Posted on 01/10/2017 10:32:52 AM PST by mikelets456
The two preferences are among the most expensive provisions in the tax code. They are also viewed as disproportionately benefiting upper-income people. Of the two, the state and local tax deduction, which tends to benefit areas that lean Democratic, looks to be more endangered.
A 2015 paper from the Tax Foundation found that the 10 counties that benefit the most from the deduction are located in New York, New Jersey, California and Connecticut.
(Excerpt) Read more at thehill.com ...
This will hit middle income Americans the hardest. As for myself the biggest deductions I have are on my mortgage interest and my state income and local property taxes. I see the rationale for putting pressure on keeping these taxes in check but I’m no exactly sure if this is the best way to go about it.
capping the mortgage interest deduction should also be in the running (and I think it has been mentioned by Trump) since it is also a subsidy for higher-earning people to maintain debt by buying expensive houses. Peg it to the same rate as the basic VA loan cap (417,000, still a pretty penny in most zip codes) and limit it to primary mortgages (a secondary mortgage deduction doesn’t promoting homeownership, it promotes living beyond your means)
A lot of people in the DC metro area will lose their shirts, but I don’t know if that’s really a bug or a feature.
This one can be implemented fairly quietly. As you noted, AMT wipes it out at the top. Taking the standard deduction wipes it out at the bottom. The only ones who will notice are taxpayers who itemize.
Plus they keep trying to bring back pork
These folks are insane
Maybe we should simply pay our state income taxes then the states pay the federal government as services are rendered. The Feds are too big and takes up a huge chunk of our earnings. The states pay the fed (not us paying them) and not the other way around.
Consider this.
By providing for state/local tax deduction from federal returns, we are actually subsidizing high tax entities with taxes from lower taxed states/localities. In other words, taxpayers in Florida and Texas, who have no state income tax, are subsidizing New York and California.
Let Californians bear the full load of their socialist tax burden. After all they voted for it, the rest of us didn’t.
Exactly. I despise our tax codes. Get rid of all of it and go to a straight flat tax. Fill out a postcard and send it in.
I used to moonlight as a tax return preparer, not anymore. When I charged $100 for an uncomplicated return, $43 went straight to the IRS: $28 for federal and $15 for FICA. Sure, you could deduct other expenses, but it just wasn’t worth it.
One of the arguments for federal tax exemption of payment of local taxes is that it helps State and local governments raise money that they would have to go to WA DC to beg for.
Another is that the federal government should not tax State and local governments.
If the federal government says that municipal bond income is no longer tax exempt under Congressional laws or new IRS regulations and it is adjudicated as Constitutional, then local sewer, water and public works projects will be much harder to finance and local government will need to go begging to WA DC for money.
If the federal budget is constrained properly than those local jurisdictions will need to use costlier methods to fund their projects. Since Democrats have lost so many State Legislature and State Governor offices, the remaining democrats at the county and city level will need to either raise local taxes or increase fees/rates for the locally provided services. Again, as these are more under control of Democrats, it will be Democrats who will be put in a harsher box associated with lost tax exemption.
Some Republican Counties and some Republican controlled states will be hurt, but they will also probably understand the give and play between local and federal taxes and understand that local tax revenues are more efficiently spent than by the federal government
Maybe I'll plant orange trees instead.
Explain to me just how state and local taxes being deductible in low tax states subsidizes New York and California.
This should be good.
LOL, of course not. If that's your retirement job, you're probably in the 15% marginal tax bracket, and Block is paying half of your FICA. So, you're probably keeping $78 after tax for every $100 gross. That's quite a bit more than my $57.
You like working there? I've considered part-time gigs there from time to time.
Well put.
The deduction is a subsidy to high-tax states.
I was an accountant and worked at a firm during tax season. Ridiculous.
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