Originally Posted by SonicFlyer
New York Gov. Andrew Cuomo, a Democrat and leader of the fight against the cap, this month called the new tax policy “an economic civil war that helps red states at the expense of blue states.”
Arguably, residents of states with high state/local taxes have been somewhat insulated from their true financial individual costs due to the ability to deduct those taxes from their federal income tax liability.
That deduction has been capped and now its “OMG Trump and the GOP screwed me!”
Nope, you got a subsidy for years, paid for by others, and now that subsidy isn’t unlimited.
Perhaps that will cause people to question their politicians about the value they receive for those taxes being so high...but they’ll probably just complain on Twitter about it.
I mean, didn’t we hear about high earners paying their “fair share”?
To recap the cycle:
1. Cost of living is high, so incomes go up
2. Incomes put taxpayers into higher federal tax bracket
3. Local/state politicians see high incomes and raise taxes to pay for increased services and new policies
4. Taxpayer deducts these taxes from federal tax burden, masking state/local tax burden
5. Federal income tax reform caps this deduction
6. Taxpayers in states with high local/state taxes freak out as true cost of those taxes finally presents itself
7. Companies and residents with means to leave high tax states increasingly do, further negatively impacting tax base (see NYS and Illinois)
8. Media stories about these events begin and politicians in these areas grandstand