Tags: IRS | california | local | new jersey | new york | pennsylvania

Upper-Income Americans Receive 88 Percent of Tax Deductions

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Monday, 30 October 2017 11:15 AM Current | Bio | Archive

Eighty-eight percent of the tax savings from deducting state and local taxes goes to those earning $100,000 or more.[1] Under current law, the benefits total $1.3 trillion over the coming decade.

Republicans in Congress took preliminary steps to eliminate this deduction last week as part of a broad tax reform effort. If the change becomes law, it would have the biggest impact on high-tax states like New York, New Jersey, Pennsylvania, and California.

A longer-term impact, however, might be to reduce spending by state and local governments. That’s because federal deduction provides a subsidy to such governments. If the taxpayers in each state have to pay the full burden of their state or local government, there could be pressure to reduce spending.

That pressure would come from competition with other state and local governments. More than 35 million Americans move each year. If state taxes are no longer deductible, those moving could find high-tax cities and states somewhat less appealing than they are today.

Footnotes:

  1. Tax Foundation, "The State and Local Tax Deduction: A Primer," March 15, 2017

Each weekday, Scott Rasmussen’s Number of the Dayexplores interesting and newsworthy topics at the intersection of culture, politics, and technology. Columns published on Ballotpedia reflect the views of the author.

Scott Rasmussen is founder and president of the Rasmussen Media Group. He is the author of "Mad as Hell: How the Tea Party Movement Is Fundamentally Remaking Our Two-Party System," "In Search of Self-Governance," and "The People’s Money: How Voters Will Balance the Budget and Eliminate the Federal Debt." Read more reports from Scott Rasmussen — Click Here Now.

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If state taxes are no longer deductible, those moving could find high-tax cities and states somewhat less appealing than they are today.
california, local, new jersey, new york, pennsylvania
268
2017-15-30
Monday, 30 October 2017 11:15 AM
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