Tags: trump | income tax | deduction | california

Trump Wants to End Texas' Subsidy of California Income Tax

Trump Wants to End Texas' Subsidy of California Income Tax
President Donald Trump addresses supporters as he speaks at the Indiana State Fairgrounds & Event Center September 27, 2017, in Indianapolis, Indiana. Trump spoke about his Republican tax plan. (Joshua Lott/Getty Images)

By    |   Saturday, 30 September 2017 12:19 PM

High-tax states run by leftist Democrats have been enjoying a hidden subsidy from low-tax states since 1913. Now President Trump wants to end the subsidy so over-taxed residents of those states can see what their politicians are costing them and low-tax residents will be put on an equal tax paying footing.

Naturally California Democrats plan to fight Trump’s new tax plan tooth-and-nail.

Here’s how the subsidy works. High tax states hit residents with a combination of income and property taxes. When the resident victims file their federal income taxes the feds currently allow these unfortunates to deduct the amount they paid in state and local taxes from their taxable income. The LA Times reports in 2014 alone 6 million California residents reduced their taxable income by $101 billion.

The Tax Foundation calculates that nationwide using the deduction cost the treasury $96 billion in taxes that weren’t paid and $19.2 billion of that belonged to California income tax filers.

Meanwhile residents of states like Texas and Florida with no personal income tax — compared to California’s brutal 10 percent — wind up paying a higher proportion of their income to the federal government because they lack that deduction.

Hence the indirect subsidy to high-tax California filers from low-tax filers.

Removing the deduction would help docile Californians finally realize just what a fortune Sacramento has vacuumed from their wallets. And that’s why Democrats will be using all their political power to try and block Trump.

I wouldn’t be surprised if they are joined in this effort by California Republicans, too.

State Controller Betty T. Yee sounded the first alarm, “Elimination of the state and local tax deduction could lead to an economic downward spiral in California, including the loss of good­ paying jobs and cuts to critical public safety and social service programs.”

Mostly I think losing the deduction would result in another boost in business for Interstate Movers and U-Haul as residents fled to lower tax states.

Some residents can’t flee because they have too much vested in a pension plan that won’t follow when they move. And that’s where the president’s tax plan puts me in a bind. Normally I’m all for denying revenue to Sacramento spenders and encouraging taxpayers to hold spendy politicians accountable. This initiative, however, hits close to home because my daughter is a teacher in California.

Losing the deduction would cost her money with no guarantee that there would be enough unrest among the population to get Sacramento to lower taxes.

She’s caught in the middle, which is where most of the taxpaying population languishes in a state run by leftists. Unless you’re one of the favored ethnic or interest groups, the taxpayer is supposed to simply pony up and shut up.

Michael Reagan, the eldest son of President Reagan, is a Newsmax TV analyst. A syndicated columnist and author, he chairs The Reagan Legacy Foundation. Michael is an in-demand speaker with Premiere speaker’s bureau. Read more reports from Michael Reagan — Go Here Now.

Michael R. Shannon is a commentator, researcher for the League of American Voters, and an award-winning political and advertising consultant with nationwide and international experience. He is author of "Conservative Christian’s Guidebook for Living in Secular Times (Now with added humor!)." Read more of Michael Shannon's reports — Go Here Now.

© Mike Reagan

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High-tax states run by leftist Democrats have been enjoying a hidden subsidy from low-tax states since 1913.
trump, income tax, deduction, california
Saturday, 30 September 2017 12:19 PM
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