When is a tax hike on the wealthy a tax cut for them? Answer: When congressional Democrats say so. That is the message that congressional Democrats have been giving the public in response to the federal tax legislation that President Trump signed into law on 12/22/17.
This tax hike on the wealthy isn’t just from the federal government. CBS News reports, “Families earning the same dollar amounts can pay vastly different income tax rates, depending on the particulars of their family and where their income comes from.”
In his blog post Breaking The Blue State Advantage, Wizbang blogger Rodney Graves explains what CBS News means by that statement:
“The blue states now face a stark choice. Their current propensity for raising taxes and fees is no longer offset by the Federal Government. The net exodus of the Middle Class from the Blue States will accelerate and extend into the upper middle class and the upper class as the pain registers.”
ABC News confirms Rodney’s assessment: “An athlete making $10 million a season will get a federal tax savings of about $250,000 with the cut in the top rate. But one who plays half his games in California will lose roughly $650,000 in deductions: half the approximately $1.3 million state tax. That wipes out the entire savings of the federal rate cut.”
Heather Wilhelm also confirms Rodney’s assessment:
“California may be filled with natural wonders, but it’s also a Democratic area chock full of people who earn $200,000 or more — and it’s also known for high state-level income taxes, with a top marginal rate of 13.3 percent. In the bad old days, Californians could count on simply deducting this highway robbery from their federal taxable income, masking the state’s shenanigans and blunting the financial pain. The GOP tax bill yanks what is essentially a federal subsidy away, forcing blue-state residents to face the reality of their local high-tax, high-spending regimes.”
Regarding the blue-state Republicans who voted against the aforementioned tax legislation, The Hill reports, “The lawmakers in question were all from New York, New Jersey or California, three of the states that will likely be hit hardest by the capping of deductions for state and local taxes at $10,000.”
Apparently, those particular Republican congressmen aren’t too keen on having to pay more in state taxes. Neither will other residents of New York, New Jersey and California. From Bloomberg:
“While the limit to the deduction won’t directly hit state governments’ coffers, it could have an indirect impact, such as increasing anti-tax sentiment as residents see their state and local tax burdens rise, Moody’s said in a report Thursday.”
By the way, the aforementioned federal tax legislation has an additional effect: “Universities would also lose a special provision that allows them to dangle tickets to college athletic events in exchange for tax-deductible gifts. Donors would no longer be able to write off 80 percent of the value of those seats.”
Yep, nothing says “tax reduction” like putting an end to the federal subsidizing of tickets to college athletic events.
Cross-posted @ The Moderate Voice