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The GOP-led tax overhaul signed into law by President Donald Trump has forced high-tax blue states to consider lawsuits and even calling for tax cuts of their own.
Democrats in New Jersey and California are considering allowing people to make charitable donations instead of paying certain taxes, according to the Associated Press. Democrats in Connecticut and New York are considering switching from income taxes to new taxes on payroll.
Some, believe it or not, are even calling for tax cuts.
At issue is the elimination of the deductions for state and local taxes (SALT) and a cap on the deduction for property taxes at $10,000.
“That's bad news for people who pay a significant amount in such taxes and relied on the SALT deduction to reduce their federal tax liability,” Theodore Kupfer of National Review wrote.
“In other words, it's bad news for rich people who live in blue states.”
Leaders of liberal states that have enacted high taxes of their own are so enraged that their constituents now have to pay them without shifting any of the burden to the feds, they are actually considering suing the federal government.
Their claims are ironic considering the Democrats' main contention with the federal tax overhaul is that it will only benefit the rich.
“The state and local tax deduction disproportionately benefits high-income taxpayers, with more than 88 percent of the benefit flowing to those with incomes in excess of $100,000,” Jared Walczak of the Tax Foundation wrote.
Oddly enough, the SALT deductions have escaped the stigma of being a tax cut for the rich. The result of the tax is that middle- and low-income taxpayers subsidize more generous spending in wealthier blue states because they benefit far less from SALT deductions, according to the Tax Foundation.
The states' ability to transfer the burden of high taxes to the federal government has only encouraged them to raise taxes higher than they normally would. Some, like Curtis Dubay at The Heritage Foundation, saw this coming.
“Faced with newly shouldering the entire burden of state and local taxes, taxpayers would markedly increase their opposition to state and local tax hikes.”
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