Congress Wants to Eliminate the State and Local Tax Deduction.

[Dr. Who]

Congress is beginning to debate major changes to the tax code (http://time.com/4959866/tax-reform-republicans-congress-donald-trump/) that could affect your tax return as early as next year.

....
What is the state and local tax deduction?Sometimes called the SALT deduction, it allows filers who choose to itemize their deductions — rather than claiming the standard deduction (https://www.irs.gov/credits-deductions/individuals/standard-deduction-at-a-glance)— to deduct either the amount of state and local real estate, property, sales, or income taxes (https://www.irs.gov/credits-deductions/individuals/deductible-taxes-at-a-glance)paid over the course of a year. These deductions (both the standard and itemized) ultimately reduce the amount of income that gets taxed by the government. Filers have been able to deduct state and local taxes since federal income tax was conceived in 1913.

http://time.com/4972976/tax-reform-state-local-tax-deduction-explainer/

Proponents of this measure suggest that only high-income earners benefit from these deductions. Of course, this goes hand in hand with doubling the standard deduction to $12,000 for individuals and to $24,000 for married couples filing jointly. It is suggested that only 30% of the population file itemized deductions and that a flat deduction would simplify the process.

Much opposition is being expressed in New York, New Jersey and Connecticut, being very high taxation states, suggesting that these tax changes will make them uncompetitive in terms of attracting professionals willing to live and work in their states.

What do you think? Will this ultimately benefit most people?

[Common]

They also want to cap 401k deductions, americans dont save enough now for retirement.

It appears they will give the working class minimal tax cut and take it back in things like capping 401ks and disallowing state tax deductions.

Just like GW Bush tax cuts that were touted as across the board tax cuts for all turned out to be total bullshit, so will these. I part company with conservatives on this issue. Working class never benefited from any tax cuts.

The Bush tax cuts didnt create a single job in america which was another selling point all the jobs that will be created by cutting corporate taxs, malarkey.

[AZ Jim]

Another gift to the rich and middle finger to the masses. The very reason I am a Democrat.

[Mister D]

I'd imagine virtually every home owner itemizes their deductions. I pay over $6,000 in property taxes here in NJ. I doubt I could afford this place if I didn't itemize my deductions.

[Mister D]

They also want to cap 401k deductions, americans dont save enough now for retirement.

It appears they will give the working class minimal tax cut and take it back in things like capping 401ks and disallowing state tax deductions.

Just like GW Bush tax cuts that were touted as across the board tax cuts for all turned out to be total bull$#@!, so will these. I part company with conservatives on this issue. Working class never benefited from any tax cuts.

The Bush tax cuts didnt create a single job in america which was another selling point all the jobs that will be created by cutting corporate taxs, malarkey.
The "working class" to these people consists of Mexicans making $10 an hour.

[Dr. Who]

They also want to cap 401k deductions, americans dont save enough now for retirement.

It appears they will give the working class minimal tax cut and take it back in things like capping 401ks and disallowing state tax deductions.

Just like GW Bush tax cuts that were touted as across the board tax cuts for all turned out to be total bullshit, so will these. I part company with conservatives on this issue. Working class never benefited from any tax cuts.

The Bush tax cuts didnt create a single job in america which was another selling point all the jobs that will be created by cutting corporate taxs, malarkey.

It does seem like a complicated shell game to make people think that they are going to pay less but ultimately benefiting the wealthiest individuals or entities. I'm also not sure how hurting those states that are net contributors is going to benefit America. I read that multinationals would no longer be taxed on their overseas earnings but that there is a yet to be determined plan to tax profits if they are repatriated.

[Dr. Who]

I'd imagine virtually every home owner itemizes their deductions. I pay over $6,000 in property taxes here in NJ. I doubt I could afford this place if I didn't itemize my deductions.

Would a $12,000 standard deduction offset what you are otherwise now deducting?

[Mister D]

Would a $12,000 standard deduction offset what you are otherwise now deducting?
Nah. My mortgage interest, property taxes, 401K and charity donations cut my taxable income virtually in half. I'd lose on this deal. I don't make a lot of money for someone in NJ. I live a simpler life than most people. This would hurt. I never saw myself as a "rich" guy.

[Mister D]

Crunching the raw numbers right now. I guess I'm exaggerating when I say half but if this were ever to pass I'd take a big hit.

[Dr. Who]

Nah. My mortgage interest, property taxes, 401K and charity donations cut my taxable income virtually in half. I'd lose on this deal. I don't make a lot of money for someone in NJ. I live a simpler life than most people. This would hurt. I never saw myself as a "rich" guy.

If it helps, I think you get to keep the mortgage interest deduction and presumably the charitable donations deduction.

[Mister D]

If it helps, I think you get to keep the mortgage interest deduction and presumably the charitable donations deduction.

But wouldn't I have to choose one or the other? I could take the standard deduction or I could itemize. Either way I'm on the losing end of this. I'd imagine my situation is common in the wealthier states.

[Peter1469]

I expect many would not miss the state and local tax deduction. It is a help for people who live in high local tax states and cities. It is a way of spreading the pain caused by these localities.

[Mister D]

I expect many would not miss the state and local tax deduction. It is a help for people who live in high local tax states and cities. It is a way of spreading the pain caused by these localities.
If we could get some property tax relief here I wouldn't be so concerned.

[Dr. Who]

But wouldn't I have to choose one or the other? I could take the standard deduction or I could itemize. Either way I'm on the losing end of this. I'd imagine my situation is common in the wealthier states.

I think the standard deduction only replaces the state and local tax deduction. I read that the mortgage interest deduction would still exist. I didn't read anything about charitable donations, but I think there would be huge objections if people couldn't deduct them. However, should this pass, you wouldn't have a choice. That portion of your itemized deductions would no longer exist. You would have to take the standard deduction. That's why the representatives for NJ, NY and CT are freaking out. The average tax paid in NJ is much more than 12K.

[Mister D]

I think the standard deduction only replaces the state and local tax deduction. I read that the mortgage interest deduction would still exist. I didn't read anything about charitable donations, but I think there would be huge objections if people couldn't deduct them. However, should this pass, you wouldn't have a choice. That portion of your itemized deductions would no longer exist. You would have to take the standard deduction. That's why the representatives for NJ, NY and CT are freaking out. The average tax paid in NJ is much more than 12K.
If that's the case there is much less cause for concern but , as I understand it, you can either itemize or take the standard deduction. I lose either way. I'll be able to deduct less but if I can take the flat 12K just as a replacement for the property deduction I'll actually come out on top! lol

Yeah, most of my neighbors must pay double what I pay.

[Mister D]

I'll have to research this a bit more tomorrow. Thanks for bringing it to my attention.

[Common]

It does seem like a complicated shell game to make people think that they are going to pay less but ultimately benefiting the wealthiest individuals or entities. I'm also not sure how hurting those states that are net contributors is going to benefit America. I read that multinationals would no longer be taxed on their overseas earnings but that there is a yet to be determined plan to tax profits if they are repatriated.

Ala Bush tax cuts

[MisterVeritis]

Another gift to the rich and middle finger to the masses. The very reason I am a Democrat.
No, Jim, you are a Democrat because you have no brains to speak of.

[MisterVeritis]

All this becomes clear once you realize this is a massive tax increase disguised as a massive tax cut.

[gamewell45]

Congress is beginning to debate major changes to the tax code (http://time.com/4959866/tax-reform-republicans-congress-donald-trump/) that could affect your tax return as early as next year.

....
What is the state and local tax deduction?

Sometimes called the SALT deduction, it allows filers who choose to itemize their deductions — rather than claiming the standard deduction (https://www.irs.gov/credits-deductions/individuals/standard-deduction-at-a-glance)— to deduct either the amount of state and local real estate, property, sales, or income taxes (https://www.irs.gov/credits-deductions/individuals/deductible-taxes-at-a-glance)paid over the course of a year. These deductions (both the standard and itemized) ultimately reduce the amount of income that gets taxed by the government. Filers have been able to deduct state and local taxes since federal income tax was conceived in 1913.

http://time.com/4972976/tax-reform-state-local-tax-deduction-explainer/

Proponents of this measure suggest that only high-income earners benefit from these deductions. Of course, this goes hand in hand with doubling the standard deduction to $12,000 for individuals and to $24,000 for married couples filing jointly. It is suggested that only 30% of the population file itemized deductions and that a flat deduction would simplify the process.

Much opposition is being expressed in New York, New Jersey and Connecticut, being very high taxation states, suggesting that these tax changes will make them uncompetitive in terms of attracting professionals willing to live and work in their states.

What do you think? Will this ultimately benefit most people?

I got a bad feeling about this; maybe i'm being paranoid but I'm leaning on thinking this will benefit mostly the 1% and NY, NJ & Ct where, as you mention live in High taxation states are going to suffer the most.

What will they come after next? Interest on mortgage payments? I'm hoping that with enough pressure from their constituents in the states with high income taxes, congress rejects it.

[Peter1469]

If we could get some property tax relief here I wouldn't be so concerned.
When I moved to the DC area, I picked VA because of local taxes.

[Peter1469]

I think the standard deduction only replaces the state and local tax deduction. I read that the mortgage interest deduction would still exist. I didn't read anything about charitable donations, but I think there would be huge objections if people couldn't deduct them. However, should this pass, you wouldn't have a choice. That portion of your itemized deductions would no longer exist. You would have to take the standard deduction. That's why the representatives for NJ, NY and CT are freaking out. The average tax paid in NJ is much more than 12K.
The rest of the nation should not subsides people who live in liberal bastions that tax the crap out of their citizens.

[Dr. Who]

The rest of the nation should not subsides people who live in liberal bastions that tax the crap out of their citizens.
Are they receiving subsidies? Those same states are contributing to the federal coffers, as opposed to being a drain. Those high taxes are being turned over to the rest of the country.

Those states are also providing far more infrastructure because they are densely populated and at the same time are home to a significant number of businesses - employers of millions of people. They are also the recipients of many unskilled and poorly educated people from other states that don't offer sufficient employment that they end up having to support if they don't want the crime rate of a third world nation. They also receive the bulk of immigration, legal and otherwise. However, people actually choose to live there.

[Newpublius]

Congress is beginning to debate major changes to the tax code (http://time.com/4959866/tax-reform-republicans-congress-donald-trump/) that could affect your tax return as early as next year.

....
What is the state and local tax deduction?Sometimes called the SALT deduction, it allows filers who choose to itemize their deductions — rather than claiming the standard deduction (https://www.irs.gov/credits-deductions/individuals/standard-deduction-at-a-glance)— to deduct either the amount of state and local real estate, property, sales, or income taxes (https://www.irs.gov/credits-deductions/individuals/deductible-taxes-at-a-glance)paid over the course of a year. These deductions (both the standard and itemized) ultimately reduce the amount of income that gets taxed by the government. Filers have been able to deduct state and local taxes since federal income tax was conceived in 1913.

http://time.com/4972976/tax-reform-state-local-tax-deduction-explainer/

Proponents of this measure suggest that only high-income earners benefit from these deductions. Of course, this goes hand in hand with doubling the standard deduction to $12,000 for individuals and to $24,000 for married couples filing jointly. It is suggested that only 30% of the population file itemized deductions and that a flat deduction would simplify the process.

Much opposition is being expressed in New York, New Jersey and Connecticut, being very high taxation states, suggesting that these tax changes will make them uncompetitive in terms of attracting professionals willing to live and work in their states.

What do you think? Will this ultimately benefit most people?

We don't know the brackets.

[Dr. Who]

We don't know the brackets.

My impression is that there are no brackets except for the tax rate itself, which would go from the current seven to three, with tax rates of 12 percent, 25 percent and 35 percent. The standard deduction would apply across the board.

[gamewell45]

The rest of the nation should not subsides people who live in liberal bastions that tax the crap out of their citizens.

Nor should the "liberal bastions" support those "red states" who get more then they pay into the system.

[Peter1469]

Are they receiving subsidies? Those same states are contributing to the federal coffers, as opposed to being a drain. Those high taxes are being turned over to the rest of the country.

Those states are also providing far more infrastructure because they are densely populated and at the same time are home to a significant number of businesses - employers of millions of people. They are also the recipients of many unskilled and poorly educated people from other states that don't offer sufficient employment that they end up having to support if they don't want the crime rate of a third world nation. They also receive the bulk of immigration, legal and otherwise. However, people actually choose to live there.
End the state and local income tax deductions on the federal income tax return. Maybe localities will cut their rates.

[Peter1469]

Nor should the "liberal bastions" support those "red states" who get more then they pay into the system.


We should curb welfare benefits for people who can actually work.

[Newpublius]

My impression is that there are no brackets except for the tax rate itself, which would go from the current seven to three, with tax rates of 12 percent, 25 percent and 35 percent. The standard deduction would apply across the board.

Well, for purposes of deductions, if a family currently itemizes less than 24k, they won't care if state/local taxes are no longer deductible, doesn't matter to them, the standard deduction is larger anyway.

If you're a filer who is losing deductions, well, for sure, you'd prefer deductions, BUT do you want to pay 25% at an AGI of 100,000 or 12% of an AGI of 110,000?

Obviously, most would prefer the latter, but that is where the specific rate brackets, which we currently don't know, really matter to analyze this thing properly.

[Dr. Who]

Well, for purposes of deductions, if a family currently itemizes less than 24k, they won't care if state/local taxes are no longer deductible, doesn't matter to them, the standard deduction is larger anyway.

If you're a filer who is losing deductions, well, for sure, you'd prefer deductions, BUT do you want to pay 25% at an AGI of 100,000 or 12% of an AGI of 110,000?

Obviously, most would prefer the latter, but that is where the specific rate brackets, which we currently don't know, really matter to analyze this thing properly.
True.

[Dr. Who]

Nor should the "liberal bastions" support those "red states" who get more then they pay into the system.

Indeed, they maintain artificially low taxation rates and expect a hand out from the federal government in exchange for providing substandard educations, providing a home for corporate polluters and maintaining largely impoverished rural populations.

[Dr. Who]

We should curb welfare benefits for people who can actually work.

You don't attract employers to places where the education level can't support the industry. The industries of old are no longer a reality. The new industries require a decent education and many of the red states are deficient in that department. They can't even attract talent to live there because they lack the infrastructure demanded by people with education, which is why many businesses are not really willing to choose those states despite the offer of advantageous tax breaks.

[Peter1469]

You don't attract employers to places where the education level can't support the industry. The industries of old are no longer a reality. The new industries require a decent education and many of the red states are deficient in that department. They can't even attract talent to live there because they lack the infrastructure demanded by people with education, which is why many businesses are not really willing to choose those states despite the offer of advantageous tax breaks.

Is that why the non-union states are doing better than the union shops?

[gamewell45]

We should curb welfare benefits for people who can actually work.

I agree provided they can find employment; how many low level skilled jobs can the government create though?

[gamewell45]

Is that why the non-union states are doing better than the union shops?
better? How so? The workers who work non-union have literally no rights in the workplace, serve at the pleasure of the employer, who in many cases, when they get too old or expensive are generally fired on a flimsy pretext or are laid off and then replaced after a few months.

As a rule they don't make as much as their union counterparts; while it may be true that in some aspects its cheaper (housing and fuel as examples) everything else costs as it does in states that are union agency shops (food, clothing, college education, vehicles, etc)

It's not the bargain that many believe it to be. Of course the employers who wish to remain non-union will tell their employees different.

[Dr. Who]

Is that why the non-union states are doing better than the union shops?

I don't think unions are a factor in the high tech world. It's still a factor in manufacturing, but that is becoming less relevant in this century.

[Dr. Who]

Is that why the non-union states are doing better than the union shops?

Furthermore, how are they doing better when many of those states are recipients of federal government welfare? They take from states like NY, NJ, CT and CA to remain solvent.

[Common Sense]

People are so easily fooled.

[Adelaide]

No, Jim, you are a Democrat because you have no brains to speak of.
Thread banned. This is On the Serious Side. Post on topic without insults.

[gamewell45]

I don't think unions are a factor in the high tech world. It's still a factor in manufacturing, but that is becoming less relevant in this century.

I think at some point that could possibly change to where you could see a greater union presence as workers become more frustrated with a lack of a decent benefits package including medical, a say in the workplace and a viable retirement plan. While money is an important factor, it's only a part of the whole equation and people become used to the money, yet the problems still exist that made them unhappy in the first place.

[Chris]

Is that why the non-union states are doing better than the union shops?

Probably. Unions tend to harm businesses. Nothing against unions per se representing employees but often they're clueless the way business works, like in demanding raising minimum wages that only harm low-level workers.

[nic34]

They also want to cap 401k deductions, americans dont save enough now for retirement.

It appears they will give the working class minimal tax cut and take it back in things like capping 401ks and disallowing state tax deductions.

Just like GW Bush tax cuts that were touted as across the board tax cuts for all turned out to be total bull$#@!, so will these. I part company with conservatives on this issue. Working class never benefited from any tax cuts.

The Bush tax cuts didnt create a single job in america which was another selling point all the jobs that will be created by cutting corporate taxs, malarkey.

That's the common I remember.

[Dr. Who]

I think at some point that could possibly change to where you could see a greater union presence as workers become more frustrated with a lack of a decent benefits package including medical, a say in the workplace and a viable retirement plan. While money is an important factor, it's only a part of the whole equation and people become used to the money, yet the problems still exist that made them unhappy in the first place.
One prominent feature of the high tech world is the number of people working on a contractual basis, by the project. I don't think you could unionize contract workers the same way as autoworkers are unionized.

[nic34]

Is that why the non-union states are doing better than the union shops?

As long as there is grunt work the foreign auto makers need that will be true, ........for now.

[gamewell45]

One prominent feature of the high tech world is the number of people working on a contractual basis, by the project. I don't think you could unionize contract workers the same way as autoworkers are unionized.

Legally under the NLRA of 1935 if the contractors meet certain criteria, they can organize if five or more show interest; regardless, if two or more do concerted activity that is protected under the act.

[donttread]

Congress is beginning to debate major changes to the tax code (http://time.com/4959866/tax-reform-republicans-congress-donald-trump/) that could affect your tax return as early as next year.

....
What is the state and local tax deduction?

Sometimes called the SALT deduction, it allows filers who choose to itemize their deductions — rather than claiming the standard deduction (https://www.irs.gov/credits-deductions/individuals/standard-deduction-at-a-glance)— to deduct either the amount of state and local real estate, property, sales, or income taxes (https://www.irs.gov/credits-deductions/individuals/deductible-taxes-at-a-glance)paid over the course of a year. These deductions (both the standard and itemized) ultimately reduce the amount of income that gets taxed by the government. Filers have been able to deduct state and local taxes since federal income tax was conceived in 1913.

http://time.com/4972976/tax-reform-state-local-tax-deduction-explainer/

Proponents of this measure suggest that only high-income earners benefit from these deductions. Of course, this goes hand in hand with doubling the standard deduction to $12,000 for individuals and to $24,000 for married couples filing jointly. It is suggested that only 30% of the population file itemized deductions and that a flat deduction would simplify the process.

Much opposition is being expressed in New York, New Jersey and Connecticut, being very high taxation states, suggesting that these tax changes will make them uncompetitive in terms of attracting professionals willing to live and work in their states.

What do you think? Will this ultimately benefit most people?

The "control code" is what it should be named. There are easier, fairer and less expensive ways to collect taxes but they don't come with the control over citizens behavior that the "tax code" comes with.

[Peter1469]

Furthermore, how are they doing better when many of those states are recipients of federal government welfare? They take from states like NY, NJ, CT and CA to remain solvent.


I was referring to the people who work in those states.

[Dr. Who]

I was referring to the people who work in those states.

There are a lot of people doing very well in NY, NJ and CA. There are also people not doing well because they attract the desperate from less well-off states who simply don't have sufficient skills. They also get the bulk of all immigration who again may not have competitive skills. Yet despite the high taxes and high cost of living, people want to be there because there is more opportunity.

[Crepitus]

I expect many would not miss the state and local tax deduction. It is a help for people who live in high local tax states and cities. It is a way of spreading the pain caused by these localities.

Actually wealth redistribution.

[donttread]

There are a lot of people doing very well in NY, NJ and CA. There are also people not doing well because they attract the desperate from less well-off states who simply don't have sufficient skills. They also get the bulk of all immigration who again may not have competitive skills. Yet despite the high taxes and high cost of living, people want to be there because there is more opportunity.

Before the 16th Amendment no such bullshit could of taken place.

[Peter1469]

I would like to see that deduction gone.


Actually wealth redistribution.

[Dr. Who]

Before the 16th Amendment no such bullshit could of taken place.
Federal taxes were initially levied to raise money for the civil war, but later it was decided that income tax was fairer than tariffs which disproportionately affected the poor and those involved in agriculture where prices fluctuated greatly. Of course, there was also the matter of ongoing funding of the military, which could hardly be funded by states that were levying very few taxes themselves. The 16th was ratified by the majority of states.

[Bethere]

The 16th was ratified by the majority of states.

3/4s.

[Kacper]

I support eliminating the SALT deductions. It would serve as a constraint on income disparity between large urban areas and other parts of the nation.

[Peter1469]

I support eliminating the SALT deductions. It would serve as a constraint on income disparity between large urban areas and other parts of the nation.

And make it harder for localities to charge ridiculous levels of taxation.

[Kacper]

And make it harder for localities to charge ridiculous levels of taxation.

Which makes it harder for them to continue to pay disproportionately high wages and fund ridiculous pension benefits which encourages people to move elsewhere which encourages real estate prices to eventually become more in line with norms.