I swiped a link to a story on Bloomberg about how the states need to change their tax codes after the Federal tax reform bill capped the SALT (state and local taxes) deduction at $10k. This story is from last Monday and already the squealing had started after hearing the GOP’s plans for tax cuts for the rich as a nauseatingly steady drumbeat for the last several weeks.

If I ever wondered what the other side of the tracks think of people like me, in a generalized way of course, this article lays it pretty bare as it suggests how the States should change their tax codes to prevent the incidence of taxes over $10K from falling on them:

Republican Senate and House negotiators in Washington agreed last week on a $10,000 cap on state and local tax deductions, or SALT. In high-tax states, that’s bad news. Personal taxes are poised to rise for 13 percent of New Yorkers and 11 percent of California and New Jersey residents, according to an analysis by left-leaning Institute on Taxation and Economic Policy, conducted after the bill’s final details were announced.

States could quit relying on income tax, paid by individuals, and switch to payroll taxes, levied on employers… If employers pay the payroll tax and reduce employees’ salaries by the same amount, workers wouldn’t have to deduct anything and would wind up being paid the same amount. That would allow states to collect the same revenue while preserving individuals’ deductions on federal returns.

In other words, the tax the rich mantra is only worth donating to when the top 10-13 percent in these blue states don’t actually have to bear the burden. When they do, they want to switch it up and make SALT a payroll tax, throwing it on the backs of workers and defeating the entire purpose of the reform in the first place. I am sure that this would be certain to gall the Democratic politicians by putting them in a position to show what they are really made of. It must be challenging to walk the walk when it really means something.

 

States with progressive income-tax rates would need to devise a system of tax credits to make payroll taxes hit the right rates. Union contracts guaranteeing certain wage levels could be a challenge, as would explaining the changes so they don’t read as a tax hike when workers get their pay stubs.

Make SALT a payroll tax and hide it from workers so they don’t know for what their pockets are being picked. That’s real rich, especially when the “rich” are supposed to be getting a Federal tax cut that is likely to offset the cap.

Nonetheless, I happen to think a better solution to this problem is to not spend so damned much, then hyperventilate when the bill arrives and try to make everyone else pay it but you. I am really not sure where Andrew Cuomo gets his campaign funds, but it certainly isn’t from me.

 

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