This will be the one time I will argue that a tax hike is a good thing. On the whole, I am diametrically opposed to the idea of raising taxes. I don’t mind giving money to charity or helping out causes. I think bringing up the bottom by pooling our funds together to help is a great idea for an enlightened society.
We just aren’t that.
The amount of waste in government programs doesn’t even begin with the lack of direction. It is the massive bureaucracy that has given people jobs and benefits with no clear direction. That alone kills me. So no, I don’t think we should add to that until we fix the already broken system.
But I couldn’t help but smile as Democrats suddenly found themselves arguing to lower taxes, for their people.
That’s right, buried inside this year’s tax law was a tax hike for the blue states. It was sweet irony to see the donkeys run and argue the tax hikes were bad for America. No, they were bad for rich Democrats in California. Finally, these states may have to actually lower their own taxes and stop forcing the rest of us to subsidize their overreaching social programs.
Pass the SALT
Did you ever wonder why New York and California continue to have the highest state taxes and government spending, but still maintain a healthy upper class? Why haven’t the super rich led a mass exodus from the Empire state?
It’s not because they are super philanthropic. (Despite their constant blathering about helping the poor, they don’t.) It’s because they don’t pay those high taxes, you pay their high taxes!
Not directly. Put the pitchfork down.
In California, New York, and some others (all blue) millionaires can write off their state taxes at a certain rate. So where does that money get made up? Well, the federal government subsidizes it. So, whatever is left over from your state can certainly make its way to the blue states.
That is correct. The rich on both coasts brag about how their state takes care of the less fortunate, when really YOU take care of their less fortunate, to an extent.
Those state governments continue to support untenable social programs and spending on the backs of people who aren’t even their citizens.
Initially, President Trump wanted to eliminate the break altogether. However, the tax law rolled out a version with less teeth. Basically, Congress capped the amount that millionaires can deduct. They weren’t happy about it, and the states aren’t either.
What is next?
The hilarious part is this: Democrats badger Republicans about how conservative millionaires find loopholes to not pay their “fair share.”
Now Democrat-heavy states are looking for loopholes to allow their millionaires to write off those taxes. In California, they floated the idea of creating a charity fund for millionaires to pay into and then could write off their taxes.
Why the rush? There are several economic factors. Believe it or not, people don’t like paying high taxes. Shocking, right? Economists actually believe this could lead to a mass exodus of high income earners.
How many? Early estimates are that somewhere in the neighborhood of 800,000 will leave New York and California alone. Tax dollars moved to lower-tax states. You can sort of see how the shift could, over time, be drastic.
It might seem like a pipe dream, but this could have far-reaching positive consequences, especially if you live in one of those high-tax states.
The states could do the right thing. They could tighten their fiscal belts without keeping enormously high state taxes. That ripple effect would be helpful to the middle class.
It could force states to take a good hard look at the programs they have. Keep what works and jettison the lost and expensive programs. I said could. There is no telling what some states will do.
However, the more important lesson is this: No one should have to fund the tax breaks for the wealthy, least of all the people in other states. This was a flawed program from the beginning.
Let us suppose the impact wasn’t as big as economists claim. It still set a pretty ugly standard for high-tax states. We will keep our rich by having the rest of America subsidize our state taxes. The principle alone is reprehensible.
The Donald set out to fix that. Yes, he probably just wanted to take a shot at the Democratic states, but if the outcome is more fair to us, who can be mad about it? Only a donkey.
Article last modified on July 19, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Why America Needed to Pass on the SALT Deduction - AMP.
Article last modified on July 19, 2018. Published by Debt.com, LLC .