BINGO A WINNER. It is mind boggling that few people ever got this. I pay around the median of NY SALT, around 12,500. Because of my overall tax rate the IRS gets around 2,800 less than it should. And that only represents my property taxes. Multiply that over the entire state and the result is in billions never going to DC. The problem the progs have is that the money is either kept by or returned to the individual taxpayer, and not sent into state govt treasuries.
>> It is mind boggling that few people ever got this. I pay around the median of NY SALT, around $12,500. <<
Given that you live in NY, or at least pay your taxes there, have you seen any discussion as to what this tax law will do to your state income tax?
I could be wrong, but I suspect that most states that collect an income tax base their calculation on the federal taxable income reported to the IRS. They might adjust it some, but I think they’d start with that figure.
Well, in the most states, and the blue states in particular, dropping the SALT deduction will result in federal taxable income being higher, sometimes considerably higher. So if a state is taxing the last dollar at, say, 10%, it will collect 10% of every dollar increase in federal taxable income from it’s high earners. And in most cases, if one changes from itemizing deductions, to using the standard deduction, federal taxable income will rise. If so, state tax collections will also rise.
Ironically, this tax bill not only cuts taxes at the federal level but it raises tax collections at the state level, particularly in the blue states, unless the individual states take action to stop that from happening.
Assuming I’m right in describing the above, it will be interesting to see how blue and red states react. If you live in a red state, maybe contact your legislators and tell them it’s a good time to cut the rates? We know what will happen in most blue states; they’ll take the money, thank you.