House Republicans have been passing around this card to represent what they say is their idea of what the Federal tax return should look like:
One thing that’s obvious: no deduction for state and local taxes. You might think that high-tax states might object to this, and in the case of New York, you’d be correct:
Gov. Cuomo said eliminating the deduction would “effectively increase state and local taxes by 20 percent to 44 percent, depending on a person’s tax bracket.”
“This would be a deathblow to New York, putting us at a horrible competitive disadvantage,” Cuomo said.
Like the level of taxation in New York wasn’t a competitive disadvantage all by itself.
Meanwhile, in that other reputed high-tax state:
Eliminating the state and local tax deduction would hit New York and California especially hard, according to a Tax Policy Center 2016 study. Combined, residents of the two states accounted for 32 percent of the total state and local tax deductions claimed nationwide.
This would bring home to all Americans how efficiently their home states are governed. Right now, high-taxing, high-spending states can mask their activities to a certain extent, because their taxpayers are sheltered from the local tax burden by deducting it from their federal taxes. If that were no longer an option, every taxpayer would know precisely how much their state politicians are costing them — because they’d be paying it on top of, over and above, their federal taxes.
I’m not quite so sanguine about this. Few states are governed particularly efficiently; the one in which I live levies taxes at a lower rate than either New York or California, and it’s been in a deep dark budget hole for some time.
The odds are pretty good that those living in tax-and-spend states such as New York, California, etc. would be very, very unhappy to experience the full magnitude of those states’ punitive taxes. They’d probably launch loud, vociferous campaigns to change their politicians’ habits — or change their politicians altogether.
Complaining about the Oklahoma legislature is de rigueur in these parts, but we don’t seem to be accomplishing a great deal of incumbent disposal, just like those Other States.
That said, I like the basics of this plan, but I question Rep. Kevin Brady (R-TX), who’s a prime mover behind it:
“We are proposing a change,” Brady said in an interview. “Rather than keep Washington taxes high and have just a few get relief from state and local taxes … No longer will Washington punish or reward you based on how much you earn or where you choose to live.”
They’ll find some way to reward their friends and punish their perceived enemies. They always do.