Posted on 05/11/2024 6:30:06 PM PDT by george76
Joe Biden has pledged to ensure that Trump’s tax reform expires next year. While many have already pointed out that this will mean a significant tax increase for most Americans, few have noticed that it will also mean a windfall for Biden’s political donors, in the millions of dollars.
A key feature of the Trump tax reform, also known as the Tax Cuts and Jobs Act (TCJA), was to limit the state and local tax (SALT) deduction to $10,000. Previously, ultra-high-income earners in high-tax states could use this unlimited deduction to reduce their taxable income by millions of dollars.
This was effectively a subsidy to high-income earners in high-tax states, paid for by the rest of the country, and capping the SALT deduction greatly reduced this giveaway.
Limiting the SALT deduction is just one example of why this 2017 legislation was really tax reform, not just a tax cut. Despite reduced marginal tax rates, the law increased taxes on ultra-high-income earners in high-tax states who were writing off millions of dollars in income via the SALT deduction.
Of course, the places with the highest state and local tax burdens are all heavily Democrat, and Biden intends to return this boon to his political donors in those areas.
If the Trump tax reform expires, marginal tax rates will increase, the tax brackets will change and the SALT deduction will again be unlimited. Despite the higher marginal rates, using the SALT deduction to reduce taxable income by millions instead of just $10,000 results in net savings.
In New Jersey, home to the highest property taxes in the country and one of the highest income tax rates, a person earning $10 million will save about a quarter million. With a $50 million income, the savings jump to over $900,000. For those with a $100-million income, savings are $1.7 million.
On the opposite coast, California has the highest state income tax rate in America, so undoing tax reform provides even more savings for ultra-high-income earners. For annual incomes of $10 million, $50 million and $100 million, a Californian will save $300,000, $1.4 million and $2.7 million, respectively.
...
Even those numbers cannot match New York City, home to the nation’s highest combined state and local income tax rate, and one of the nation’s highest property tax rates, too. Rolling back the Trump tax reform results in a true windfall here.
The federal tax bill for a New Yorker earning $10 million annually will drop over $300,000. With a $50 million income, the savings are $1.6 million. And a New Yorker making $100 million will see his federal tax bill reduced by almost nine percent, over $3.2 million, more than three percent of his income.
These figures do not even include other provisions of the tax reform like capping the mortgage interest deduction, which similarly reduced the ability of very high-income earners to make large reductions in their taxable income. Thus, the figures above are conservative estimates.
The reason Biden is so zealously promising to ensure the Trump tax reform expires is not because he cares about raising taxes on millions of Americans — although that’s precisely what will happen — but because he wants to save his donors millions of dollars.
It is only a very small group of people who will see substantial savings if the Trump tax reform expires: the very wealthy in very blue areas.
For someone who talks incessantly about “the rich paying their fair share,” Biden is hellbent on giving a handout to the highest earners in the country — provided they live in a solidly Democrat-run state.
nicely explained.
Looked at in a vacuum, taking off the limit to the SALT deduction would lower taxes for many. Of course, this assumes that the tax rates didn’t change. If Biden has four more years, as many expect (through voter fraud), then Federal income tax rates are going to rise a lot.
Why were these temporary instead of permanent?
Mixed emotions on this one - at least with the old, pre-Trump, system these people stayed out of our states. Of course, pretty much everyone reading this here will pay higher taxes - and if the average person understood that, those leaning in his direction would be less likely to vote for this senile, perverted, corrupt Leftist POS.
Nothing is ever permanent in the tax law.
Gee, maybe all of those high-income people will start moving back to high-tax states. It could happen.
I didn’t know conservatives were for tax increases.
Ever notice that most taxes never expire.
Only tax cuts expire.
If they’re all brainwashed lefties moving back to blue states, good.
Every Establishment Republican I know fumes about the SALT tax exemption being removed.
Removing this exemption did cost Trump some votes.
Normally, republicans cut taxes, in their view. But as far as SALT goes, these Establishment republicans will never blame the tax and spenders in their own state. They already hate Trump to begin with, so Trump raised their taxes. That makes Trump non-republican and it makes Trump a tax increaser.
It’s twisted logic, but they swear by it.
I suspect this explains how they can justify at least considering a vote for Biden.
Trump = tax increaser
Biden = tax cutter. It’s all about the SALT.
-nicely explained.
I disagree. The article assumes just because the elimination of SALT raised some taxes, others were reduced. Do we know that? With these thieves, I suspect the extra money was just spent on Ukraine and routed to bank accounts like Hunter’s and everyone else paid exactly what they would have paid anyway.
Not just that, but government needs to be starved of all revenue. I have encountered the American Stasi (see my tag) and am now of the opinion most government funding is just funding of theft and the criminal operations necessary to support it.
If you have not see domestic surveillance, you have no idea the degree to which the government is your outright enemy these days.
.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.