Of course, now that Democrats — who have made a career out of demanding soak-the-rich taxes in order to redistribute it to the poor — are in control of the U.S. House of Representatives one their first priorities will be to provide a tax break for the rich — in certain Democrat-controlled states.
According to Forbes, today’s Review-Journal editorial and others, a top priority will be a repeal of the $10,000 cap on IRS deductions for state and local taxes (SALT).
According to the Tax Policy Center, three-quarters of the benefit of the SALT deduction goes to households making $153,000 or more. The Tax Foundation says 88 percent of the benefits flow to those making more than $100,000 a year.
So it benefits the rich, but just the rich in certain states.
Nevadans — along with residents of New Hampshire, Florida, Wyoming, Texas, South Dakota and Alaska — get to deduct about 1 percent or less of their adjusted gross income, while those who live in New York, Maryland, D.C. and California deduct more than 5 percent.
Nearly one-third of the dollars generated by the SALT cap is borne by Californians and New Yorkers, both heavily Democratic states.
Using 2010 statistical data from the IRS, you find Californians who filed for state and local income tax deductions claimed deductions of $10,700 per return. Nevadans who filed for the state and local sales tax deduction claimed only $1,430 per return.
Calculated on a per capita basis, Californians claimed $2,116 in federal income tax deductions, while Nevadans claimed only $166 per person for sales tax deductions.
Tax fairness. Not hardly.
I agree with the commentary above, but I would like folks to know that the amounts classified as rich are far from it if you live and own a house along the coastal areas of California. I work in LV (and own a home) and my wife in the Northbay area of SF. (and we own a small home). With kids in private school (because the QUALITY of public education stinks) and college (and most people who will get clobbered with this new provision regarding SALT) are not rich. For my family we are anticipating around 5 figures more to the federal government around tax time because we can’t deduct above the limit. The super-rich (if that is the right way to describe them) can afford it. With a 13.3% income tax, high real estate taxes and then all local county, city and other state taxes the 88% of this benefit over a $100K not an accurate benchmark. Again, I agree with the commentary (and the fact that the voters have done this to themselves in CA, IL, NJ, NY and allowing their reps to keep raising taxes). they need to demand their tax burden be reduced, not fighting the SALT provision. It is not fair for me in NV to subsidize higher tax states. Most people don’t realize it or have not really addressed it but at tax time the roar from these folks will be heard on the moon. Problem is they will direct it at the wrong folks. They can change their situation by voting in folks who will lower the state’s take of their income.
That’s the better solution.
I hope you would agree that the best solution would be to eliminate all deductions and have either a flat or reasonably graduated income tax.
Once upon a time, conservatives were against taxing the same money twice. Isn’t that what the death tax thing was all about?
The Democrats are merely attempting to reverse the recent political chicanery of the Republicans. In their tax legislation of 2018, the Republicans eliminated the state and local tax deduction past $10,000.00, knowing that state income and property taxes are much lower on average in Republican states. The limit obviously wasn’t to increase taxes on the rich, since they received a far greater benefit in the bill than the semi-rich or the middle class. No, that was so it would still appeal to the middle class Republican base, but also keep the rich in clover.
The Republicans also doled out (and I do mean doled) a 21% tax deduction to owners of S-Corp businesses, but carved special exclusions for S Corps owned by professionals such as doctors and lawyers, who vote predominantly Democratic. An interesting exclusion to say the least.
[…] on a per capita basis, Californians claimed $2,116 in federal income tax deductions, while Nevadans claimed only $166 per […]