Most Read
Image 01 Image 02 Image 03

Controversial Tax Change May Face No Hassle in Senate

Controversial Tax Change May Face No Hassle in Senate

But the elimination of state and local tax deductions must pass the House first.

https://www.youtube.com/watch?v=jN7nGcjxGtg

Eyes are on tax reform this week as the GOP controlled House plans to release its tax reform bill on November 1, which may include elimination of state and local tax (SALT) deductions along with changes to 401(k) retirement plans.

Both have received proper outrage, especially from representatives in high-taxed states. But if the elimination of state and local taxes pass the House, the Senate GOP said they have a unified front on that issue.

The Hill reported:

Senate Majority Leader Mitch McConnell (R-Ky.) is helped by the fact that there isn’t one Senate Republican who represents the nation’s largest high-tax states — California, New York, New Jersey and Illinois.

“I don’t think it’s going to be a problem,” said Senate Finance Committee Chairman Orrin Hatch (R-Utah), when asked Monday if any of his Senate colleagues are demanding that the deduction for state and local taxes remain in the law. “I don’t know anybody who’s advocating strongly for that.”

“Not on this side,” Senate Republican Whip John Cornyn (Texas) said Monday when pressed if anyone in his conference is opposed to eliminating the deductions.

This is a big deal because the GOP only holds the Senate by two seats, which means they can only afford two defections so Vice President Mike Pence can come in and cast a tie-breaking vote

The House has 35 Republican representatives from those four states. It’s expected that the Democrats will vote against the package and the 35 representatives are more than enough to kill the bill if they join the Democrats.

The House passed it’s budget last week by a slim margin of 216-212. the majority of Republicans that voted no came from those high-taxed states

The GOP leaders claim that the SALT elimination will generate $1.3 trillion in “revenue” lost due to proposed tax cuts.

(Or they can keep the SALT deductions and slash the budget. But that makes too much sense, right?)

Rep. Kevin Brady (R-TX), the chairman of the House Ways and means Committee, has tried to keep the language in the bill, which he has kept under wraps, to drive down the opposition in the House. To make up for the SALT elimination, Brady “pledged in a statement over the weekend to include language in the tax package that would allow people to take deductions for property taxes.”

The Senate GOP is also waiting for Brady to unveil his plan, but they have their own ideas on a tax bill:

Senate Republicans are waiting for the House Ways and Means Committee to unveil its package later this week, but they are coalescing around a plan that would only keep intact deductions for charitable contributions, home mortgage interest payments and complex medical expenses.

“The proposal on the Senate side is going to be to double the standard deduction, keep the mortgage interest deduction, the charitable deduction and for some complex medical issues,” Cornyn said Monday. “That’s sort of the current discussion.”

DONATE

Donations tax deductible
to the full extent allowed by law.

Tags:
, ,

Comments

buckeyeminuteman | October 31, 2017 at 11:49 am

So the federales lose revenue because income tax in liberal states is too high? I’m all for lower taxes across the board but the feds shouldn’t lose out because CA and NJ tax way higher than say AL or TN. The feds should reach into everybody’s pockets the same way (as minimally as possible).

    healthguyfsu in reply to buckeyeminuteman. | October 31, 2017 at 8:47 pm

    You shouldn’t be taxed twice on the same dollar, no matter who you are or what state you live in.

    The same goes with sales tax, but they made it the perverse “either/or” compromise.

    None of this is just, simply part of doing business in the swamp.

      rabidfox in reply to healthguyfsu. | October 31, 2017 at 9:59 pm

      So you don’t think the states should have income taxes? Or since the states have income taxes that the Feds shouldn’t tax income.

        healthguyfsu in reply to rabidfox. | October 31, 2017 at 11:58 pm

        Clearly, you aren’t following because that’s not what I meant at all or even alluded to.

        The SALT deduction is set up so you can deduct state income tax from your federal income tax because it is ridiculous to pay federal income tax on money that was never really income in the first place, since you had to pay it out as state income tax.

        Some states don’t have a state income tax and in that case you can deduct your sales tax. Some states you have to choose (and nearly everyone chooses SALT because it is higher). Either way, you shouldn’t have to pay tax on monies that go to pay more tax…it’s compound theft, legally applied.

          buckeyeminuteman in reply to healthguyfsu. | November 1, 2017 at 10:53 am

          Me thinks the cart is before the horse. Feds should take their cut. Then what’s left is the rate the states should tax you on.

          Additionally, I would rather pay much higher local taxes and minimal federal taxes. When our money goes to DC it gets gobbled up and recycled by special interest groups. When it goes to my state legislature or city council, I have a much easier time voting out people when I don’t like how they spend it.

          healthguyfsu in reply to healthguyfsu. | November 1, 2017 at 8:23 pm

          That’s a fair point, but I think the local/state should get first cut since they are the ones most likely to use the money towards your regional interests (even if you don’t agree with all of their distributions).

          It’s not an irrelevant philosophical debate either what with the wishy washy history of the 14th and all.

      Arminius in reply to healthguyfsu. | November 1, 2017 at 1:18 am

      Consider this a teachable moment. Stop voting for thieving socialists to run your state.

Because this will become a job security issue for some of our congress critters, I don’t have much faith in this passing as written.

It’s pretty astonishing to me that the two items receiving the most attention are expansions of the govt’s ability to snag more taxes from the 20% of taxpayers who pay 95% of taxes. And yes, CA, NJ & IL have high state tax rates, but they get very little in the way of federal dollars in return (ranking 46, 47 & 48 per this chart https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700/). Combined with the proposed IRA grab, this makes it clear that this is just another facade for screwing more cash out of those who have supported the GOP all these years. Personally I’m sick of it, and while I’d never vote for a Dem, this makes me less inclined to vote for any of these tenured scammers What happened to the elimination of the AMT, the under the radar rate raise that was sold as only affecting the super rich, but now digs deep into every two wage earner family. http://www.taxpolicycenter.org/publications/alternative-minimum-tax/full

Close The Fed | October 31, 2017 at 1:18 pm

I have always believed that the government should tax at ZERO, any activity it subsidizes.

So, why tax medical care for anything but cosmetic procedures? If you want people to shoulder more of that, and the government involvement to decline, then all medical care should be deductible, 100%.

Same thing with day care, food, et cetera.

(Or they can keep the SALT deductions and slash the budget. But that makes too much sense, right?)

No, it doesn’t. Eliminating the SALT deduction is a goal in its own right, which should be pursued regardless of how much revenue it produces or how much the budget is cut.

Most of the studies which “show” that states paying a lower federal tax get a greater proportion of federal tax dollars than do which pay a larger federal tax bill are horribly misleading. A 1 mile stretch of highway generally costs about the same whether it is constructed in Montana or Illinois. So, if a similar amount of highway is built in both states, then a greater percentage of federal tax dollars collected in each state will have been spent in Montana than in Illinois, even though the amount of tax dollars spent is equal. However, if a state with a tax paying population three times that of a smaller tax paying state gets twice the federal funding that the smaller state gets, it still looks as though the smaller state is getting a bigger piece of the federal tax pie.

Actually it would be a simple matter to eliminate all deductions and establish a straight 10% tax on all income. Make a dollar, pay a dime to Uncle Sam. Make a billion dollars, pay one hundred million to Uncle Sam. If you can not survive on 90% of what you earn, then you will have to get some kind of welfare assistance or a better job. If states wish to tax their citizens to support welfare programs, they are free to do that. But, citizens of Florida should not subsidize citizens in Oregon.

    rabidfox in reply to Mac45. | October 31, 2017 at 10:03 pm

    Make that 10% to include business profits and capital gains as well. If you really wanted to get energetic, tax imports and sales as well at 10%.

    Aarradin in reply to Mac45. | November 1, 2017 at 1:05 am

    “A 1 mile stretch of highway generally costs about the same whether it is constructed in Montana or Illinois.”

    Actually, Blue States tend to spend MASSIVELY more per mile of highway construction. Unsurprisingly, ALL of the 13 States currently controlled by D’s rank in the top 15 of cost/mile of highway.

    Montana currently spends $6,238 per lane mile while Illinois spends $23,240. And DE and NJ spend more than DOUBLE what Illinois does.

      Arminius in reply to Aarradin. | November 1, 2017 at 2:00 am

      That’s the cost of regulatory compliance, Aarradin. I don’t know how it is in other states but in Kali they don’t want more roads. More roads mean a more pleasant, less congested driving experience. And the socialists know that cars are evil and they need to force everyone onto public transportation.

      As then-candidate Barack Obama said in 2008 about coal-fired electrical plants, it’d still be legal to build them. He just intended to bankrupt you if you tried.

“(Or they can keep the SALT deductions and slash the budget. But that makes too much sense, right?)”

No, it doesn’t make sense at all.

Slashing the budget is certainly sensible, but eliminating the SALT deductions is absolutely worth doing regardless of what they do on the spending side.

We’re sick to death of subsidizing Blue States.

“I call the difference between the statutory rate and the actual rate the “special interest spread.” It is the difference between the official stated rate and the actual rate paid after deductions and credits. True tax reform should seek to reduce this spread to zero.”

Indeed.

And, as always, identify the special interest that is benefiting, and at who’s expense, in the case of the particular “special interest spread” that we’re seeking to reduce.

Here, the special interest consists predominantly of upper middle class Liberals living in Blue States. The very people that are, every single day, slandering Republicans in general as the veritable incarnation of Hitler. And, at who’s expense does the SALT deduction come? Federal taxpayers with a greater than zero tax liability, predominantly living in Red States. Specifically, those of us that stand for Limited Government and that are trying to drain the DC swamp by sending outsiders like Trump to shake things up.

Font Resize
Contrast Mode
Send this to a friend