Editorial: Stop giving high-tax states an IRS deduction

We have long advocated making the IRS sales tax deduction permanent, instead of having to renew it every year or so, because Nevada is one of only nine states with no state income tax to deduct, which has been deductible practically from the start of the federal income tax in 1913. It’s only fair.

Actually, the fairest thing to do would be to eliminate all itemized state and local tax deductions for IRS taxes, because residents of high-tax states — mostly run by tax loving Democrats — get to deduct a disproportionate share. This causes low-tax states — and Nevada still ranks nearer the bottom despite recent tax hikes — to essentially subsidize the higher-taxed states by paying a greater share of federal taxes.

Although it has been tried before — by Ronald Reagan in 1986 — in this election year a number of GOP presidential candidates are including in their tax reform packages elimination of state and local tax deductions.

According to The Wall Street Journal, Ted Cruz, Marco Rubio, Chris Christie, Jeb Bush, John Kasich and Ben Carson all have proposed repealing this tax break, while Donald Trump, as usual, is vague on specifics.

The Heritage Foundation has estimated that dropping this deduction could allow the federal tax rates to be reduced by as much as 12.5 percent across the board.

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.

Not surprisingly, The Wall Street Journal reports that all of the top 10 high-tax states voted for Obama, while most of the lower-taxed states voted for Mitt Romney, with Nevada as one of the exceptions. Nearly one-third of the cost of the repeal would be borne by Californians and New Yorkers, both heavily Democratic states.

“If marginal tax rates were reduced in a revenue-neutral and distributionally neutral manner, the more than 70 percent of taxpayers who do not itemize would face lower combined federal and state income tax burdens,” write Heritage researchers Rachel Greszler and Kevin D. Dayaratna. “Additionally, this could lower overall taxes for some taxpayers who itemize but who have relatively lower incomes or live in lower-tax states.”

They concluded that the deductions subject federal tax revenues to the whims of state lawmakers and largely benefit wealthy taxpayers and those in high-tax states.

“The rationale for it is that since state and local taxes reduce individuals’ after-tax income, the income used to pay those taxes should be excluded from federal taxation. …” Greszler and Dayaratna write. “In practice, however, the deduction allows states to raise taxes higher than they otherwise would and has significant perverse distributional impacts, redistributing income from the poor to the rich and from people in low-tax states to people in high-tax states. Despite some efforts to eliminate it, the deduction for state and local taxes remains one of the largest deductions in the federal tax code.”

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.

A version of this editorial appeared this past week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record. It ran as a column in the Elko Daily Free Press.

Editorial: Where the presidential candidates stand on public land issues

Basin and Range National Monument (R-J photo)

With the Nevada presidential caucuses just weeks away we are offering readers a glimpse into the stances of the candidates on a key issue — federal public lands control.

For the Democrats there is not much choice.

Bernie Sanders has not taken a stance on letting states and counties have a greater say in public land use, but he has called for raising grazing fees and prohibiting logging and oil drilling on public land.

Hillary Clinton during a press conference in Las Vegas a couple of months ago said the country should preserve federal public lands and add even more.

“We certainly should not be giving in to this ideological argument from the right that we need to put more public lands into private hands,” she exclaimed. “I don’t agree with that.”

On the Republican side, most have called for some level of privatization of federal lands.

The exception is Donald Trump, who was asked at a gun show in Las Vegas recently about whether he would support relinquishing federal land control to states.

“I don’t like the idea because I want to keep the lands great, and you don’t know what the state is going to do,” he replied. “I mean, are they going to sell if they get into a little bit of trouble? And I don’t think it’s something that should be sold.”

While John Kasich has been silent on the topic all the other Republican candidates have expressed some degree of favor for transferring control to states and/or privatizing.

As a senator from Texas Ted Cruz voted in favor of an amendment to facilitate the transfer of public lands to the states. In 2014 he also offered an amendment to a bill that would have prohibited the federal government from owning more than 50 percent of the land in any state.

Rand Paul has also said federal lands should be transferred to the states. He has met with Bunkerville rancher Cliven Bundy and expressed sympathy for his plight.

“You run into problems now with the federal government being, you know, this bully — this big huge government bully,” Paul has said. As a Kentucky senator he introduced a bill to give states more power under the Endangered Species Act. It failed.

Like both Cruz and Paul, Florida Sen. Marco Rubio supported an amendment to facilitate the transfer and sale of public lands.

He also backed transferring control of federal energy resources to the states. “This common sense bill will empower states to develop our domestic energy resources responsibly and effectively,” Rubio said. “Ensuring states have more authority in our nation’s energy development will help keep energy costs low, create jobs and grow our economy.”

Businesswoman Carly Fiorina in a recent newspaper interview said, “The federal government does a lousy job of managing forests. The private sector does a much better job of managing forests. The federal government controls too much land in this country.”

Retired surgeon Ben Carson also has expressed the need to allow more local control of the lands. “We the people of the United States are the only ones capable of preventing uncontrolled government expansion and abuse,” Carson wrote in a column in the conservative National Review. “Like the ranchers in Nevada, Americans must find the courage and determination to maintain a free and vibrant nation.”

Former Arkansas Gov. Mike Huckabee, during a speech in Nevada, said he favored more development of oil and gas exploration on federal lands. “One of the real challenges in the western states is that energy in those areas is often not able to be explored,” he said.

Huckabee also said something is wrong when the federal government can put “a gun in a citizen’s face and threaten to shoot him” over a cow eating grass.

Former Florida Gov. Jeb Bush has called for moving the headquarters of the Interior Department to the West.

“I think these lands have to be managed in a true partnership,” Bush said during a speech in Reno in October, noting that public lands “should be viewed as something that creates economic activity, can create cultural values, create wins for citizens and residents of the West.”

New Jersey Gov. Chris Christie, while not addressing directly privatization of federal land, has been a strong advocate of privatizing public services such as parks in his state.

Former Pennsylvania Sen. Rick Santorum has supported transferring or privatizing public lands. “We need to get it back into the hands of the states and even to the private sector,” Santorum told an Idaho newspaper. “And we can make money doing it.”

A version of this editorial appeared this past week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record. It ran as a column in the Elko Daily Free Press.