Democratic state officials are working to save money for wealthy residents from a higher tax burden imposed by the new cap on federal tax deductions for state and local taxes, reports Real Clear Investigations.
The Associated Press has reported that three states like Connecticut, New York and New Jersey are planning to sue over the new federal caps.
In high-tax states like California, New Jersey and New York, the top 1 percent of income earners would see their federal income taxes rise without these state-level fixes.
“Democratic governors and lawmakers in a handful of high-income, high-tax states are promoting policies that are intended to spare their residents the pain of the new $10,000 cap on deductions for state and local taxes,” the AP reports.
the legislative workarounds have moved swiftly through state Senate chambers in California and New Jersey, and a bill with similar components passed the Oregon Senate and House in the last two weeks.
The concept is under consideration in Connecticut, Maryland, New York, Rhode Island and the District of Columbia.
Democrats are trying to justify their actions by claiming that the cap on state and local deductions disproportionately affects states controlled by Democrats and raises the cost of living which would then make these wealthy libs leave their state and risk their political office.
California state Senate President Pro Tem Kevin de Leon, a Democrat sponsoring the bill there, said the state budget would take a big hit if wealthier residents flee California because they pay the bulk of the taxes.
Republican Senator John Moorlach thinks the Democrats statements about the tax caps are extremely ironic.
Last year, a Democratic colleague sarcastically thanked him for taking a stance that would protect yacht owners. This year, Moorlach had a retort: “It’s rich that you guys are trying to help the wealthy now in California,” he said at a January committee meeting. “So welcome aboard.”
Republican critics say the states should be reassessing their taxes instead of trying to circumvent the new tax law.
“What’s worse?” asked New Jersey state Sen. Joe Pennacchio, a Republican who voted against the work-around measure there. “Not being able to take the tax deduction or having high taxes to begin with?”
Under the deductions, known as SALT for state and local taxes, money paid to state and local governments is not counted as taxable income by the federal government in many cases. The higher a taxpayer’s state and local taxes, the bigger the benefit the federal deduction can be.
This new law caps the deduction while also lowering tax rates. Overall, it’s expected to result in reduced tax bills for most Americans, with the bigger savings going to high earners.
Seems as though Democrats are only looking out for their highest earning supporters so their seats in office won’t ever be risked. No shocker there.