One of the aspects of the new federal tax plan that made sense to me was the elimination of much of the deduction for state and local taxes. While the move cost those of us in higher tax states, it finally forced states to stop using the federal tax laws to effectively subsidize its high tax policies. Now that bill has come due in New York where taxpayers will no longer be able to write off their high state taxes. The result is not only a shortfall of $2.8 billion but droves of wealthy taxpayers leaving the state.
There has long been a valid concern over states like New York approving higher and higher taxes while assuring voters that they will not really pay the full cost since they can write it off on their federal tax bill. Taxpayers have complained that they are effectively subsidizing taxpayers in states like New York and California even though they often make considerably less. I have come to support the approach for a different reason. It forces local politicians to bear the true costs of tax hikes since they can no longer dismiss objections by saying that their increases will simply be recovered as a deduction on federal taxes. California legislators responded by trying to push legislation to force businesses to give back half of their federal tax savings.
In New York, the legislature is still pushing to add spending to the budget as Gov. Andrew M. Cuomo announced the need to slash the budget. He referred to the reality of the budget as a “heart attack.” If so, it was a heart attack years in the making from an effectively subsidized bloated tax system.
While New York was outraged by the tax change, it will finally have to deal politically with its own tax policies rather than have people in Nebraska effectively help pay for New York programs.
The new tax law caps the deduction at $10,000 for state and local taxes. That will hit the most wealthy taxpayers in states like New York. Cuomo noted that this top one percent also happens to be highly mobile and pay half of the New York’s taxes.
It is an ironic moment. While Democrats routinely complain that the rich are not paying their fare share, this one percent covers half of their taxes. Now they may be leaving. That will require either cuts in the budget (which is already being opposed) or higher taxes on the remaining wealthy. . . which is likely to result in more leaving in a vicious circle.
To his credit, Cuomo acknowledged the problem: “This is the flip side. Tax the rich, tax the rich, tax the rich. The rich leave, and now what do you do?”
What you do is adopt a tax system that can be sustained without federal subsidy and to take responsibility for your own budgetary decisions. Cuomo seems to be doing so but he is already facing opposition.
Peter H., why won’t Obama tell us how he paid for his time at Occidental College. He got a scholarship. What was it for? Academic, minority, or was it for being a foreign exchange student. Why would an American citizen need a scholarship meant for a foreign student? What’s the big secret?
The point is that people who work for NPR and give no evidence of any familiarity with financial statements and people who’ve been agitating to see the President’s tax returns are pretty quick with a set of numbers when it suits them.
Tabby, explain why Trump’s tax returns are such a sacred secret.
I mean, here we have the first president in history with ‘no’ experience in public office, yet his business empire has links to every corner of the globe. And now his son-in-law is informally conducting foreign policy with an eye on Trump-Kushner business interests. But we’re supposed to believe that Trump’s tax returns are completely out-of-bounds regarding public scrutiny. Like it’s totally impolite to even ask! ..’Why’, I wonder..??
This is great news for us in flyover land, that we can quit subsidizing LA and NYC. Very unfair. Thanks to Trump! Midwestern voters are pleased.
Kurtz, does Illinois not allow these deductions? I’m just asking. I haven’t filed income tax there in many years.
Socialism works till you run out of someone else’s money.
Bob, lame talking points work until you take them outside the right-wing media bubble.
TRUMP HAS GOTTEN AT LEAST $885 MILLION..
IN TAX BREAKS AND SUBSIDIES FROM NEW YORK CITY
PLUS MORE BREAKS FROM FLORIDA, NEW JERSEY AND NEVADA
Over the years, Trump has eagerly sought out federal, state and local tax breaks whenever possible, and they have added significantly to his bottom line. When he built Trump Tower on Fifth Avenue in the 1980s, he successfully sued the city to get a tax abatement on the property.
When he wasn’t seeking tax breaks, Trump was lobbying local governments to lower the appraised value of his hotels and casinos in order to reduce his property tax bill.
Although Trump has never released his tax returns, The New York Times estimated last year that he has gotten at least $885 million in tax breaks, grants and other subsidies for his properties in the city.
That doesn’t include the many breaks he got for his properties in Florida, New Jersey and Nevada.
Trump Administration Proposes ‘Massive’ Tax Overhaul And Tax Cut Plan
“He’s had massive tax disputes in Palm Beach around Mar-a-Lago. He’s used various forms of tax arguments on his golf courses, looking for environmental easements and different definitions of how he was going to use the property in order to lower the cost,” O’Brien says.
Many cities see tax abatements as a way of encouraging development and fending off blight, although critics say they are sometimes handed out for properties that don’t really need them.
Getting a tax abatement isn’t illegal, and in fact they are part of the negotiations in real estate development deals all over the country. But in New York, at least, few developers have succeeded the way Trump has.
“Long before Trump ran for president, he was known in New York City as a developer who was consummate at finding and obtaining these tax breaks, even when these tax breaks weren’t specifically designed for his types of projects,” says Nicole Gelinas, senior fellow at the Manhattan Institute.
“If you look at what other developers have done over that same time period, what Trump did was unusual in scale but not unusual in type,” she adds.
Trump was able to take advantage of these breaks because local politicians allowed it, Gelinas notes.
“These were sophisticated city and state politicians who designed these programs much better. They could have designed them much better. They could have cracked down on the loopholes that Trump drove his bulldozers right through,” she says.
Still, Trump has often advocated a simpler tax code, free of the many loopholes and exemptions that make tax payments such a pain.
His own frequent use of tax breaks in his business dealings suggest he’s not above taking advantage of those breaks.
“For a candidate who has espoused the many virtues of the free market,” O’Brien says, “Donald Trump’s business wouldn’t be possible but for major government subsidies.”
Edited from: “As Trump Built HIs Real Estate Empire Tax Breaks Played A Critical Role”
NPR, 5/18/17
And your point is?
So?
Peter often becomes indignant but when someone like you asks “So?” he shuts up. I think Peter likes being indignant.
“Getting a tax abatement ISN’T ILLEGAL, and in fact they are part of the negotiations in real estate development deals all over the country. But in New York, at least, few developers have succeeded the way Trump has.” (emphasis added)
These are the same people hell bent on taking him down…I have no sympathy for self-inflicted wounds. Nuff said…
“One of the aspects of the new federal tax plan that made sense to me was the elimination of much of the deduction for state and local taxes.”
– Professor Turley
______________
I’m gonna take a wild guess and say that was President Donald J. Trump’s tax plan.
Congratulations, President Trump!
MAGA!
FIVE LARGEST STATES PRODUCE THE MOST..
BUT HAVE LESS POLITICAL POWER THAN ANY TIME ON RECORD
Unlike the U.S. economy, the U.S. political system penalizes growth. The effect is easiest to see at the state level, where senators are selected. Commerce Department figures show that the five largest states have less representation — relative to the national average — than at any other time on record. Comparable figures begin in 1968.
As Silicon Valley corporations rose to dominate the national conversation, senators in California gained well over 600,000 constituents in a typical two-year span. That’s more than senators in Vermont or Wyoming represent, total.
In 2015 and 2016, the most populous states also accounted for the highest share of the nation’s income on record. And their collective income, which we’re using as a proxy for household economic output, has grown faster than income in any other decile of states since the Great Recession.
There is a similar but smaller effect in the House. Seats there are reallocated once a decade, and tend to lag population growth. The electoral college reflects both chambers.
In a recent paper in the Cambridge Journal of Regions, Economy and Society, Jason Spicer, now of the University of Toronto, observes that the flow of people from rust-belt states interacted with the state-level winner-take-all electoral system to give older, whiter voters outsize influence in the 2016 election. This type of government allows regional inequality to build up to higher levels than in countries with proportional representation, Spicer said.
“It is no accident that the first and most powerful shocks of the backlash to neoliberal globalization came in the U.S. (Trump) and the U.K. (Brexit),” two countries with winner-take-all elections, Spicer said via email.
“We shouldn’t gloss over that the emerging knowledge economy is inherently an urban one,” said Mark Muro, a senior fellow at Brookings. “That accentuates the stresses of the founding fathers’ system.”
“We’ve never been here before,” Muro said. “We’ve never had a digitally oriented, agglomeration-driven economy.” The political side effects, he said, “are becoming an impediment to efficient economic growth.”
In 2016, the most recent year covered by the Commerce Department, the five biggest metro areas by population were in the five largest states: California, Texas, Florida, New York and Illinois. Voters in the sixth-largest metro, D.C., are under-represented in national politics.
The country’s most economically important cities aren’t even guaranteed to determine their state’s national representatives. Sen Ted Cruz (R-Tex.) won the state’s contested Senate seat by a 2.6-percentage-point margin earlier this month, despite heavy support for Democrat Beto O’Rourke in Dallas and Houston, two of the largest cities in the country.
The real tension is between regional inequality and a functioning democratic system, Hendrickson said. “Ensuring the health of American democracy might depend on achieving a certain level of geographic cohesion.”
Edited from: “The Big City Paradox: They’re Getting Richer But Losing Electoral Clout”
THE WASHINGTON POST, 11/16/18
RE. ABOVE:
America’s economy is increasing concentrated in the largest states and metro regions. Yet smaller, less productive states still hold the balance of political power. Republican exploited this imbalance with their tax bill capping deductions for residents of large blue states. Their motive, of course, was to punish residents of liberal-leaning states.
They don’t give you a single data point, much less a time series.
Pretty amusing. Fifty years ago, the Democratic Party was concerned with the state of depressed regions. Now Peter Shill is complaining that depressed regions have too much influence because they don’t vote Democratic.
Politicians waste money at unprecedented levels to feed their egos and vote-getting groups. There is little fiscal accountability and when challenged, they wrap their positions in the appeal of emotional manipulation. Many “citizen” initiatives are funded by multi millionaires and billionaires, such as Tom Steyer, George Soros, and Nick Hanauer. Liberal legislators – the “people’s” representatives, are happy to complain about money while accepting direct and indirect money (e.g., PACs) and turn a blind eye when it suits them, which is often.
The Constitution was written in a way to level the playing field between the haves – in your statement, rich liberal cities and states – and the have nots, such as rural America. The subtle agenda of your statements are that the rich liberals should be free to bully the rest of America. Frankly, feel free to take your ball, and money, and go home. Those of us in rural America would be happy if the rich liberals would mind their own business and shut the hell up.
The five most populous states are California, Texas, Florida, New York, and Pennsylvania. Three of these voted for Trump.
The federal government has stolen the rights of the states under Democratic control and now the Democrats complain with a new complaint totally of their creation.
There are several South American and Caribbean countries (e.g., Ecuador, Chili, Venezuela, Honduras, and Nicaragua) who should be happy to receive the money and capable populous of New York and Silicon Valley, and likely their governments operated by those persons. Be bold. Approach those countries. The citizens of New York, New Jersey, and California would be free and proud to live their ideals and demonstrate to the world their prowess unimpeded by the rural citizens and counter political beliefs in the United States.
Have the courage of your convictions. Lead by example.
Repeal the 17th amendment. Perhaps your vision of the job of the Senate is flawed. The house represents the interests of the People, the Senate is supposed to represent the interests of the State. At least that was the way it was intended.