New York and co. are paying the price for being Deep Blue

NY Post ^ | Jan 02, 2018 | John Podhoretz

[Oshkalaboomboom]

The cold wasn’t the only thing that hammered the Northeast in the final fortnight of 2017 — and we can thank our extreme political polarization for the traumas New Yorkers and New Jerseyans are about to suffer.

On the last night of the year, the Trump administration informed New York and New Jersey that there was no longer a deal with the federal government to help fund the desperately needed new rail tunnel between the two states — a $13 billion hit.

Before that came the signing of the tax bill, whose limitations on the mortgage-interest and state- and local-tax deductions (SALT) are going to hammer upper-middle-class residents in these states and send real-estate values into a downward spiral.

We can argue about the merits of these decisions. Does the unquestionable NY-NJ commuter crisis have a national component obliging the federal government to take an active role? There are strong arguments on both sides.

Should states with high taxes have been allowed to keep their taxes high and spend so much on services not provided to other states by gaming the system through the state- and local-tax deduction?

And was there a public interest in allowing people who can afford million-dollar mortgage payments to deduct the entirety of the interest on those mortgages — or does the existence of that deduction simply inflate housing prices at every level and make home ownership unaffordable?

There are arguments on both sides here. They cannot be easily resolved.

But what we do know is this: Had there been a single Republican senator in any of the high-tax states in America — a senator in New York or New Jersey or Illinois or California or Oregon or Minnesota or Hawaii — the elimination of the SALT deduction would likely not have been included

[spokeshave]

I came (unexpectedly)

I saw excess spending

I cut your budget

[RetiredTexasVet]

If it is that economically important to NY and NJ, then the economic benefits accruing to the states will more than enable them to pay for it .... I doubt that Wyoming or Utah will reap any benefits from the tunnel.

[digger48]

For years, Midwest states like mine have been “literally” taking NY and NJ’s hazardous waste.

Then we are forced to shutter cheap and efficient coal power plants and litter our rural communities with 500 foot tall monuments to Gaia because some kid 600 miles down wind on the East coast got asthma.

Not to mention Barry dumping thousands of illiterate third-worlders into our communities without them knowing even basic personal hygiene.

[Robert357]

As the Big Zero once said elections have consequences.

As Chris Cristy of NJ showed when he kissed up to the Big Zero, it is sometimes necessary to play nice in politics.

As Trump has shown cross him and you will be made to pay for it.

[papertyger]

If so then it appears that the only reason NY was economically viable in the first place was that it was being subsidized.

But, but, but...all the welfare goes to RED states! Every reputable news organization said so!

[RayChuang88]

Look, right now the ONLY reason why New York, New Jersey and Connecticut hasn't completely fallen into financial dire straits is this thing called Wall Street. Now even more true given the newspaper and magazine industries based in New York City are in dire straits. Wall Street's success is "papering over" a lot of very serious financial issues in the three states I mentioned.

[Fhios]

I see nothing wrong with equalizing tax liability amongst all the states.

Allowing federal deductions for State Taxes favors the big blue needy states. Consider them rich states and Trump is now taxing the rich more , just like the left wants.

[Fhios]

Well, PA is having the last laugh. They sure have cleaned NJ’s clocks in Atlantic city.

I’m sure NJ’s gaming license holders would like to see gambling losses tax deductible for ordinary gamblers to encourage more gambling.

[Ouderkirk]

Western NYS looks like France after the Nazi’s left.

The cities are still active war zones with the homey’s killing each other, and no place inside them is safe from black on white crime. They have replaced the populations with Turd-Worlders and it shows.

Let NY fail !!! In fact, I welcome it. I want the government of State of NY to go completely bankrupt. Then maybe we can get rid of Cuomo and his a coterie of butt lickers.

[Agamemnon]

Trump is not petty, he's strategic.

There are a lot of folks enjoying the situation blue states find themselves in, but like the rest of the world, whose tax systems and socialisms have been artificially propped up by the US's non-competitive tax system (35% until this tax bill), in order to remain competitive, nations will be forced to trim their socialism in order to remain competitive with the US.

Similarly high property/income tax states have lost the artificial "support" of tax deductions of these items against the Federal bill. This will force these states to have to trim their tax bills (and with it their socialism) or risk losing their businesses and tax paying populaces.

I think Trump sees this as another deal to negotiate. Assume that cash repatriation and a 21% Corporate Tax rate brings an economy on fire -- bounty as a consequence of a supply side tax bill is seen everywhere -- simply undeniable. Supply side finally wins the argument against the Keynesian. Bounty enough to more than "pay for" and justify still more national tax relief.

High tax states lost income tax and property tax deductions -- what would they do to get them back? Lower or eliminate the Capital gains tax? How about a top (or flat) personal tax rate of 15%. Lower the Corporate tax to 15% or lower? Or maybe all of them?

Democrats might strangely find themselves on the side of trying the lower their tax burden and might be desperate enough to go to great lengths to do that.

FReegards!

[Rummyfan]

Does the unquestionable NY-NJ commuter crisis have a national component obliging the federal government to take an active role?

No. NY and NJ should work this out.

Should states with high taxes have been allowed to keep their taxes high and spend so much on services not provided to other states by gaming the system through the state- and local-tax deduction?

No.

[Rummyfan]

Who did these NY and NJ Democratic politicians think they were messing with, the Bushes?

Are they learning? Maybe. But very slowly.

[Grampa Dave]

" Had there been a single Republican senator in any of the high-tax states in America — a senator in New York or New Jersey or Illinois or California or Oregon or Minnesota or Hawaii — the elimination of the SALT deduction would likely not have been included"

Elections and attempted sedition to prevent a legally elected President from becoming president have rewards and consequences for the losers and seditionists.

[Pietro]

Yeah, that’s going to leave a mark.

[Enterprise]

Losers must suffer the agony of losing. Seditionists must suffer imprisonment. Make it so!

[MNDude]

Trump is hitting the Liberals from so many different directions, they don’t even know where to strike back. And then, he trolls them on Twitter repeatedly, and they fall for it every single time.

I cannot even imagine their hatred.

[bkopto]

Does anyone think that this new tax legislation could backfire?

The wealthier idiots in these blue states will flee to red states, bringing their leftist diseases with them.

Its like stomping on a grease fire.

[Freee-dame]

Cuomo says the elimination of SALT

Is Cuomo stupid or a liar? The SALT deduction is restricted to a maximum of $10,000, not eliminated. I don't think that he is stupid.

Ah, Tax cuts for the rich are anathema to Dems when campaigning so why don't they think that capping the SALT deduction at $10,000 is only making the rich pay their "fair share?"

[Rembrandt]

“hes dumb, not sophisticated, has no idea what he is doing, never considers the consequences of his actions...”

People like that don’t have two nickels to rub against each other. That’s not Trump. That’s the future Cuomo.

[Norseman]

>>Is Cuomo stupid or a liar? The SALT deduction is restricted to a maximum of $10,000, not eliminated. I don’t think that he is stupid.<<

Well, liberals aren’t noted for their charitable donations, so he’s probably right in that most New Yorkers will end up claiming the standard deduction now. It takes over $14,000 in mortgage interest, charitable contributions, and other deductions to use the $10,000 in SALT allowed. Most New Yorkers who own their homes are undoubtedly itemizing.

What’s ironic is that by using the $24,000 deduction, and losing a ton of SALT deductions, their federal taxable income can go up a lot, but because of the lower tax rates, their federal taxes go down.

But if their federal taxable income goes up substantially, will that mean that their New York State taxes go up accordingly? If state taxes are based on federal taxable income, they will.

As one example, a couple making $250,000 and claiming all their state taxes plus $10,000 in property taxes and $8,000 in mortgage interest will see a few hundred dollar decrease in their federal taxes, but their federal taxable income will rise by over $20,000. They might end up paying STATE tax on that increase, adding even more pressure on the state government to get taxes under control.