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The IRS Is About To Limit Those SALT Caps: They're Looking at You, New York!
Hotair ^
| 06/13/2019
| Jazz Shaw
Posted on 06/13/2019 9:10:24 AM PDT by SeekAndFind
When the tax cuts were passed in 2017, one major sticking point was the limit on how much of your state and local taxes (SALT) could be listed as a deduction on your federal return. The amount was capped at $10,000 and this brought howls of protest from Democrats, particularly those from higher-income states like New York and California. They quickly got to work seeking to thwart the rules by allowing taxpayers to “donate” the extra amount to a “charity” set up specifically for the purpose of evading the law. That’s about to come to a halt, as a new rule from the IRS goes into effect. (CNN)
Residents of high-tax states like New York and New Jersey will no longer be able to bypass a $10,000 limit on federal deductions for state and local taxes.
The Treasury Department on Tuesday finalized regulations that would bar individuals in high-tax states from creating charitable funds in exchange for state tax credits — a maneuver developed as a workaround for changes to the treatment of state and local taxes under the 2017 tax reform…
“The regulation is based on a longstanding principle of tax law: When a taxpayer receives a valuable benefit in return for a donation to charity, the taxpayer can deduct only the net value of the donation as a charitable contribution,” the Treasury Department said in a statement.
I’d been wondering how long it was going to take for the IRS to get around to doing this. Most of these schemes that were enacted in primarily blue states were obvious dodges from the beginning. The one in New York, for example, allowed taxpayers to take the amount of state tax in excess of $10,000 and make transfers to funds controlled by state or local governments, or other transferees specified by the state, in exchange for credits against the state or local taxes.
They described these transfers as “fully deductible charitable contributions for federal income tax purposes.” But since when is giving money to a government controlled fund considered a donation to a charity? (Well, in the case of New York, the budget is so badly managed they could probably use some charity, but that’s not the point.) It was a scheme intended to stick a thumb in the eye of the Republican controlled Congress and a way to get around the law.
As we’ve discussed here before, a $10,000 cap on state taxes is pretty generous. That works out to someone making nearly $150K per year. And even then, you’d only lose the deduction for the taxes you paid on income above and beyond the $150K mark. If you earned a quarter million last year, that means you would miss out on a deduction of about six thousand. Is that really such a burden for people in the top five percent of earners?
Oh, and there’s one other question to consider as the Democrats work on a way to thwart this new rule. Don’t they constantly talk about raising taxes on the wealthy? Why are they complaining about this?
TOPICS: Culture/Society; Government; News/Current Events; US: California; US: New York
KEYWORDS: california; incometaxes; irs; newyork; propertytax; salt; taxcutsandjobsact; taxes; taxreform; tcja
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To: lightman
41
posted on
06/13/2019 11:10:21 AM PDT
by
null and void
(Stamp out philately!)
To: sparklite2; null and void
Avoiding tax by keeping income low is fine. You keep your taxable income as low as possible by taking all the deductions to which you are legally entitled.
Pretending that a tax is a charitable deduction is not legal. Dem state governments, like NY, are such cheaters
42
posted on
06/13/2019 11:39:42 AM PDT
by
Freee-dame
(Best election ever! 2016)
To: Freee-dame
And tax
evasion can get you 20 years in Club Fed.
No less that the best Supreme Court justice we never had, Judge Learned Hand observed that:
"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."
43
posted on
06/13/2019 11:46:21 AM PDT
by
null and void
(Stamp out philately!)
To: SeekAndFind
I LOVE IT! GO TRUMP!
“....The Treasury Department on Tuesday finalized regulations that would bar individuals in high-tax states from creating charitable funds in exchange for state tax credits a maneuver developed as a workaround for changes to the treatment of state and local taxes under the 2017 tax reform
....”
To: Mariner
It is STILL NOT ENOUGH!
They need to pay their fair share!!!!!!!!!!!!
Bahahahahahahaahaha!
“FYI: These states already pay more in FEDERAL taxes than your state, whatever it is.”
45
posted on
06/13/2019 11:54:41 AM PDT
by
2banana
(My common ground with islamic terrorists - they want to die for allah and we want to kill them.)
To: mewzilla
“If folks dont like it, they should elect state and local pols who will lower their taxes.”
Or, alternatively, unelect the Republicans that raised their taxes.
The logic is like this: We don’t stand a chance of turning out the commies that run the state. But we CAN unelect the bastard Republican in the swing district that we reside in.
Thus, CA alone lost TEN, TEN Republican seats in the 2018 elections.
Suburban districts all over the country unelected the Republican that voted to RAISE their taxes.
One can argue whether that was a rational response. But when somebody raises your taxes substantially, it seems rational to those who took the hit.
It’s called payback.
“Not expect other states taxpayers to pay their freight.”
The Blue states are paying YOUR freight by subsidizing YOUR state at the Federal level. That’s why you’re able to live in a so-called low tax state.
Of course that’s because average income in the Blue states is so much higher and most Republicans believe “the rich” should pay more. And not just a higher total number, but a higher percentage rate.
And that’s why the Congressional GOP had no trouble selling a tax increase. That, and general ignorance and envy on the part of Republican voters.
16% of the total tax break went to individuals, the overwhelming number of those under $100k. The rest went to business.
The bill was picked up by families over $100k in suburbia...and the deficit. It so happens most of those families reside in Blue states.
46
posted on
06/13/2019 12:06:45 PM PDT
by
Mariner
(War Criminal #18)
To: Mariner
Another ignorant so-called conservative advocating for higher taxes. Especially on the rich. I used to see it your way. However, recently, I've come to recognize that the "rich" are not on our side. Name one "rich" dude who doesn't want to screw you, by exporting your jobs, grabbing your guns, and supporting amoral cultural degradation (excluding PDJT). Now, I don't care one bit if these rich get clobbered with increased taxes.
47
posted on
06/13/2019 12:09:13 PM PDT
by
bkopto
To: 2banana
“It is STILL NOT ENOUGH!
They need to pay their fair share!!!!!!!!!!!!”
Says another proud “conservative” Republican. Which could easily be exchanged for a Social Justice Progressive, and nobody would notice.
48
posted on
06/13/2019 12:10:16 PM PDT
by
Mariner
(War Criminal #18)
To: bkopto
The rich, in this case, is a two earner family making ~$130k per year and living in the suburbs.
Yep. Most Republicans would destroy the middle class if given the chance.
The politics of envy shall prevail.
49
posted on
06/13/2019 12:13:33 PM PDT
by
Mariner
(War Criminal #18)
To: Mariner
Mariner, how much did the SALT cap cost you last year?
50
posted on
06/13/2019 12:13:58 PM PDT
by
sparklite2
(Don't mind me. I'm just a contrarian.)
To: Mariner
Lighten up Francis.
If you choose to live in a high tax state and vote for socialism, you should not expect the rest of America to subsidize it.
####
“Says another proud conservative Republican. Which could easily be exchanged for a Social Justice Progressive, and nobody would notice.”
51
posted on
06/13/2019 12:26:22 PM PDT
by
2banana
(My common ground with islamic terrorists - they want to die for allah and we want to kill them.)
To: Mariner
[The SALT deduction concerns all forms of state and local taxes, including income taxes. Not JUST income taxes.
In fact there are people in every state in the union who hit the SALT cap last year, many with incomes as low as $120k for the entire household.
Many of them used to be Republicans.
Doctors, lawyers, cops, firefighters, two-earner families etc.]
The badly-designed tax cut is probably the principal reason that Trump’s poll numbers are mired in the low 40’s. I’m hoping for the best, but re-election is definitely not a sure thing.
52
posted on
06/13/2019 12:30:04 PM PDT
by
Zhang Fei
(My dad had a Delta 88. That was a car. It was like driving your living room.)
To: RegulatorCountry
No kidding. I used to be in a rural area, now 130+ houses are being built on the property across the street. Legally, only 11 could have been built, but a judge threw that out. 40 built so far, 12 more are under construction.
Grey
53
posted on
06/13/2019 12:33:04 PM PDT
by
Grey182
To: null and void
And tax evasion can get you 20 years in Club Fed. I know someone who claimed several hundred thousand in home renovations as a business expense. Both he and his wife did about 9 months each as a guest of the feds.
54
posted on
06/13/2019 12:39:56 PM PDT
by
Fresh Wind
(Trump: "America will never be a socialist country!")
To: 2banana
“you should not expect the rest of America to subsidize it.”
Then why do you expect blue states to subsidize you?
55
posted on
06/13/2019 12:42:43 PM PDT
by
Mariner
(War Criminal #18)
To: SeekAndFind
Never happen but the IRS needs to be abolished and the American tax system started over.
56
posted on
06/13/2019 12:50:06 PM PDT
by
shanover
(...To disarm the people is the best and most effectual way to enslave them.-S.Adams)
To: Mariner
They don’t.
They pay the EXACT same tax rate as everyone alse.
Appropriation of that tax money is dictated by the Congress. A DEMOCRAT controlled congress. Controlled by blue states.
But you already knew that. And why are you complaining?
####
“Then why do you expect blue states to subsidize you?”
57
posted on
06/13/2019 12:51:05 PM PDT
by
2banana
(My common ground with islamic terrorists - they want to die for allah and we want to kill them.)
To: bkopto
However, recently, I've come to recognize that the "rich" are not on our side. Name one "rich" dude who doesn't want to screw you, by exporting your jobs, grabbing your guns, and supporting amoral cultural degradation (excluding PDJT). Dan Cathy.
58
posted on
06/13/2019 12:57:24 PM PDT
by
null and void
(Stamp out philately!)
To: lightman; Mariner
My friends lightman and Mariner,
Good job trying to talk some sense into some of the misguided, envy filled, vindictive, SJW conservatives. I know its exhausting. Its not fun being right all the time in the midst of political tragedy like losing the House. But as Mariner pointed out, we lost 10 seats in CA alone. We also lost 3 (I believe) in NJ alone - all because of the middle class tax cut.
Its crap like this on the forum that I have been taking a posting break. When logic, facts, and reason get you hate posts and the lemmings swarm like hornets, Id rather live life for awhile and enjoy books, movies, gardening, my old MGB, my beagles, and my family for awhile instead of arguing with fools who are proud of their ignorance.
We have some Freepers who want a civil war and brag about how many people they will shoot. Others who go ape when someone points out that none of coup plotters have yet to be arrested, and they are accused of being Never Trumpers and trolls.
I know we also have good folks like you two.
Take care, thanks again, and God bless.
Sky
59
posted on
06/13/2019 3:56:41 PM PDT
by
SkyPilot
(("I am the way and the truth and the life. No one comes to the Father except through me." John 14:6))
To: Mariner
“Or, alternatively, unelect the Republicans that raised their taxes.”
Republicans didn’t raise anyone’s taxes. The taxes were raised by the State and locality they live in, primarily Democrats.
The nation decided that no longer were the rest of us going to fund their high taxes. They were paying their State and locality taxes and deducted it from their federal taxes so the rest of us had to pay more. No longer. They get to pay their fair share of federal taxes.
It’s very liberal of you to make that bold faced lie that high State and local taxes are because of Republicans in federal office.
60
posted on
06/13/2019 4:23:42 PM PDT
by
CodeToad
( Hating on Trump is hating on me and Americans!.)
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