Posted on 12/27/2004 7:22:18 AM PST by alessandrofiaschi
Bush Plan Could Imperil Tax Write-Off for New York By IAN URBINA December 27, 2004
As the Bush administration looks to revamp the tax code, New York officials say they are particularly worried about one idea being considered: eliminating the federal deduction for state and local taxes. If the president pursues this plan, New York State would lose about $37 billion per year in federal tax deductions, more than almost any other state, according to Internal Revenue Service data. The change would affect about 3.2 million households in New York, three-quarters of which are middle- and low-income, tax records indicate.
"This change would be one of the worst things for New York to came out of Washington in a long time," said Senator Charles E. Schumer. "But if they take this route they can expect a serious fight." With a 7.7 percent maximum state income tax rate, the second-highest in the country behind California's 9.3 percent, New York would be especially affected because its residents use those taxes to take large federal deductions. About 38 percent of households in New York file for some sort of federal deduction of state and local taxes.
New York City residents, who also pay city income taxes, would be especially hard hit as they could expect an 11 percent increase in the amount they pay the I.R.S., or an increase of about $3.4 billion, said Ronnie Lowenstein, director of the city's Independent Budget Office.
Beyond New York, eliminating the federal deduction for state and local taxes would also affect residents in New Jersey and Connecticut. (...)
Claire Buchan, a White House spokeswoman, said it was too early to discuss specific plans. "The president has yet to appoint the panel that will review the tax code and (...)
(Excerpt) Read more at nytimes.com ...
The Times seems to have their facts wrong again. Oregon has a 9% maximum income tax rate. And to make it worse, the state only allows a maximum deduction of federal taxes of $3500.
"In sum, these complex tax reductions entail only less local spending responsability. "
If Bush wants his guest amnesty plan, the he needs to figure out how to fund it , this proposal in the tax code does just the opposite. Illegal immigration is not a local spending responsibility when the federal government fails to protect us as prescribed by the US constitution. . These federal costs California is having to collect thru local taxes amounts 10 billion per year, or about 1,000$ per family!
Both the local governments in the hardest hit sates; California and Arizona have passed propositions to limit the funds of local taxes being paid to foreigners residing illegally in our country. But Instead of backing the will of the people with sensible fiscal responsibly measures, the presidents people are proposing dumping more federal requirements to the states mandating more immigrants and their “cheep labor” with the hidden welfare costs with no tax write-off! NO WAY!
1. The people who would lose the most are the the people paying the most taxes, i.e., the ones with the most income, and they are mostly Bush voters.
2. Because of the alternative minimum tax, high-income New York taxpayers are already losing part or all of their deductions for state and local taxes.
3. The issue is not Blue vs. Red or rich vs. poor -- it is what tax system is most pro-growth.
Kalifornia would be hit hard by this, too.
Breaks my heart!
No more federal subsidizing of NYC elite.
But I'd keep the "support the troops" stuff to yourself if you do go over there... :-)
If New York suffers because of this change, then NY needs to change and stop the giveaways, freebies, and special interest handouts that make NY perhaps the most expensive and inefficient government in the first world. Sure, you can blame the politicians, but remember, we the voters are the ones who return these idiots back to Albany year after year. Since NY remains the same regardless of the party in control (in theory, we have had a Republican Governor and Senate for the last 10 years), the only way to force change is to vote the bums out by voting for the challenger regardless of party. It can't get any worse.
Well, be surprised. According to the Tax Foundation, New York receives $.81 for every $1.00 in taxes it pays to federal government.
Source: http://www.taxfoundation.org/ff/taxingspendingupdate.html
A Flatter and Fairer Tax Code
November 19, 2004
Edwin J. Feulner, Ph.D.
President, The Heritage Foundation
As President Bush rebuilds his cabinet, we can expect to hear many in the media and on Capitol Hill claim the president lacks a mandate for his nominees and his policies. That’s nonsense. The president earned more than 59 million votes -- about 3.5 million more than John Kerry -- in large part by making a convincing case for several clear-cut policy goals, including Social Security reform, a muscular foreign policy and, critically, fixing the tax system. “The American people deserve and our economic future demands a simpler, fairer, pro-growth system,” President Bush announced in his acceptance speech at the Republican National Convention in September. “In a new term, I will lead a bipartisan effort to reform and simplify the federal tax code.” To keep that promise, President Bush should press Congress to act quickly on tax reform. And he should ensure that this reform meets four broad goals: The tax code shouldn’t punish achievement; The tax code should not be used to promote social policy; The tax code should be clear and understandable, and Tax rates should be as low as possible, to encourage economic growth. This won’t be easy, of course. The current system has developed over decades, and every confusing element of it has champions in Congress and lobbyists ready to fight for them. Many of these people like to talk about “progressive” tax rates. But there’s nothing progressive about a system that taxes savings and investments twice, as our current system so often does. The president should insist that lawmakers devise a system that would encourage investment and innovation. First and foremost, that means bringing down tax rates, since lower rates encourage workers to put in extra hours or attempt to start their own businesses. It’s also time to stop using the tax code to encourage people to do things the government will approve of. Right now, the government gives tax deductions or credits to taxpayers who buy houses, have children or donate to charity. While these are all worthy goals, people ought to decide to do them on their own. Eliminating all the deductions and credits also would simplify the tax code, which ought to be another of the president’s goals. Americans spend more than 6 billion hours filling out tax returns every year. Plus, we shell out more than $200 billion to tax accountants and software companies to do our taxes for us. After all, who has time to read all 1,100 forms and publications that make up the current tax code? The answer is a fair, flax tax with a generous personal exemption, so the tax burden doesn’t fall disproportionately on poor people. All income would be taxed once, at a flat rate. Taxpayers could fill out their return in minutes and mail it in on a postcard, instead of struggling for days and then stuffing form after form into an envelope. All these reforms probably will be a tough sell in Congress. But departing Sen. Don Nickles of Oklahoma has an idea that could speed the transition: Allow taxpayers to fill out returns under the current system and under a reformed, flat-tax system. Then they could put the returns side-by-side and file the one that benefits them. Most people are sure to prefer the simple system, especially since it will usually save them money in the long run. President Bush has a clear mandate to make the tax code flatter and fairer. That’s what the president wants and what taxpayers deserve. When he succeeds, he’ll have turned a mandate into a legacy.
Ed Feulner, president of the Heritage Foundation, a conservative think tank based in Washington.
Ping the post 32, if you can
Why should the Red State Federal Tax payers support the outrageous local and state taxes in the Blue States by keeping the deduction re federal taxes.
I live in California, and this would be another signal for the tax and spenders in Sacramento to get their act together.
California, NY, Oregon, and other high tax and spend blue states need the red hot focus of removal of the deduction of state taxes from our federal tax burdens. Most of our taxes are wasted in/on the Blue Voter factory cities of the Rats, like LA, Gay Frisco, Chicago, Portland, NY City, Boston and _________________. (fill in the blank).
Thank you for that.
I am surprised. That makes me wonder all the more why New York seems to so love taxes and votes for people who want to increase them further.
That is just odd.
>>>Why should W worry over NY? They are Blue in 2000 and 2004......
The article is about NY, but this will have an effect on those of us in the red states as well. If you pay state income tax, you will see your federal taxes increase under this plan no matter which way your state voted in 2000 and 2004.
Florida has never had an income tax and can't unless the state constitution is changed or hell freezes over. I believe Texas is the same. We don't relate to other states' problems with income taxes. The pols are afraid that if this thing passes, they will actually have to answer to the voters for their tax laws. Apparently, they have for years justified their tax rules by saying that you can deduct it from your Fed taxes. They won't be able to shift their tax burden to the rest of the states' populations in this way anymore........
According to your Senator, that's filthy rich.
I agree
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