• Racing the clock: Prepaying taxes that would otherwise have been due in 2018 was a popular scheme that emerged, and was endorsed by state, county and municipal officials from New York and New Jersey to Illinois to California, only to evolve out of existence when the tax overhaul took effect on New Year’s Day. (It’s worth noting that some early versions of the Republican overhaul favored property taxes within the state and local framework, leading some analysts to propose states shift to collecting property taxes in lieu of local income taxes.)
• State-run charity: The new law puts a cap on state and local income-tax deductions — but not charitable donations. If states set up charities to fund programs, taxpayers could donate money to those charities. They could then receive tax credits applicable to their state tax levy, while still taking advantage of the federal tax benefit.
• Payroll-tax shift: Alternately, states could make employers, not employees, responsible for remitting taxes on income. Currently, employees pay taxes on their earned income. States could set higher payroll taxes to replace that. Businesses would pay the full amount owed — and reduce employee wages by that amount. That would simplify the filing of personal taxes and provide corporations a tax benefit, since those taxes are still deductible for businesses.
It’s only fair to note that many conservatives say high-tax states should do more in their own backyards to get residents’ tax burdens down. But New Jersey’s Leonard Lance was particularly vocal among blue-state Republican House members in arguing that state and local taxes should have remained fully deductible, noting that reducing that deductibility meant the tax overhaul was picking winner and loser states, curtailing federalism by interfering in local decisions about levels of public-service provision, and effectively double taxing residents’ income.
Many Americans have made life plans based on the ability to deduct those taxes, a feature of the tax code for over a century.
Still, it’s not just the aggrieved elected officials in higher-tax states railing against the law. There are serious legal minds calling into question the legality of the distribution of the pain from this overhaul, possibly providing ammunition for court challenges, if those states should choose to file suit.
I have a solution! The blue Nazis should charge less taxes like everyone else.
Gee, that was simple.
...and conceivably hurting local economies and housing markets.
Last year my daughter and her husband moved from Studio City, CA to a Phoenix suburb. The rate of pay for their jobs as accountants was essentially the same, but they got a house for $250k that would have cost over a million in Studio City.
There needs to be a correction. It’s about bloody time.
It is a good thing to have a tax limitation on real estate. The wealthy put their money into real estate. I know people with three homes. (Advised by their money manager). Environmentally that is a big footprint.
“making it far more expensive to live and work in those places”
Awwwww, sniff sniff, boo hoo!
And it’s not FAR MORE expensive. Frankly, I don’t give a rat’s poop.
How is the new tax code going to affect blue states? I have not been to my tax guy yet.
What a$$holes! The “payroll tax shift” would reduce the employee wages by the amount formerly paid in state taxes. Please tell me how that would be calculated? There is no way to calculate it.
This idea is nothing but a legal fiction. Your employer takes the money right away, when you earn it, and doesn’t give it to you. That is EQUIVALENT to you paying it yourself. Know what a legal fiction is?
And it was calculated on the invalid assumption that the payrate reflected in your current paycheck is valid over the entire year, and not just for that pay period. So if you quit your job during the year, and not Dec 31, the amount the employer took was too much, and you have no way to get it back. How do you plan to get it back? You are assuming that the employer keeps that money in escrow for you, when in reality the employer sent it to the government.
• Payroll-tax shift: Alternately, states could make employers, not employees, responsible for remitting taxes on income.
The sound you hear is the massive roar of thousands of moving vans revving up to get tax-paying people and businesses out of these bleau-yuk states.
Once again the left wing Market Watch has to stir up nonsense.
lulz..... Thankfully I don’t live in a NY or California with a crazy high state income tax. New Hampshire has no sales tax or income tax. The difference is made up via higher property taxes, though the state is run lean anyway.
Thus New Hampshire taxpayers have been subsidizing NY and California taxpayers. Other states too. Some states have lower income taxes so at least there is some sanity.
Whatever will lead to long-term conservatism, I’m for it! BLUE STATES to RED STATES=AWESOME MAGA!