As GOP Looks to Eliminate State Tax Deduction, New Jersey Democrat Wavers on Millionaires Tax

The Daily Signal ^ | November 20, 2017 | Rachel del Guidice

[Tolerance Sucks Rocks]

New Jersey is potentially holding off hiking its income tax due to the possibility of the state and local tax deduction being eliminated in the GOP tax plan, according to the president of the New Jersey Senate.

“I’m actually very concerned for the people of this state if this Trump tax happens, and I think we’re going to have to re-evaluate everything once that happens,” Senate President Steve Sweeney said Nov. 15 in reference to hiking the state’s tax rate on the highest earners from 8.97 percent to 10.75 percent.

The Senate tax plan, which was voted out of the Senate Finance Committee Nov. 16, does away with the state and local tax deduction, a tax that allows taxpayers who itemize to deduct from their federal taxable income any property and income taxes paid to state or local governments. Eliminating the state and local tax deduction would provide roughly $1.3 trillion in new revenue for the U.S. government.

Sweeney, who previously maintained, according to the Observer, that “an increase in the marginal tax rate on income above $1 million would be the first bill the state Senate passes when Governor-elect Phil Murphy takes office in January,” appears to be softening his stance.

“I voted for it seven times,” Sweeney said, referring to the millionaires tax. “I’ve said it’s the top priority … But I’m actually getting very, very nervous now with what’s happening in Washington.”

President Donald Trump has been outspoken about reforming the tax code and has said he wants to sign a bill by Christmas.

[trebb]

I don’t see the sense in not providing deductions for local/state taxes. Why pay taxes of taxes? It’s a robbing Peter to pay Paul type setup.

Perhaps the better question is, why should people from other States subsidize those who live in high tax States? It's just a shuffling that actually requires Federal taxes to be higher to "make up for" what States are taking from paychecks.

[LouieFisk]

“Perhaps the better question is, why should people from other States subsidize those who live in high tax States? It’s just a shuffling that actually requires Federal taxes to be higher to “make up for” what States are taking from paychecks.”
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Either way, it doesn’t make much sense - if it (making local taxes non-deductible) is based on the convoluted idea that it will force localities to lower their taxes.

Cutting the funds the Fed actually hands out to the states is a different and good thing, e.g. the ongoing problem with “sanctuary cities”:

Localities that refuse to comply with Federal law shouldn’t get Fed funding. If a locality wants to fund foreign criminals rather than it’s citizens, let ‘em pay for it in lost Fed money, court costs, criminal prosecution of the enablers and forcible deportation of the illegals. In fact, they should be charged for the cost of the Fed gov having to enforce long-standing law against their will.