As Caps on Federal Deductions Begin, High-Tax States Seek a New Scheme
For many, there are few things quite as enjoyable as watching high-tax states kvetch that the new GOP tax plan caps deductions on federal tax returns for state and local taxes.
Taxpayers in other states have long subsidized the spendthrift ways of states like California and New York. Those states could always sell yet another tax increase to their citizens, who knew they could deduct the increase on federal returns.
But those days are over, and high-tax states are scrambling to figure out how to keep having their cake and eating it, too. The New York Times reports: "One proposal would replace state income taxes, which are no longer fully deductible under the new law, with payroll taxes on employers, which are deductible. Another idea would be to allow residents to replace their state income tax payments with tax-deductible charitable contributions to their state governments."
This is in addition to efforts to sue the federal government -- as if a federal tax deduction is somehow a right.
However, I do encourage those states to try that "charitable contribution" idea, under the obvious condition that they can't dress up a mandatory tax as a charitable contribution. Because that's not charity.
What's amusing is that these states don't seem too interested in just cutting their state budgets. Spending less would be heresy to Leftist politicians who embrace a redistribution ideology. Balanced budgets are for other people, but not them.
Many other states are able to prosper without ridiculously high taxation rates. Some states have no income tax at all, and manage to run just fine. Funny how that is.
Frankly, "flyover country" is sick of subsidizing the ever-expanding bureaucracy of states that look down on us with disdain. If the coastal elites want high taxes, then they need to find a way to make that work on their own. Don't ask the federal government to just pass your debt over to the rest of us.
The Times notes: "[T]he cap on the state and local tax deduction could pose a serious threat to state budgets, because it makes state taxes more expensive for residents. That could make it harder for states to raise taxes, particularly on wealthy residents, and could increase pressure to cut spending."
In other words, these state governments are well aware that their own citizens don't want to pay for whatever crap they keep spending on. They've just been shamelessly forcing others to pay for it through deductions.
Now that there's a cap, they'd rather scheme to dump the costs on another sucker than admit their ideas lead to ruin. All the while, the rest of us are sitting here with smirks on our faces, knowing this is going to be a titanic failure.