistant Deans, assistant superintendents, assistant principals would be a good start.
I’m torn. Part of me wants to stand up for the moral value of “The State is only permitted to tax income once, and if you have X dollars taken out of your income by a government tax, that missing money should not be taxed again, ever.”
The other part of me is nodding and agreeing that the standard deduction covers this fairly well, particularly since it would be expanded.
I’ve always been a fan of a 3:1 reduction in taxes. It has been probably 5 or 6 years, but I recall reading a lengthy study that said that if for every 3 points reduction in federal taxes, states and local authorities allowed a 1 point increase (or zero, depending on the area), there would be a much more effective use of tax dollars. The efficiency gains (theoretical) by managing many things at the local level account for the overall tax burden being much lower but service delivery being much better. The primary areas were education, infrastructure, and most all support programs that have historically been better supported by local communities.
Democrats Not Pleased With Trump’s Plan to Ax Popular Tax Deduction
Au contraire, I’ll bet they’re giggling like schoolgirls. Now they can pretend that he’s an even worse tax hog than they are. It won’t be true, but it just has to sound true enough to get into the headlines.
No, they’ll positively ooze over this.
He needs to kill all the tax credits for green energy and cars.
Plus end all the special tax credits and favoritism shown to the Hollywood industry….
Love it. Obama pursued anti red state policies for years. Karma is an interesting guest for sure.
I left NJ because of high taxes. Cut my property and income tax massively.
Let them pay. I will gladly trade down in income tax bracket for this penalty that I can opt out of by where I live.
I do feel for the blue state conservatives like the Professor. The answer is to dust off the splitting of NY State into two states, upstate and NYC+.