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 ...
It is all very odd. The states that receive the most from the fed gov't are generally the most republican, whereas states that receive the least are the most democratic. In a sane world, North Dakota would be filled with socialists and Massachusetts with rock-ribbed conservatives as it is in their interests to be such.
You may not want to believe this, but a $100k income puts one in the middle class in NY, certainly not the "rich".
What happened to the days when "rich" meant accumulated wealth, not a high salary?
"Rich" is soomeone like TEE-RAY-ZUH, with a $ billion portfolio, and the ability to play all sorts of games with her stated income to minimize taxes (and the money to hire a phalanx of lawyers to handle that part of her life without her lifting a finger).
Well, OK, she does lift one finger on occasion.
Ponder this one for a second:
When did states' rights get distorted to involve "the right to tax first"?
The correct way to handle taxes seems to be a common federal tax on everyone, then let the states allow deductions for federal tax paid in their own taxation schemes.
The way we work it now, the fiscally responsible states are subsidizing the less responsible ones. Let the voters of each state reward or punish their politicians according to their abilitiess to restrain spending.
OTOH, along with this tax reform must come an end to unfunded mandates. As a Kali resident, I firmly believe that our "budget crisis" would never have happened if the federal government had either enforced the immigration laws or if our courts had allowed us to deny social services to illegal immigrants. Even allowing the state to deport illegals instead of paying them welfare, food stamps and free education would resolve the issue. The sickening part is that because the illegals' kids are less well prepared, their education is more costly than the education of our own citizens.
I've often wondered about those numbers. Is the US payment to the United Nations apportioned to New York where a great deal of it is spent? How are agricultural subsidies treated? The checks may be sent to farmers in Iowa Kansas Florida etc but the benefits accrue to New Yorkers in cheaper food etc. How is income to the federal government determined? What happens if a company is headquartered in New York but all it's plants are scattered all over the country e.g. IBM. If IBM pays federal taxes is its federal tax payment credited to New York or apportioned out to all the plants where the income was generated?
Also keep in mind that a number of audits have determined that the Federal Government's accounting system is so bad that several reports by the CBO and others have shown that billions spent cannot be accounted for. How can they apportion income and spending to the states if the accounting system is a shambles?
There are a lot of red folks (and counties) in this blue state------and we pay for the welfare babies and the illegals.
If GWB takes away the deduction, a lot of us are screwed.
OTOH, it might make the powers-that-be take notice.
G-D, I hate when this happens! :-)
BRAVO!!!
Hillary Rodham Clinton (July 26, 2004, NY Daily News)
Thanks
Good point. my state collects revenue from income taxes and less on sales taxes, while yours collects all revenues from sales taxes andnone on income tax.
Sales taxes, itself, is tax on tax, as money spent has already been income taxed.
Instead of getting rid of our deductions, you folks should be looking to add deductions of your sales taxes. In fact, we really should be getting rid of income tax all together.
If you would like to be added to this ping list let me know.
John Linder in the House & Saxby Chambliss Senate, offer a comprehensive bill to kill all income and SS/Medicare payroll taxes outright, and provide a IRS free replacement in the form of a retail sales tax:
H.R.25, S.1493
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.Refer for additional information: http://www.fairtax.org, http://www.salestax.org & http://www.geocities.com/cmcofer/ftax.html
Not to worry, Hillary and Chuckie Schumer are there to represent their, uh, er, I mean, the interests of New Yorkers.
Yep, but my fellow New Yorkers have kept their mouths shut and elected GOP and DEM tax and spend liberals time after time even knowing they are the highest taxes residents in the union.
Thus, if NY'r lose this deduction they won't storm the capital, they'll just pay it.
This part should be highlighted!
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.
www.fairtax.org
in case you don't already know about HR25
the other thing they won't be able to do is stupify the American people with overwhelming complex BS tax laws.
The reason pols avoid the K.I.S.S. principle is to bamboozle people who think they hit the lottery every time they get a "big" tax return.
no, many of them will move out of NY. and they will move to places like North Carolina and Virginia and Florida, and they will be angry at Bush for doing this, and they will bring a Democratic vote to those states which are now currently Republican.
Another reason is the Pols in DC can't then wrangle cash out of corporate donors for tax law loop holes added for them and them alone......
I one sense I'm smiling at the thought of only allowing Democrats to move out and Republicans to move into NY. Perhaps in a few years we'll be a RED state.
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