I’m a refugee from NJ who raised a family and built a business in Florida. The environment for both is 10 times better here than in NJ. The schools are mostly good and the infrastructure is relatively pristine, yet there’s no state or city income taxes. (And the weather is great!)
Wise up: You’re not paying higher taxes in the northeast to support better schools or services. You’re paying higher taxes to support government employees and political corruption. Sad...
2
Mnuchin is waving one finger at the suburban Republicans around our biggest cities, because even though they're GOP, they're not donor-class, vote-buying 1% GOP.
In the meantime, the new rule might have interesting effects in all the Red States that have just been forced to admit that teachers need raises just like other people, and that the money will have to come from somewhere (local property taxes). And in Texas, the state legislature justified a tax cut by simply assuming the local taxing bodies would raise their taxes. Texas already has some of the higher property tax rates around.
Circular firing squad in the Republican party these days as the current "leadership" tries to re-accelerate the sweeping of money into fewer hands, as begun during the Reagan administration. Obamacare put a real drag on that, but they're chipping away. The new rules mean healthy people are leaving the plans, so people still benefiting from ACA plans will get a new round of price hikes, entirely due to the Republican Party.
1
What I find most amusing about this whole thing is that the Times recently ran a series of articles condemning the efforts of various accounts and lawyers to create structures designed to allow taxpayers to shelter large sums of their income from Federal taxation. Now, they are effectively praising the State of New York for doing the same thing.
It all depends on whose ox is being gored, doesn't it?
3
The morons who govern failing states states such as New York and New Jersey have a legal way to reduce state taxes - abolish state income and property taxes and cut spending, particularly on corrupt government employee unions. Federal income tax evasion is a felony. I look forward to seeing these governors and those who evade paying their fair share of federal income taxes serving their sentences in federal maximum security prisons.
4
Several weeks ago the IRS was screaming they needed more money. Now we see why nobody wants to help them. They are simply in the business of trying to screw the little guy. Starve the bums out I say. All they do is make people give more and more money whether warranted or not.
Carl Davis is a joke. How can you compare a charity that gives its money to non-profit schools to one that is solely based on giving its money to the government? The IRS routinely disregards shams like that .
2
If the recent GOP tax scheme actually invested in K-12 education and in programs for those in need rather than line the pockets of the already rich, then I would be far less outraged by the unfair target on the blue states by the GOP.
1
Fear not. If the state "workarounds" are ultimately unsuccessful, the next Democratic congress (coming soon!) will undo this blatantly partisan law.
1
Speaking of the IRS, how is that audit going on Mr. Trump's tax returns?
It’s pretty much done. Apparently the President made lots of money, which is good, and paid only the taxes required by law, which makes him a model taxpayer. What else you got?
1
So let’s see the returns, already.
@Richard Stanley
You’re assuming a public airing of his taxes would change someone’s opinion about Trump, pro or con. That would be a fake assumption.
' “I hope that the states are more focused on cutting their budgets and giving tax cuts to their people in their states than they are in trying to evade the law,” [Mnuchin] said. '
States are countering a tax raise imposed by the Republican controlled federal government! Moreover, it should be against conservative values to force states to reduce their budgets via federal mandate! Lies, spin, and hypocrisy.
1
Trump is, indeed, winning. He, McConnell, Ryan, the liar Susan Collins and so sadly many others have convinced me there is nothing to trust, love, or respect in our government, in our law enforcement, or the purely corporatized partisan sink hole that is our courts.
First the vicious Right politicizes the national anthem, then they destroy the credibility of the law by weaponizing the Supreme Court, then they make the tax code a revenue stream for the very wealthiest Americans, and now they turn the IRS into a tool of the Republican party.
Welcome, anarchy.
2
Despite the caveat emptor retorts the fact is that stable tax law over decades resulted in a defacto contract with the people that they could plan their lives and livelihood around. Entire industries and social contracts have been established where decisions that were made under that social contract have been torn asunder. People will be blamed for not predicting that their careful financial plans could be affected by a vindictive group of people in the government. What was sound decision is now a folly and, you are told, it's your fault too, just to add insult to injury.
Mnuchin and many commenters speak cavalierly of cutting local taxes or moving. What this simplistic view overlooks is that things that taxes pay for, people, land, buildings and materials, resources, etc., have different costs in different parts of the country. What you can do for $500,000 in the mid west can't be done for the same in Boston or New York. It simply costs more in some locals so even of the services were on par the costs are likely to be different.
Unless the Republicans want to have a uniform cost per acre of land across the country, uniform labor rates across the country, uniform costs for goods and services across the country different areas will have different costs. Are the Republicans really ready to take your property values in order to lower property taxes? Are they ready for force everyone in state and local government to work for the same pay across the country to lower taxes?
2
New York is a shameless money hungry State. It’s good that the IRS is cracking down because the new law NY created to get around the new federal tax cap is nothing but smoke & mirrors. It’s about time that NY State government got its act together and stopped over spending. NY is so bad that I recently filed an amended tax return for the year 2015 because my previous accountant made a mistake, and they refuse to send my $2000 refund. They sent a complex tax computation sheet that even my accountant can’t figure out. Albany is full of political cronyism where the legislature shamelessly spends our tax money on unnecessary expenses. No, the federal cap isn’t the problem, NY State spending is the problem.
2
Lawyers and accountants have attempted to defeat the clear intent of Federal tax law with clever shelters and work-arounds ever since the income tax began in 1913. These "charitable deduction" provisions must be the first time in the century-long history of the Code that a state itself has created a generally applicable device intended to permit widespread avoidance of the clear intent of the Federal tax law. It is a poor precedent.
"“I applaud the administration for responding to these gimmicks.”. The gimmick is what the Trump/Ryan/McConnell con sold to the people of this country.
Those who still have high praise for this tax "reform" plan that sold as a way to stimulate the economy will see they piper needs to be paid. And when they do, who will they blame?
1
That is very brave of Representative Brady to decry attempts to work around the SALT limitation. Mr. Brady hails from Texas where, last I checked, has no state income tax. Very courageous, Mr. Brady.
2
And you voted for a republican because....?
1
I believe the proper response is "that makes me smart".
I hope Dems remember this when they get back in power. Seems like NRA and Evangelical institutions don't really deserve their tax exempt status either.
3
A GOP fracker that I know pays $100,000 a year in property taxes on his main residence near me. And there are thousands more in Texas just like him. All that matters to this bunch is they no longer have an estate tax.
There is one thing about this I'm willing to bet my life on:
Trump will never again, for tax purposes, declare himself a resident of New York State.
2
The IRS ought to investigate Trump.
1
This continues the philosophy of might makes right that has been favored by the Republican party. Or, as Darth Sidious (Senator Palpatine), future Emperor, said, "I'll make it legal." where they define their deductions as legal and yours as not and then hide behind the their self-serving law as justification.
One thing you'll have to accept is the little mind trick by those who are saying if paying these contributions is not optional they can't be called charitable. Seems reasonable, right? But remember that these are same people who for years have railed against taxes as forced charitable contributions saying that they shouldn't have pay for others and who have justified on that basis every measure to avoid paying.
I wonder if those who feel strongly that being forced to pay means it isn't a charity will stipulate that all the tithing where people are required to give a certain amount of their income to their churches are also not charitable contributions and therefore can't be deducted? (Rhetorical. Of course they won't.)
The fact is that current "tax reform" that will cost me an additional $4000 this year used might to redefine what is deductible, taking from middle class and giving to the wealthiest and corporations. The fact is people will be paying taxes on income never received. Double taxation. A concept that those gloating now were so adamant about in the estate taxes that was part of the "reform".
1
So hey how's that Federalist states' rights thingy working for all those Conservatives out there these days?
Leave it all up to the states....except when it involves things we want the big Federal Gov't to handle 'cause big gov is mostly bad except where big gov knows best...like marijuana, auto emissions, and now, state tax rules....
4
Hanging chads??
Truly a first: Fatcat Republican beneficiaries of tax cuts subsidizing their profit margins are complaining about "loopholes" in the reformed tax code. Gee, does this mean the AMT will still be uniformally applied?
2
This give the wealthy reason to help us get rid of Trump!
1
This is not surprising since Trump is from New York and his administration seeks to harm New Yorkers by double taxing them. This is part of his lowering taxes policy that applies only to red states.
He is from Queens and lives in Manhattan, but despises his state and his fellow New Yorkers. So much for loyalty and concern for the state that he has lived in all his life.
Trump reveals himself in his actions as a vengeful sociopath who only cares about himself and survives by abjectly playing to his beloved base. Can his supporters ever see him as he is, as a cowardly destroyer of our democracy and as an ungrateful con artist?
4
If you live in a blue state, you cannot vote for a Republican Congressman. You're voting to slit your own throat. Your own Republican Congressman may be a great guy (I doubt it, but maybe). Maybe he/she has done some great things for your district (I doubt, but who knows). But that's all irrelevant. Voting for him or her puts people in charge who want to hurt you personally and pass laws to hurt you and punish you for living in the state of your choice. We cannot afford a government run by people who want to hurt part of the population. Republicans cannot be trusted with power.
7
I thought republicans were going to shut down the IRS.
2
"...Alabama provides a 100 percent state tax credit for taxpayers who donate money to organizations that give children vouchers to attend private school..."
WOW!!! George Wallace is gone, but his words don't merely echo yet -- they find everlasting [???] homage in Alabama law: "Segregation now, segregation tomorrow, segregation forever."
What a country!!! States like Alabama and Mississippi get to add insults like this to 'Blue-States' injuries sourced by our federal taxes paying their third-world-economy bills.
8
I am not holding my breath for the GOP to fight this based on their obsession with states' rights.
This is the very reason all GOP representors on every level should be voted out of office. It doesn't matter if they voted for the tax bill or not, they are part of the party that supports trump and his administration.
7
If DJT thinks this tax bill is such a great deal, he should release his taxes so we can see what it does for him!!! Except then he'll reveal all his conflicts of interest.
4
What this shows is the hypocrisy of the red states in full and glorious color. To get around laws that don't allow people to deduct tuition for private schools, especially religious ones, they make that a 'charitable contribution' so that the federal government is subsidizing it, yet of course they don't want other states doing that because those high tax states subsidize them. People in South Carolina proudly talk about being a low tax state, yet they get 8 bucks for every dollar they send into uncle sam, subsidized by blue states that get back 65c.
When this eventually gets to Scotus (and I am sure it will), the conservatives I am sure will try and ban these tactics as 'illegal', but if they do that then NY and NJ should use the legal firepower to make sure that the law is applied equally and the 'good folks' in Alabama and places like that suddenly find they don't enjoy the nice loophole they have had.
7
If you want to avoid confiscatory state income taxes then do what David Tepper did in 2016 and Tom Golisano did in 2009. Leave New Jersey, New Jersey, or Connecticut or California and move to Florida. Then you won't have to listen to Democratic politicians demagogue about how you don't deserve to keep your hard earned money and how your money is, suddenly, their money. Say goodbye to cold weather and high taxes. Say hello to sunshine and no state income tax.
3
Actually Toni, what this sounds to me is that the Republicans who currently take about 40 cents of every dollar I pay in federal taxes and send it to people in other states telling me that I have to pay even MORE money to the federal government.
Maybe if states that are currently net "takers" from the federal government raised THEIR state and local taxes so they didn't need such huge federal subsidies, I would have to send so much of my money to them.
2
Gee, why doesn't the IRS tell the rich to pay their taxes? As usual, they'd rather go after the little guy. Has the IRS ever targeted Bezos or the Walton family? I didn't think so.
1
who do these states think they are? Hedge fund managers that get to claim their income as capital gains? The nerve!!
4
The GOP never met a corporate tax break it didn't like. It has actively gutted IRS enforcement for wealthy individual and corporate tax cheats.
Republican have deliberately driven us into huge national debt once they elected their last two presidents.
But let "blue" states attempt to preserve tax equity when their residents are singled out for unequal tax liability - it's time to bring out the federal jackboots.
2
And when California secedes, and takes its 5th-largest global economy with it, the "flyover" remnant U.S. will be a third-world country.
1
An California will return to a parched, uninhabited desert.
1
And the answer is; vote in November and get rid of every republican in office. Enough is enough!
2
My heart bleeds for those who can afford properties with $ 10,000 taxes a year,
The great majority of Americans can't
2
don't Democrats want the rich to pay more? Someone who earns $200k+ is rich
2
This deduction is a progressive liberal dream , it affects mainly rich rich people with big house and large tax bills ........ this the kind of wealth distribution the left wants ?
1
What would Trump do on his tax filing?
2
Here’s a thought exercise:
Say NY identifies Public Education Charity XX as an acceptable recipient of donations for which NY will give a credit.
Let’s say you’ve been donating to that charity for years. Can the IRS now deny you a federal charitable deduction for your future donations to the charity?
How about it you haven’t previously donated, but all this publicity makes you realize this is a good way to support public education, so you make a donation to this charity, but don’t claim the NY credit. Can the IRS deny you the federal charitable deduction?
What if you do this for three or four years, and then decide to claim the NY credit for your donation in year five. Can the IRS deny you the charitable deduction for year 5?
If you answer yes to the last scenario, why? You’ve been making the same donation for years.
Capitalism means that things are priced according to what folks will pay. Real Estate is the ultimate expression of this. One can make more money in NYC than Omaha, so our 3 bed with real schools is 500K with a commute, your $180k house, and you'll have a nicer yard.
Since the teacher and the DPW guy all live in that world, you have to pay them more. That's OK, it's all relative. Still, it also explains why that house has a $3k tax bill in one place and $17K tax bill in another. Garbage gets picked up, kids get a school, streets are hopefully paved. Prices are way different, just based on average money in area.
Telling me my taxes are "too high" and as such should not be subsidized by the rest of the US is a farce, especially as New York is a Donor State. Sorry more people will bid up NYC vs other places, but that's not some plot..it's capitalism.
The SALT tax must be revised once the Dems get back one or both houses.
7
I think the IRS gets badmouthed and pushed around too much, when what they do is fund Civilization. Seems most people don't really want a collective civilization. Some people believe they're Tarzan and can get along w/o the kind of order brought about by having an institution whose mandate is to require your participation. They really should be the ones who have more soldiers in the field given the myriad hostilities conspired against them. Reducing the IRS's ability to operate by politicians is flatly dishonest.
2
Prepare for an extremely unpleasant surprise when the IRS Tax Court affirms this communication with action after you've filed your 2018 return. Penalties and interest.
I have yet to see an official "opinion" -- a letter from a law firm which stakes their reputation on an interpretation of an aspect of tax law -- which supports Governor Murphy's view.
1
From my understanding of the IRS code, if you give to a charity you are supposed to get nothing in return. That would hardly be the case if you give to the state to lower your Federal tax.
2
"The Treasury Department and the I.R.S. are worried that the workarounds could further balloon the cost of the tax cuts..." So Republicans are worried about 'balooning' the debt? Then why did they pass the bill in the first place?
2
States that are receive more federal spending than they pay should pay higher federal taxes. It’s sorta like work-fare requirements.
3
Well, I can't say as I'm surprised by this. I had doubts the states would be able to pull this off. But I appreciate their trying.
I'm still beside myself that they were able to pull-off this blatant give-away to some of the wealthiest families on the planet.
It gets more surreal by the day. Sometimes I think I must have died and gone to purgatory.
I see an empty threat. If any state can create a system of funding from its citizens that legally cannot be labelled an income tax, there is very little the federal government can do about it except was lots of money in court. And then lets see where the "states rights" crowd aligns...
1
I'm concerned that a tax dodge like NY's will have an negative effect on charitable donations to local institutions.
1
So it would be legal for Falwell's Liberty "University," a "religious" front for a hyper-partisan and political operation, to qualify for tax exemptions as well as preferential tax treatment with respect to taxpayer-funded and federally-supported student loans.
But for blue states which were specifically targetted by Conservatives, Republicans, the Tea Party, and Trump with a $10,000.00 limit on state and local tax deductions, including income and property taxes and mortgage interest which are necessary to support essential services?
We'll see you (GOP) in court. This will not end in the juridical sectors. We will also see you in the court of public opinion. We shall not forget this Conservative-Republican scheme, nor forgive. This is sleight-of-hand and highway robbery of hard-working middle-class citizens.
2018 midterm elections cannot arrive soon enough. Neither can 2020. Sooner or later, there will be a political reckoning. This shall not stand. There shall be political consequences for the rightwing extremist billionaire cabal.
We shall not forget -- nor forgive!
3
If hedge funds can redefined income as "carried interest", what rational does the IRS have to stop states from declaring payments a "charitable contributions"?
2
Regardless of your politics, if you look at what the states are trying to do, there is only one logical and legal conclusion.. These are tax avoidance schemes with no economic substance and the irs is right to put rules in place disallowing the tax scams. If you don't like the new tax code, vote people into office who will change the law. Funny how the same politicians who love to hate the wealthy are now trying to come up with schemes to protect them...
2
California is not such a high tax state compared to states in the Northeast, property taxes were capped by Proposition 13 in the 1970s. Older people who bought homes back then are taxed at a low rate of what they paid for their home. People only renovate their homes here and don't trade up like in Texas and other low tax/low services states.
When Arnold Schwarzenegger was governor, his refusal to raise taxes to fund state services meant that education funding and road repairs were put off. Roads are crumbling in many places with bad potholes in which the state is only beginning to make repairs.
Gov. Jerry Brown's policies have helped the economy recover and fund essential services. Republicans only fund prisons and the military when they are in power while running up huge deficits.
1
Wouldn't it be interesting, or hugely scandalous, if during the discovery phase of litigation between the I.R.S. and state jurisdictions it was revealed that Republicans in Congress intentionally placed a cap on SALT deductions in order to politically punish blue, Democratic states. This information could possibly be secured via depositions of key Republican Congressional committee chairmen, production of all pertinent documentation including that flowing between Congress and the White House, and other sources. Perhaps a whistleblower, or two, might even emerge to deepen the drama. One never knows what might be secreted away, for now.
1
There is a way to repay the “heartland” for their duplicity - just about everything that goes on a retail shelf, or gets assembled in a factory, comes in containers. And those containers arrive mostly at Blue State ports. As Indiana, or any other heartland state, does not support the infrastructure that gets those containers from the stack yard to the Interstate, tax the container before it gets loaded on a trailer. If the container doesn’t leave the state, wave the tax. It is time to treat trump nation with the same respect they extend to others.
2
This tax change should have been proposed by Democrats, not Republicans. Progressive Democrats have endlessly contended that the wealthy should pay more in taxes, not less. Well, here is their chance, And they are whining about it!
3
Will not tolerate flouting the law? That's rich. Can we now apply that to Trump and company? Corporations? The 1%?
2
Wait...I thought New Yorkers loved taxes on the rich. What rich irony that they ARE the high-income, high-tax people the IRS was looking for.
5
Americans should bear the same federal tax liability regardless of which state they live in. Donations made to state coffers in exchange for equal reductions in state taxes obviously are not a charitable donation.
1
The SALT deduction limit amounts to forcing people in higher tax states to pay tax on taxes. Federal tax should be removed from income before state taxes are calculated, and state taxes should be removed from income before federal taxes are calculated. At least for income, if not property, taxes.
That would certainly favor you, wouldn’t it? And it did, for years and years.
Or, alternatively, we could have it that everyone pays the same federally, and then the states can opt to spend extra money (via state and local taxes) on whatever the local population wants. That would then be fair, rather than continue to line your pocket at the expense of the federal revenues.
2
Is the charitable contribution voluntary or not? Is that not the question? As I understand it, if your town sends you a bill for property taxes and you do not pay it the town may place a lien on your house and, eventually, take it. If the state is proposing to make local property taxes a voluntary contribution, how do local mayors and town council members feel about that?
2
In blue states the largest SALT component finances public education, while donations to most private schools continue to be deductible. Typically the largest SALT component finances public education, the main long-term effect of the new tax law will be crippling the public school system - as intended?
5
Tax returns should be as simple as possible and no more. Tax gross incomes for individuals and businesses - NO exemptions, deductions, credits, exclusions, etc. Capital gains and wages should be same rates. simple.
2
The claim that these manufactured “charitable deductions” that are merely state tax collection methods that exponents seek to use to allow their residents to avoid the requirements of the new federal tax law, are indeed charitable contributions like any other … is patently absurd, and actually hilarious in its blatant chutzpah.
Of COURSE the IRS is going to disallow them. Obviously, not only are state and local taxes (much) higher in hyper-blue states, but those states clearly suffer from a surfeit of lawyers, as well; and such have never lacked brass. If such states need revenue that their residents don’t need to worry about deducting or not deducting, they should consider selling that excess of lawyer-flesh to glue factories.
But of COURSE a “charitable contribution” to a public school district, that used to be called a “property tax”, is a transparent sham! How do these states, and the glue-factory lawyers, expect to get away with it? The IRS ALWAYS has exercised the power to disallow ANY kind of deduction that they conclude is nothing more than a subterfuge to avoid paying federal taxes.
Immensely entertaining, even though I will be one of those crying in my beer.
5
So, a deduction for donating to a private school is ok, but not one for donating to a public one? Private good, public bad? The end result will be crippling public education, and a return to the eighteenth century: education only for the elite.
3
Paul:
No, the end result will be that high tax states won't be permitted by their own residents to keep raising taxes without limit.
Tax evasion can result in massive penalties. The courts will rule on any actions.
2
The point of the deduction is to not pay double taxation.
The SALT deduction is a simple and efficient way to make sure Americans are only paying income tax on their actual income. If a CA resident makes $100k and pays $30k in state and local taxes, that person only has $70k in net income. By capping the SALT deduction at $10k, that same person would be paying taxes on $20k they never had.
19
Really??? Most all deductions have caps, like say health insurance / care.
5
That person "never had" the money that they spend on their rent, their mortgage, their car payment or their food, either. Federal taxes are designed to fund the federal government, and there is no reason that people in NY making $100K should pay less for defense, debt or the NIH than someone in Florida making $100K.
2
Actual income is not affected by taxes charged by your municipality. It’s what you earned. There’s nothing inherently fair or unfair in giving a welfare to homeowners, which is what the SALT deduction does. It’s a political calculation, nothing more. That said, I lose this deduction myself, and I’m not particularly happy, and I hope that those who made this crazy tax bill pay a heavy political price for it.
1
On the assumption that there are attorneys willing to opine that there is sufficient comparability between the existing state educational vehicles contributions to which are deductible, and vehicles patterned after them to overcome the SALT limitation, a taxpayer could avail him/herself or the IRS' private ruling process which has been widely used over decades and I assume continues to be available.
It involves filing an application with the IRS asserting that based on the facts and law, in this case there is sufficient comparability between the recognized educational devices and those proposed as alternatives to property taxes so that contributions to the latter ought to be ruled similarly deductible. If the IRS ruled to the contrary and the taxpayer continued to disagree, he/she could file returns taking the deduction which the Service would disallow satisfying the predicate for the taxpayer to take the matter to court.
Strictly speaking there's no need to request the ruling beforehand, but the process of so doing could at least identify the points of disagreement and possibly suggest a mutually agreeable resolution.
Point is the IRS has got to have law on its side for asserting insufficiency of the new vehicle, as presented on the basis of the opinions of competent counsel. And ultimately, court is where such matters get decided, whether or not politically fraught.
3
Understanding the tax treatment of high tax states like New York begins with the question of why these states are high tax in the first place. When you look at the New York state budget, what jumps out is the amount of health care spending and, more specifically, the amount of Medicaid and CHIP spending. New York's per capita Medicaid spending is very high. And 54% of New York children are covered by Medicaid or CHIP.
Suffice it to say that New York's high taxes are heavily spent on health care for the poor and for children. Of particular relevance, this spending costs billions to the federal government for matching funds.
The reason state income taxes are deductible is to eliminate double taxation of the same income. The tax bill provides for double taxation of the upper third of New Yorkers and similar high-spending states.
New York is trying some shenanigans to prevent double taxation but the IRS says no go. So the question is whether the upper middle class of New York is willing to pay double taxes for expensive medical coverage for the poor. We'll see what happens.
11
Absurd. The reason why my local taxes are so high is the cost of good public education. I can deduct if I give to private schools but not to public ones? Is that fair or logical?
It is not medical spending for the poor but rather the middle class who end up in nursing homes and the disabled.
1
One reason blue state taxes are high is because we're paying the federal government's bill for welfare to third-world red states that sponge off the feds.
The IRS is correct. People may not like it, but they are right. No CPA or attorney is going to sign a tax return that takes a contrary position. I doubt many millionaires are going to do their own returns on turbo tax.
11
“I hope that the states are more focused on cutting their budgets and giving tax cuts to their people in their states than they are in trying to evade the law,” he said."
Brilliant, Steve, they should follow the example of states like AZ, KS, KY and WV that slashed education funding, which uusually accounts for about half the state budget.
15
I am finally in agreement with this new tax stature. It's the reason why I left NY and moved to PA (where my vote finally counted in turning the state red from being blue since 1992).
If high tax states feels that they can cirumvent the tax laws, they will never reform their tax laws.
Look at all the high tax states, NY, NJ, CA and IL and WA, more people are leaving than those coming in. Hopefully with the new census coming up in 2020, red states will gain more electoral votes and members of congress, which is good for Republicans and conservatives like me.
9
More "high income" tax payers are leaving these states, their ranks being supplanted with low skill workers.
It is not just the states often mentioned as high tax states. many people in Missouri will be affected too, I think they just don't realize it yet. Itis not uncommon to have more than 10K in real estate and state taxes
I hope that a large percentage of the poor are leaving New York for Pennsylvania. Then you conservatives can deal with the problem of how to provide healthcare and other services. Enjoy your new neighbors!
I am very, very angry. The horrid need of Republicans is to punish and harm New Yorkers and Californians and the like. What a disgrace these Republicans are, to purposely divide, divide, divide the country.
80
Would you rather that you get to spend lavishly on your own (state and local) purposes, and contribute less to the larger (federal) purposes? Surely you can recognize that all should pay the same rate for federal taxes, which will now be the case. You will then still be able to choose to spend on your own districts how you wish, but no longer at the expense of others not in your state/districts, who receive none of your local benefits.
2
I'm with you 100%!
It was not a tax overhaul. It was a $1.5T giveaway to wealthy people most of whom pay almost nothing in tax, on the credit of the working classes who pay the taxes that pay that credit bill.
94
Hello,
The bottom 50% of all tax payers pays about 2% of all federal taxe, while the top 10% pays over 87% of all taxes.
1
Would you trade places with that bottom 50%? Didn't think so.
It is interesting how each of these blue states are responding to this tax. Democrats have been campaigning on raising taxes for the rich. The SALT deduction limit does just that. It raises taxes for people with homes that cost $1,000,000 or more (i.e. the rich).
So now the blue states are fighting the tax rise. Are they saying that the government should raise taxes for the rich, but only if they are not my constituents?
Are Democrats in favor of raising taxes for the rich, or not?
23
In my town, a house with an appraisal of $250,000 can have taxes over $10,000. It's not a rich person who owns that house. The objection, and it is fully legitimate, is that we pay higher taxes in order to get better services in our states. We believe that providing education and healthcare to all of our residents is important. What we don't want our tax dollars to do is to subsidize the profits of filthy rich corporations that simply enrich their largest and richest shareholders. And the Trump tax sham funnels money to corporations and the mega-rich, who can afford to structure their entire lives into tax sheltered devices to avoid paying anything. This is BS and I hope our states fight against this farce with every bit of legal power in their arsenal.
58
Peter, I am a former Ct resident and have to gently remind you that despite all its taxes the state's finances are in horrendous shape because of the give-aways to public employees. There have been big cuts by a Democratic Governor and legislature for education and healthcare to take care of the employees. Your taxes are going to them, not social welfare. If Connecticut wants to so generous to the employees, so be it. The taxes paid for them should not be deductible from Federal tax.
4
New Haven, CT only assesses real estate at 70% of fair market value, though.
In New Haven, the current real estate tax rate is $38.68 per $1,000 in assessed value. Real estate is assessed at 70% of its fair market value. But even with an appraisal of $250,000 (for a house with a FMV of about $357,000), the annual real estate tax would be $9,215. That's closing in on $10k, but definitely not "over."
A property would have to have a fair market value of over $387,000 before annual real estate taxes would exceed $10,000.
It's a (very) high real estate tax, but someone in a $387k home in New Haven probably isn't struggling. And, while there are serious issues with the tax bill that passed, it does make sense for the federal government to collect more revenue where it can, considering the large deficits...especially from people who have a greater ability to pay higher taxes.
2
What NY is trying to do is absurd.
To characterize a mandatory tax payment as a "charitable contribution" is plainly fraud.
An individual taxpayer trying to do this would go to jail.
26
If they want to make these state tax payments truly "charitable contributions," all they have to do is make them voluntary. Let's see how many NY officials sign up for making state tax payments voluntary. Show of hands, please.
Yet you do not condemn Alabama for having the same law. Only difference is NY was limiting the deduction to 85% while 'Bama allows 100% deductions for contributions to charities that provide vouchers to private schools.
What's absurd is for this GOP congress to penalize blue states. That's what they did. Wait until we get a DEM congress. I say let's tax red states till they go under!
So "Mnuchin ... has scolded states that were looking for loopholes to blunt the impact of a new $10,000 cap, while serving as an appointee of a "president" who has boasted of HIS OWN blatant tax avoidance? (and no doubt tax evasion)
That's rich... (pun intended)
74
As a resident of a lower tax state, Colorado, I get fewer state funded services, crumbling infrastructure and poorly funded schools and higher education. Why should we subsidize people in high tax states? You are benefiting from your higher state and local taxes. And before you lump us in with the "taker" states, Colorado and New York both receive less than $1 back for every dollar paid in federal taxes. (The Atlantic March 8, 2017).
14
I live in low tax Tn, our roads are pretty good, out schools funded adequately and if not local taxes can go up. We spend way too much on health insurance.
2
Tennessee has a high illiteracy rate and ranks high in infant mortality, smoking rates, obesity and mental health. I'd say Tennessee should spend quite a bit more on health insurance and on education with these very unfortunate statistics.
Evergreener: An old phrase springs to mind here, i.e., you get what you pay for. Seems to me that your complaint should be addressed to your state government which refuses to adequately tax you to provide decent services. If, as you say, both NY and Colorado get less back from the Fed than they pay in, then it is difficult to see how your state is subsidizing mine. Like all New Yorkers, I do indeed benefit from my higher state and local taxes. I may not be too thrilled at the higher tax rate but I recognize that I'm getting value for my dollar. If you're too cheap to want to pay for anything then don't blame me.
1
The only way to address this issue is for voters in blue States particularly California and New York to throw out all their Republican representatives so the Democrats regain control of the House and to start the process to reverse the vindictive Attack by Trump and Ryan et al.
Just for the record both New York and California send more to the Federal Government than they receive.
More seriously we need a congress that can rein in this corrupt administration which is not only lining its own pockets but step by step they are dismantling our Democracy.
The future for our kids is simply terrifying.
49
Let me understand this correctly:
It is ok for an international conglomerate to sell intellectual property to a subsidiary in a tax haven to evade income taxes;
it is ok for Trump to write-off from his income losses that his bank took on bad loans made to him, rather than report as income the debt proceeds he never repaid in the only tax return publicly revealed;
It is ok for millionaires and billionaires to funnel monies to offshore accounts domiciled in tax havens in an intentionally opaque jumble of private LLC’s (see Trump Organization, Trump’s fixer Michael Cohen, etc.) to evade taxes;
But if private ordinary citizens transparently enable their elected state representatives to make state and local taxation as tax efficient as possible through legal means, that is something the IRS has to crack down on!
Nothing gets a tax cheat as mad as to think ordinary citizens will benefit from legal and transparent tax planning.
The corruption and greed of the Trump Administration is boundless and fetid and revolting.
298
Corporations and billionaires could not make a donation to a state in in exchange for an equal reduction in state taxes and count it as a charitable donations on their federal taxes.
I'll bet the truly rich find away around this cap too. Do you really think Trump will have his tax deduction on Trump Tower capped at $10,000? No. The cap only applies to individuals. Set up a corporation or similar to own your property and collect income, and it can deduct all its taxes. The rich with their scheming tax lawyers will find a loophole. It will be just middle-class chumps who will face this cap.
7
Let's not forget that the Republican Congress enabled this affront. They are just as complicit.
3
Any tax law can be changed. Just like any other law. We just need new law makers....
40
The IRS's position is very defensible - and their defense rests on a very simple concept. Governments are not charities. Only private organizations can be charities. If you volunteer your money to private organizations that provide social benefits, then enjoy your tax deduction (as Alabamans do). But if you volunteer your money to a government (as New Yorkers do), then no tax deduction for you. New Yorkers get to follow the same laws as Alabamans. If New Yorkers want a tax deduction, they can set up their donations the same way Alabamans have.
19
If this were true, there should not be a $10,000 cap, there should be no deduction at all.
Truth is, tax law is loaded with favors. Mortgage-interest deductions. Deductions for dependents, education, medical expenses, casualty and theft losses, business expenses, sales tax, charitable contributions to all sorts of organizations including churches, etc. that may favor specific interest groups rather than public good that benefits everyone. Then there's favorable rates for investment income, carried interest, etc. Who gets the favors is a never-ending argument.
There's also advantages built in to what interests get federal funding from these taxes and what don't. Highways? Check. Alaska's state ferry? Check (it receives federal highway funds). Subways? Not so much. New York City's subway is mostly funded by state and local taxes (and of course fares). There's not much federal funding. A much-needed rail tunnel between New York and New Jersey that's seeking federal assistance isn't getting much support.
6
Except it’s not a government organization. They are giving money to a educational charity. It’s a loophole, but it’s real and would follow the law as currently written. Which according to the President is what is supposed to happen.
Tell that to the religious institutions receiving direct government funding yet retaining their welfare exemption AND receiving tax-deductible private donations
1
Some tax practitioners and IRS claim the charitable contribution strategy doesn't pass muster under accepted "form and substance" thinking. They are wrong, and the IRS is over-reaching.
A State has the authority to determine how it taxes its residents. If a State wants to give a credit for contributions to an education charity, it can. it's rationale for why it chooses a tax structure -- and the tax structure (whether a tax cut, a deduction, or a credit) -- is irrelevant.
The law permits a federal tax deduction for contributions to a 501(c)93) educational charity. That the donor gives the contribution to get a tax benefit is of no import. In fact, that the point of 501(c)(3) -- incentivize contributions with a tax benefit.
The taxpayer's form and substance is a charitable contribution and a state tax credit. I think this is an easy case for a taxpayer to win. And there's ample precedence for the taxpayer to rely on.
17
No taxation without representation. States Rights! Right GOP right wing?
21
I can think of one high-income individual from a blue state who doesn't worry about paying taxes. It turns out that the Republican Congress gave huge tax breaks to real estate developers, real estate owners and golf course owners. What are the odds?
89
''The Internal Revenue Service is preparing to crack down on states that try to circumvent...''
Doesn't everybody wish the end of that sentence was 501c4's that were using their dark money influence to circumvent the will of the people in elections. It could end with ending the inversion loophole so companies could not hide their profits offshore and in some cases pay no tax at all. How about ending with forcing all prospective and current members of government to release their tax returns.
I know, I know, crazy idea. never mind.
47
With the 5th largest economy in the world, California pays plenty towards the federal budget, and thus supports states that don't adequately support their own population.
Pure politics, and spiteful retribution towards the blue states.
27
Nice try, but you’re not quite there yet.
California pays a lot (because of population and high incomes), but didn’t pay as high a rate (because its high tax rates were previously deductible). Now everyone will pay the same rate, regardless of his state’s fiscal/taxation decisions.
14
California doesn't have particularly high tax rates. It has high taxes because the cost of property is high (so at the same rate, people pay more) and as a result the cost of living is high so that people have to earn more for the same standard of living as a lower cost state. People paying at the same rate on a higher income (not higher standard of living) will pay more in taxes and have more to deduct.
2
Then lets ensure that we all receive from the govt equally. The blue states hit most heavily by the Republican tax scam contribute much more than received in fed benefits, jobs and grants. So if you want to tax at an equal rate, there needs to be equal rate of spend back into the states. Let’s not see some states receiving less than $.99 on each dollar of tax paid while others receive upwards of $7 for each $1 paid.
1
The Trump administration, with its starve the beast mentality, has done just that to many agencies including the IRS. Who, pray tell, is going to enforce this "regulation?" They can't even answer their phones or figure out how to untangle some of the mess Congress handed to them in the latest tax overhaul.It's laughable.
14
What is the value of staying in the United States union for those states (all blue) who have long been punished quietly for their relative living standards and are now punished openly by a tin-horn dictator and his mob in Congress and the Federal Government? The red state politicians steal national elections with the help of our international enemies, they steal Congressional seats through ruthless gerrymandering, they steal Supreme Court seats through legislative obstinance, and they steal our resources even more flagrantly now via their so-called "tax reform" legislation. Time to separate ourselves from people who long ago ceased being our compatriots. It's time for us to go.
53
I've claimed this for years. Freed of its connections with the Red Zones, New England would make a perfectly lovely country and would exist on a sound economic footing. We could even take New York, New Jersey, and part of Pennsylvania with us!
Or we could join the Canadian confederation.
Either way, we'd be freed of supporting people who do not share our values and, in fact, actively despise us and constantly work against our interests.
And on the West Coast, Ecotopia and/or Cascadia could do the same!
3
You seem really fed up with America. You have a problem with our Constitution. How much effort have you made to change it? The person you describe as a “tin horn dictator” (whom I didn’t vote for) is our President.
If you’ll actually leave the USA, I guarantee there is someone who will pay for your ticket. New Zealand is nice.
Let's call these workaround laws what they actually are ..
State approved tax evasion .. to help high income people.
17
Let's call the limit on property taxes deductions what it is, a shot across the bow of Blue States by the GOP.
18
Some people practice tax evasion and brag about it. And doing so gets them elected.
If you read the tax law, it does not say anywhere that it is only applied for "blue" states.
So why only blue states are complaining ? *wink*
Mnuchin "scolded states that were looking for loopholes". Unlike his rich buddies who hide their money in tax havens all over the world? Unlike corporations that set up phony-baloney foreign entities to "generate" their income? And how come the tax bill didn't do away with "carried interest" (even though Trump promised he would), which lets hedge fund billionaires pay a lower tax rate than the rest of us? Never mind that, let's stick it to the middle class. At least the states are trying to help them.
51
Whatever happen to I support states rights.
14
States have no right to offer their residents a scheme to evade federal tax.
14
....but the 1% have schemes all over the place. Is that OK because they can afford to buy themselves lawyers?
i certainly hope the Service will go after states and the individual legislators who aid and abet this flagrant tax evasion.
11
This tax law was written by Republicans specifically to punish taxpayers in blue states, especially California, but also New York, Massachusetts and a few others. Disgraceful.
81
No, it was to prevent scamming federal tax code via SALT deduction. High tax blue states happened to be the biggest beneficiaries of this deduction.
Complain to your state and local govt., not the fed.
17
Well, it can be reversed after the Democrats regain control of the Presidency, House and Senate. Except, Trump will then benefit most, perhaps.
3
I'll be paying Estate Tax by then.
1
Steve Mnuchin is one to talk; he should have looked at the "interest carry" loophole so prized by Wall Street.
Hmmmmm, wonder why he did not.
22
Conservatives have had no problem undermining the Affordable Care Act based on the specific wording of some sections with no regard to the larger context. They even took one effort all the way to the Supreme Court. I have no doubt there are holes in a tax bill that was thrown together at the last minute.
9
This scheme seems fishy at best. The best remedy is to elect a Blue majority to over turn the cap.
Personally I'd still like to see a cap but one's that based on a formula taking into account each state's individual situation. $10k ain't the same in N.J. vs., say, Okla.
As for mortgage interest, I'd like to see the deduction for second homes and RVs (!) eliminated, albeit gradually (5-10 years) to allow the market time to adjust.
Also let's do away with the tax-exempt status of churches and 503(c)s.
In return, churches could politic to their heart's content; they already skirt the regs. Maybe a flat tax of 10% on all these outfits.
And tax investment bankers' income as income.
One can dream.
16
agree 100% on the second home...RVs?...I hope you're joking...
1
Sounds like you want to be ruler. Everyone should pay a flat tax rate no matter where they are. That is fair and equal. Okla. citizens do not benefit from the spending done in N.J..
7
No, taxpayers in Ok don’t benefit from money spent in NJ, but they benefit disproportionately from the many more federal tax dollars they put in than NJ.
3
Steven Mnuchin, Treasury secretary is very concerned that working class people might get out of paying burdensome taxes. Taxes created because he, Mr. Trump and the league of ludicrously lush needed to have their taxes lowered.
States like California and New York are donor states paying into the treasury more than they get back, unlike a number of state that support Mr. Trump and who rely heavily on federal dollars flowing into their state.
I would bet that New York and California will have better attorneys than the disheveled Trump Administration can dredge up.
Remember, this administration will go after school teachers and nurses, but failed to live up to Mr. Trump's promise to address the Carried Interest Deduction.
24
It’s sad but expected that Mr Mnuchian (or however he spells his name) does not know the difference between “evade” and “avoid” when it comes to taxes! Evasion is an individual engaging in lowering taxes by criminal methods. “Avoiding “ is the use of non-criminal methods. New Yorkers who avail themselves of a State Law would NOT be evading the law. Likewise the IRS could disallow the deduction but it would be litigated in civil not criminal courts.
11
Mr. Mnuchin complains that some states are trying to find tax loopholes to help their citizens avoid having to pay significantly higher taxes. Is it only rich people like yourself that are allowed to take advantage of tax loopholes, Mr. Mnuchin? Do you never take advantage of tax loopholes yourself? I think we all know the answer to that question. Hypocrite.
107
States rights? Only when its convenient.....
20
No logic to your comment, what do states rights have to do with federal tax law?????
Let’s see Trump’s returns.
48
"The $10,000 cap, which was included in last year’s $1.5 trillion Republican tax overhaul, hit predominantly Democratic high-tax states hardest..."
...By Republican design.
32
Yes and well deserved, all these high tax blue states are controlled by greedy unions that own their states assembly's and governors. Perhaps these blue states need to reign in unions.
1
Americans should pay the same federal taxes regardless of how much they pay in state or local taxes.
10
That would mean double taxation and that would be unfair.
6
Effort to evade the law? Passing laws is not evading the law. Legally avoiding taxes, as Mnuchin well knows, is called tax avoidance, not tax evasion.
Why is it ok for corporations to shift income between subsidiaries, etc., reducing their taxable income sometimes to nil, and not ok for New York to restructure its tax code? Why is it ok for money managers to categorize their not-at-risk income as carried interest, subject to capital gains tax, instead of income?
The IRS says charitable donations are nontaxable. Why can't states set up charities? How is donating to New York different from donating to the Red Cross? I don't see how the IRS can distinguish.
54
Charitable contributions are not charity is there is a quid pro quo.
10
> Charitable contributions are not charity
> [if] there is a quid pro quo.
It's funny how unevenly this rule is applied. Almost all donations that people make to their churches are tax deductible even though the lion's share of the donation merely goes to maintaining the clubhouse that is used by the members of that church, an obvious quid pro quo.
I'd say that the states have a much better claim on their plan given that taxes help everyone, not just the tax payer.
So should we eliminate all deductions of charitable contributions? Who is to know whether a donation is made for belief in a cause or for the tax deduction? How about ending deductions for contributions to religious institutions? Why should I subsidize religious beliefs I don’t agree with?
We lost our SALT deduction in California and I am glad. Every deduction for property is a subsidy paid for by renters. Canada enjoys the same percentage of home ownership as we do and they don't have it. SALT adds to asset inflation just like artificially low interest rates. It's time to stop the whining.
Everyone wants tax reform until they are the ones being asked to reform.
37
Your landlord can always deduct the SALT taxes for the rented property as a business expense. The new wealthcare tax law only limits SALT deductions for a primary residence.
7
No individuals who need that deduction were crying out for tax reform. People in high state tax states will not even benefit from the change in the law - they will pay more in taxes.
5
There is a VERY SIMPLE solution -- neighbors rent from each other -- so everyone is then a landlord, and all expenses are deductible. No SALT limit on top either!!
Lease agreements can be written for any period that suits the two owners. This creates a new category of appraisers & arbitrators who compare the conditions of the properties at start and end, and assess any adjustments.
The administration's reaction is not unexpected and simply highlights the fact that capping the deduction was a mean spirited political act designed to hurt states that tax and spend more to improve the lives of their residents i.e. primarily Blue States and, perhaps, to force them into the low tax low service model of America's South.
Any Republican congressperson or senator from these states who voted for the tax bill thereby targeting their own state should be kicked out of office at the soonest opportunity.
16
Seems sensible to me.
But I recall Maryland's Representative Andy Harris (R) getting re-elected after voting against relief for Sandy damage. Delmarva, Harris' own district, was hit very hard by that storm.
1
But of course! Can’t go letting anyone but the 1% who write the laws try to reclassify THEIR income/expenses to lessen the IRS’s bite.
But not subjecting investment income to the Standard Rate is just dandy.
12
You do know that the 1% pay both the highest rates and also the greatest amounts, don’t you?
10
Doctor, you do know that the 1% own 50% of all assets in America, don’t you ?
3
This is why we should remove all tax deductions from the income tax code. The code is thousands of pages long, and most of that consists of loopholes that some politician thought would help him or her buy votes. Very few deductions make sense in terms of fairness or economics.
The best way to think about a tax deduction is that it’s a penalty or fine for the people who don’t meet the right criteria. With that in mind:
If I own a house and my neighbor rents an identical house, should he pay a fine?
If I live in a state with low taxes, and you live in a state with high taxes, should I pay a fine?
If I donate money to my church, and you donate the same amount of money to a political party, should you pay a fine?
If you have a child and I don’t, should I pay a fine?
And on and on…
36
Agree wholeheartedly.
Take it a bit further -- eliminate ALL exemptions, deductions. exclusions, etc. If businessmen 'choose' to travel first class or not - essentially the one not doing 1st class is subsidizing the other. IF traveling first class serves a business purpose [in better efficiency etc] then the business absorbs the cost.
All businesses should be taxed on GROSS receipts, not on tricked up net income.
The tax code should NOT be sued as a tool of social policy! Taxes are for raising revenue. Take some portion of that and allocate it for social purposes.
Ideally - we as taxpayers should have a say in how taxes are used -- ie we should checkoff boxes on our tax returns specifying which purpose we want the taxes to be used for -- at least 50% of our taxes// Congress can decide how house the other 50%.
About 68.5 percent of households already take the standard deduction, a percentage that is sure to grow under the new tax law. We should eliminate tax deduction for everyone.
1
The Feds lowered their tax rates. The states ought to do the same. Let us recall that the politicians are our employees. How about doing a job FOR us instead on on us?
11
The federal government can (and has, for decades) run a deficit, borrowing money to cover ordinary governmental expenses. Lowering taxes while spending and borrowing more is doing a job on us.
1
The same people who tell us "of COURSE Trump, Romney etc. pay as little taxes as they legally have to. It's the reasonable thing to do!" are chiding the states for trying to minimize the amount of taxes their citizens owe. Give me a break.
47
This is tantamount to taxation without representation.
Secession may be a real remedy for blue states. Looking better and better.
18
Try living in DC for taxation w/o representation.
5
State, local and real estate taxes are by necessity taken from me. I have no choice. I never see that income. There is no way that I can use it to enhance my lifestyle. Why should I have to pay federal income tax on money that I can never appreciate?
12
They’re not evading the law - that’s what the GOP does. They’re playing by the rules and getting creative.
Keep it up high property value states.
Finally, some counter punches!
11
Anyone in a state where the local income taxes combined exceed 6% should take the opportunity and vote Trump and Mnuchin and the other GOP miscreants out of office. They raised the debt >500 billion this year alone just to give the richest 100,000 (Literally the richest.25%) and a few dozen corporations a break.
33
What Steven Mnuchin, the Treasury secretary, really meant to say:
“I hope that the states are more focused on cutting their services and giving undeserved tax cuts to the wealthiest people in their states than they are in trying to evade our budgeting busting tax giveaway to the top 0.01%.”
21
This tax rule is scandalous as it effectively double taxes your income. Of course, Trump got himself a sweetheart deal worth much more than the extra cost in state taxes...
8
Payback will be the election of straight Democratic Congressional delegations from high tax blue states. There are at present:
Califormia 14 republicans
New York 9 republicans
Illinois 7 republicans
Pennsylvania 13 republicans
More than enough Republicans right there to flip the House.
59
Don't forget the six in NJ. We should pick up at least four of them. It's a shame, really, because three of them are considered "liberal republicans".
“I hope that the states are more focused on cutting their budgets and giving tax cuts to their people in their states than they are in trying to evade the law,” [Mnunchin] said.
Wouldn't a responsible person hope that states are caring for their population with effective services and responsible policy, rather than knee-jerk -- and potentially harmful -- budget cuts?
As an educated, conservative non-Republican, my answer is yes.
12
I'm on board with effective services and responsible policy including paying increased taxes. But I'm not a fan of a never ending stream of additional government workers with unsustainable, bloated pensions.
3
The SALT limit is perfectly fair.
THose who are whining CHOOSE to
* live in high-cost areas
* to buy very very very expensive homes - far far beyond the means of the median household with a $50000+ income - and those CHOOSE to pay high property taxes
* to live in states that tax the bejesus out of them for 'wish list' stuff of progressive dreams
So sad too bad but you do NOT get to duck out of paying your fair share of the NATIONAL expenses by giving more to your state as less than you should pay for Federal costs
Pay you share of national expenses - and then deal with the fact that your state taxes you like mad to pay for the 'extras' you all think so important.
The rest of us are tired of having to make up the difference nationally because you CHOOSE to buy a house that less than 10% of the US can afford, CHOOSE to support high local taxes and CHOOSE to support high state taxes.
You are gonna find out that your 'wish list' of goodies in your state really are expensive - like providing medical care to illegal immigrants in CA and housing anyone who is homeless in NYC
Dig deeper in your pocket if you want that stuff in your state.
20
Best comment so far!
By deducting state and local taxes, high state/local tax areas have for decades not paid their share into the national coffers. Now, they will pay equally into national funds, and then can adjust their local/state benefits versus tax rate as they see fit, as a the citizens of the area see fit, via their local/state voting process.
10
The Blue States choose, by having higher taxes, to pay for more qualified teachers, better infrastructure, better services for the poor, elderly, and disabled, etc. etc. The end result are states with stronger economies which end up paying more to the federal government, in contrast to the Red States which are poorer and end up receiving more in benefits than they pay in taxes.
The true moochers are those states that won’t raise taxes to pay for what they need and instead expect the rest of us to subsidize them.
20
We already do dig deeper, and that's why our citizens are better educated and healthier. AND, we already pay our fair share or more than that to the federal government: the blue states that are being punished by this SALT thing give a lot more in taxes than we get back. We have been subsidizing the red states for quite a while now.
By the way, do you remember the story of the Good Samaritan? In that story and others, Jesus taught that we should care for the "other" -- today would include healthcare to undocumented people and shelter for the homeless. Would you rather have them die?
5
Yeah, good luck with that IRS. Maybe Congress should have addressed that potential "problem" when passing the tax bill. Reap what you sow!
5
I thought liberals in these States wanted to pay their fair share of Federal taxes. What is the problem?
16
Q: "I thought liberals in these States wanted to pay their fair share of Federal taxes. What is the problem?"
A: The problem is that blue state residents already pay more than our fair share of Federal taxes.
19
@Bruce Reynolds: the point of the new tax law is to avoid the error that blue states did NOT previously pay their share, due to their state/local taxes being deductible, this keeping them from federal coffers. Now, everyone will pay the same rate into the federal system. Surely you can understand that the same rate being applied to everyone is inherently fair, rather than letting some people spend on themselves first (state/local taxes) and paying a correspondingly lower rate into federal taxes.
6
Mnuchin stretches over backwards to give China the pass over tariffs and stealing of American intellectual property but appears ever so happy to tax New Yorkers. Very... patriotic.
11
Dem states NYC CA
Taxes are ridiculous high
Lower them
Everyone is moving to Fla
i mean everyone
8
Kind of puts Trump in a difficult position, the man who said only stupid people pay taxes.
9
Gotta keep those blue states propping up broke, failing red states.
57
The whole point of this is that blue, high-tax states have NOT been paying their share to the nation, since they keep more of their residents’ income as state tax, which then is NOT paid into the national coffers equally, because state taxes were previously deductible. Now, that error is corrected.
6
No, Doctor, you are wrong. The blue states, with our higher incomes (and concomitant standards of living) have been subsidizing the red states for quite a long time. Even with deductible state and local taxes, we have sent in more Federal taxes than we get back from the government. It is the red states that have not been paying their share.
5
Seabiscute (sic), surely you must understand that if state taxes are deductible, the federal RATE paid by a citizen in a high tax state will be lower than the federal rate paid by a citizen of a low tax state. That is just simple math. The myth of blue states paying more that their share must end. They pay a lower RATE. It’s not the raw amount that anyone is talking about. It’s their lower federal rate that is now being equalized.
1
Many people hit hard by the loss of SALT will be saved by a weaker AMT.
4
I expect the states to fight back! God forbid that states should pay for education, infrastructure and all the other services and amenities that make them prosperous and desirable places to live. God forbid they should pay to be better places to live than the 'red' states. Fight, Fight and Fight! Don't let these gangsters take it away!
29
For shame! Blue states trying to negate the first legislation to politically and financially penalize a group of states since reconstruction!
It's OK for the GOP to arbitrarily and unilaterally decide that those states, which use income and property taxes to fulfill their mandates to their citizens, are penalized (which oh, by the way, are Blue states). When those same states try to address this via restructuring their revenues, well, that's not acceptable?
It's been obvious that the GOP stands for local and states rights over that of the federal government - until the GOP disagrees with what "local control" prefers for policy.
On top of that, the Blue states send far more taxes to the federal government than they get back in federal spending, while the Red states get far more than they provide.
This has become the most overtly partisan and divisive administration and Congress, ever. When citizens find out what their actual 2018 taxes are when filing, next year, The War on the Blue States will become all too apparent.
210
The change in SALT affects mainly upper middle class or wealthy taxpayers, so the state legislators are scurrying around to help people who are pretty well off
Second, it has been clear since the law passed that none of the ideas were likely to pass muster, esp the charitable contribution idea
Therefore, all the effort and noise the state legislators and governors are making is political theater - the politicians know full well this is not gonna work, they are just conning their own voters
shame on the politicians and shame on the Times for not being more forceful
as I read expert comments, the only idea likely to get IRS approval is the payroll tax idea which is hideously complex and just not a great idea as it requires employers to be nice to workers
19
I'm working class, living on $30,000 a year since I got a huge pay cut to fund health benefits under Obama, and I pay VERY high property taxes, which were just raised to something like $15,000 (some dividends pay some of my taxes). Can't give my home away, it's a dump with no driveway (if you're segregated, you take what you can get). If I got my actual income, I'd have a nice income of $69,000 a year, but most of my income is taxed to support rich people.
1
To live in a home, which you built with your bare hands over 25 years ago, and have endured annual real estate tax increases each year to point they approach the $10K limit, does not make me "pretty well off". Your logic is quite narrow minded.
1
The states whose people will be hurt by this "tax reform" need to ban together and file a lawsuit, as this cap is confiscatory.
These states put much more in the federal coffers than do the low-to-no state tax states.
The reason high-tax states contribute more is because they offer the people and the companies that locate there more.
The higher state taxes in these states provides the infrastructure, the culture, the education and social services that make them the more desirable states to reside.
Again, Putin's poison pill diminishes the United States and what has made it great.
66
States don't pay federal taxes or put money in federal coffers. Only individuals and corporations pay federal taxes.
"The states whose people will be hurt by this "tax reform" need to ban together and file a lawsuit, as this cap is confiscatory. These states put much more in the federal coffers than do the low-to-no state tax states."
Abolishing the 16th Amendment to the Constitution would do exactly what you want, no lawsuit required. The United States federal government functioned quite well before 1913 when the Amendment was ratified. Here's the text:
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration."
Stop the unfair taxation on the big blue states. Apportion federal taxes based on population, NOT on wealth. Abolish the 16th!
We want higher taxes- on them, not us!
13
The author needs to consider the interplay of changes to alternative minimum tax and the reduction in the SALT deduction.
I believe that most taxpayers in high tax states will actually see a reduction in federal taxes as they will no longer be subject to AMT.
But I don't have the wealth of knowledge regarding tax calculations that Albany pols seem to have.
5
It's not just the taxpayers subject to AMT that are getting whacked by the SALT provision. Someone with a moderate income but a well-appreciated, long owned house in a high-property-tax city will see overall taxes rise -- especially with home equity interest no longer being deductible and the personal exemption vanishing.
1
I thought Republicans were great supporters of "states rights". This seems to be contrary to that basic Republican principle.
73
The new law is perfectly in keeping with states’ rights: you spend your own money how you see fit, but that does not allow you to shirk your responsibility to federal taxes any longer. States still decide what they spend locally.
3
The elimination of the SALT deduction made no sense as a matter of taxation principle, and its passage further polarizes our civil fabric. The purpose of the SALT deduction was to avoid taxing households on money that their states and localities had involuntarily confiscated from their paycheck. This is sensible, as any given household will never even see money that their state or locality have withheld from their earnings as a matter of law. After the GOP tax law, we are now taxed at full federal income, payroll, and Medicare rates for income that we never even see. This defies core principles of our taxation system, where we tax income that people receive, not money that is diverted to other entities before the taxpayer ever sees it. Second, as a pluralistic society, it's important that our federal government taxes regions in a neutral way, and doesn't reward or punish regions based on their political leanings. The GOP's elimination of the SALT deduction turned this principle on its head, and was explicitly designed to plunder Democratic regions to benefit GOP areas. This is the first time since the Civil War era where Congress has passed legislation specifically designed to harm specific dissident regions. The effects of this political decision will be widespread and longstanding, and could well lead to the dissolution of the nation if opposition regions conclude that the federal government exists to punish rather than help them.
99
Although were previously paying, and still are paying, tax on income that is diverted to Social Security and Medicare.
Vote, elect Democrats and pass real tax reform that benefits middle income earners and not corporations who are motivated by one thing only, profit.
8
My taxes are going up due to this SALT cap. I've received no pay increase and no bonus this year, meaning a net reduction in after tax income.
Besides the one-time benefit of prepaying my 2018 property tax, I've moved a lot of my bank account savings into a state tax-exempt money market fund. Removing the interest from my taxable income provides a small bit of relief.
Besides this, I'm considering retiring (I'm close to retirement age). This will really cut my taxes. I'm getting tired of paying more and taking home less, just to make up for the tax cuts for the rich.
66
If paying taxes is your concern, and retirement is an option, then by definition you are the rich.
9
The rich deserve tax cuts. The top 10% of taxpayers pay almost 70% of federal income taxes.
The IRS is apparently threatening states that look for ways to protect their tax incomes by implementing new tax options. Until those new options are put in place, though, it will be difficult for the IRS to attack them, and until they are found to be illegal after they are enacted, I would think you could rely on the state's legal opinion and take advantage of the new options. I would also think that if the options were subsequently found to be illegal, there would be a good argument that no penalties should be assessed, given that the state changed its tax options and you relied on the state's representations and laws. I certainly can't make any promises or representations of course, but I would hope a blue wave might significantly resolve this issue. Vote Democratic.
74
States will either come up with work arounds or they will not. Personally I am skeptical about the legality of work arounds. However, the states have an obligation to their citizens to try. I am confident that President Trump will stand with me in proclaiming that no one should pay any more taxes than they are legally obligated to pay, and it is legal and proper to work the laws and regulations to the maximum extent possible to limit the taxes we all pay.
114
Or those highly taxed states' leaders could put their energy into something more constructive. Instead of figuring out some workaround, those states could work on lowering the tax burdens for their citizens.
18
These states put their energy into creating jobs and opportunity, maintaining productive communities, serving the needs of the people now and for tomorrow. These states are not putting their people into a race for the bottom, as its seems our current President and Congress are happy to do.
1
If you want to play it that way, it seems just as logical for states like CA to try to put pressure on the federal budget to discourage wasteful expenditures, like subsidizing Arizona.
High tax states are high tax because (enough of) the people in those states have decided to invest in state infrastructure to support things that people want/need in those states. Given that the high tax states seem to be net contributors to the federal budget, there’s no evidence that they’re totally wrong.
Or we could just be honest and admit that the tax bill (partially) paid for a big corporate tax cut by raising taxes on individuals who contribute to the most productive parts of our national economy, while sparing people who live in areas where there economy is dependent on federal redistribution of resources, so as to maintain political support for the party passing it.
When we put it that way, it almost sounds like an old-school Republican political ad attacking socialist Democrats, except we’d have to swap the labels.