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Clobbered by new tax code, blue states and pundits plot their revenge
Marketwatch ^ | 01/03/2018 | Andrea Riquier

Posted on 01/03/2018 8:46:12 AM PST by SeekAndFind

The Republican tax overhaul may not do a great deal to boost overall economic growth — but it’s already having one stimulus effect. Call it the Full Employment Act for Tax Pundits.

Ever since the contours of the plan made clear that residents of high-tax states would take the biggest hits, a cottage industry devoted to strategizing blue-state tax work-arounds has emerged.

As a reminder, Americans for generations have been able to deduct the amounts paid for state and local income tax, as well as property tax, from their federally taxable income. But the new law caps that amount at $10,000, making it far more expensive to live and work in those places — and conceivably hurting local economies and housing markets.

The state governments in California, New York and New Jersey are all mulling legal challenges to the federal law. But they’re also eagerly hunting for ways to revamp their own tax systems to cushion the blow to their residents.

And they’re in luck. From Medium posts to academic papers, from Twitter chats to economic think tanks, tax strategery is proliferating.

As New York Gov. Andrew Cuomo put it just before Christmas, announcing a plan to encourage New Yorkers to prepay 2018 property taxes, “I say this is an economic civil war. Not North and South over the issue of slavery [but] an economic civil war pitting red states against blue states.”

Call your GOP representative and tell them: Vote NO on this tax monstrosity. #GOPTaxScam pic.twitter.com/dHvgx8QWCh— Jerry Brown (@JerryBrownGov) December 18, 2017


(Excerpt) Read more at marketwatch.com ...


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events; US: California; US: Florida; US: New Jersey; US: New York; US: Texas
KEYWORDS: andrewcuomo; bluestates; california; civilwar; florida; incometaxes; newjersey; newyork; taxcode; taxcutsandjobsact; taxes; taxreform; tcja; texas; trumptaxbill
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1 posted on 01/03/2018 8:46:13 AM PST by SeekAndFind
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To: SeekAndFind
Here’s a roundup of a few of the suggestions that have attracted attention:

Racing the clock: Prepaying taxes that would otherwise have been due in 2018 was a popular scheme that emerged, and was endorsed by state, county and municipal officials from New York and New Jersey to Illinois to California, only to evolve out of existence when the tax overhaul took effect on New Year’s Day. (It’s worth noting that some early versions of the Republican overhaul favored property taxes within the state and local framework, leading some analysts to propose states shift to collecting property taxes in lieu of local income taxes.)

State-run charity: The new law puts a cap on state and local income-tax deductions — but not charitable donations. If states set up charities to fund programs, taxpayers could donate money to those charities. They could then receive tax credits applicable to their state tax levy, while still taking advantage of the federal tax benefit.

Payroll-tax shift: Alternately, states could make employers, not employees, responsible for remitting taxes on income. Currently, employees pay taxes on their earned income. States could set higher payroll taxes to replace that. Businesses would pay the full amount owed — and reduce employee wages by that amount. That would simplify the filing of personal taxes and provide corporations a tax benefit, since those taxes are still deductible for businesses.

It’s only fair to note that many conservatives say high-tax states should do more in their own backyards to get residents’ tax burdens down. But New Jersey’s Leonard Lance was particularly vocal among blue-state Republican House members in arguing that state and local taxes should have remained fully deductible, noting that reducing that deductibility meant the tax overhaul was picking winner and loser states, curtailing federalism by interfering in local decisions about levels of public-service provision, and effectively double taxing residents’ income.

Many Americans have made life plans based on the ability to deduct those taxes, a feature of the tax code for over a century.

Still, it’s not just the aggrieved elected officials in higher-tax states railing against the law. There are serious legal minds calling into question the legality of the distribution of the pain from this overhaul, possibly providing ammunition for court challenges, if those states should choose to file suit.

2 posted on 01/03/2018 8:47:00 AM PST by SeekAndFind
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To: SeekAndFind

I have a solution! The blue Nazis should charge less taxes like everyone else.

Gee, that was simple.


3 posted on 01/03/2018 8:48:31 AM PST by American in Israel (A wise man's heart directs him to the right, but the foolish mans heart directs him toward the left.)
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To: American in Israel

RE: I have a solution! The blue Nazis should charge less taxes like everyone else.

You can’t do that without slimming down the welfare state.


4 posted on 01/03/2018 8:50:42 AM PST by SeekAndFind
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To: SeekAndFind

Why not file suit? That’s all the blue states have done since Election Day.


5 posted on 01/03/2018 8:52:20 AM PST by NTHockey (Rules of engagement #1: Take no prisoners. And to the NSA trolls, FU)
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To: American in Israel

Blue Nazis






Remember these guys? LOL! :-)

6 posted on 01/03/2018 8:52:41 AM PST by left that other site (For America to have CONFIDENCE in our future, we must have PRIDE in our HISTORY... DJT)
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To: SeekAndFind

In the states of CA, NY, NJ and IL there are 34 House Republicans. The vast majority of them voted for the tax bill.

How many will survive the 2018 election?


7 posted on 01/03/2018 8:53:20 AM PST by Mariner (War Criminal #18)
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To: American in Israel

Notice that cutting spending does not seem to enter into the equations. Liberals running out of other people’s money is fun to watch.


8 posted on 01/03/2018 8:53:23 AM PST by CIB-173RDABN (US out of the UN, UN out of the US)
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To: SeekAndFind
State-run charity: The new law puts a cap on state and local income-tax deductions — but not charitable donations. If states set up charities to fund programs, taxpayers could donate money to those charities. They could then receive tax credits applicable to their state tax levy, while still taking advantage of the federal tax benefit.

Can't wait til they do that and SCOTUS calls it a TAX anyway ...

9 posted on 01/03/2018 8:53:42 AM PST by 11th_VA
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To: American in Israel

It will force the blue states to live in their means.


10 posted on 01/03/2018 8:56:31 AM PST by Biggirl ("One Lord, one faith, one baptism" - Ephesians 4:5W)
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To: SeekAndFind

...and conceivably hurting local economies and housing markets.


They need to be hurt.

Last year my daughter and her husband moved from Studio City, CA to a Phoenix suburb. The rate of pay for their jobs as accountants was essentially the same, but they got a house for $250k that would have cost over a million in Studio City.

There needs to be a correction. It’s about bloody time.


11 posted on 01/03/2018 8:57:02 AM PST by robroys woman (So you're not confused, I'm male.)
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To: SeekAndFind

That “state-run charity” looks more like state-run tax fraud to me. If you’re getting a dollar for dollar “tax credit” for a “donation”, that’s not at all a donation in the traditional and legal sense


12 posted on 01/03/2018 8:58:34 AM PST by jiggyboy (Ten percent of poll respondents are either lying or insane)
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To: left that other site

Oh my gosh! Blue Meanies!! Haven’t seen them in decades!


13 posted on 01/03/2018 8:58:39 AM PST by LYDIAONTARIO
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To: SeekAndFind

It is a good thing to have a tax limitation on real estate. The wealthy put their money into real estate. I know people with three homes. (Advised by their money manager). Environmentally that is a big footprint.


14 posted on 01/03/2018 8:59:25 AM PST by Lopeover ( The 2016 Election is about allegiance to the United States!)
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To: American in Israel

New York: Blue zone finally gets to pay their fair share of income taxes


15 posted on 01/03/2018 8:59:43 AM PST by bert (K.E.; N.P.; GOPc;WASP .... The Fourth Estate is the Fifth Column)
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To: Mariner
The vast majority of them voted for the tax bill.

I'm not sure about that. Most of the GOP reps. in New Jersey voted against it, and every public statement I've seen or heard from a New York GOP representative was in opposition to the bill.

16 posted on 01/03/2018 9:00:10 AM PST by Alberta's Child ("Tell them to stand!" -- President Trump, 9/23/2017)
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To: left that other site

Never heard of them but my kids probably did.

.


17 posted on 01/03/2018 9:00:24 AM PST by Mears
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To: jiggyboy

And wouldn’t it require state-compelled charitable giving to a specific “charity” in order to work?


18 posted on 01/03/2018 9:00:33 AM PST by Wyrd bi ful ard (Flag burners can go screw -- I'm mighty PROUD of that ragged old flag)
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To: Mariner

Illinois reps. could probably get away with voting for the bill because I believe the bigger issue there is property taxes, not state income taxes ... and the Chicago area (which probably has no GOP representatives anyway) is the worst place for that.


19 posted on 01/03/2018 9:01:24 AM PST by Alberta's Child ("Tell them to stand!" -- President Trump, 9/23/2017)
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To: SeekAndFind

State-run charities? Letting some slimy Democrap Governator compete with the Salvation Army and Little Sisters of the Poor for charity dollars??


20 posted on 01/03/2018 9:02:14 AM PST by Buckeye McFrog
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