California proposal to allow its residents to avoid the $10,000 tax deduction limitation

[Ravenman]

@HurricaneDitka

I don’t want the hassle of trying to collect or give money to an anonymous stranger over the Internet and I’m certainly open to the possibility (perhaps even probability) that de Leon’s proposal gets modified in the future. At the moment, based on the answer his office has given to the press, it doesn’t appear to be any more focused than that, but I think we agree that they’d be on firmer footing if it was.

A sense that you do not hold President Trump’s campaign promises to the same literal standard as you are holding Mr. de Leon’s promises in this case…

As in, “Yeah, Trump made campaign promises, but a lot of that was not to be taken seriously, except the things he has delivered on” versus “de Leon said THIS so that’s the terms of debate!”

[thelurkinghorror]

@Ravenman

While it is nice to see conservatives suddenly upset about tax loopholes - I guess they are bad when blue states get them - your donation to the Mormon Church would likely get your a tax deduction, but not a tax credit.

However, if you chose to make a donation to a particular organization that support vouchers for kids to attend private schools (including religious schools) in Florida, Arizona, Louisiana, Alabama, or South Carolina, you would receive a 1:1 tax credit on your state income taxes. There are a handful more states in which you can receive a 50, 65, or 90% tax credit for your contributions.

As much as I think of these as all somewhat underhanded policies, I’m at a loss to explain why those states can enact such laws and California cannot.

I do think California would be on better ground if it sought to create a similar charitable organization focused on a single mission (like the other states did with education) rather than a supplement to California’s general fund.

I am at a loss to explain why so many states have decided that donations to support, say, parochial schools are worthy of a 100% tax credit and donations to Planned Parenthood are not treated similarly.

Oh wait, I can explain that very easily.

Florida income taxes?

[HurricaneDitka]

@Ravenman

A sense that you do not hold President Trump’s campaign promises to the same literal standard as you are holding Mr. de Leon’s promises in this case…

As in, “Yeah, Trump made campaign promises, but a lot of that was not to be taken seriously, except the things he has delivered on” versus “de Leon said THIS so that’s the terms of debate!”

I didn’t really consider it a “promise” by de Leon, so I’m not sure of what the point of muddying the waters by bringing up Trump’s campaign promises.

de Leon has an actual bill up for debate. de Leon’s bill is scheduled for a hearing in the Senate Governance and Finance Committee in two days. They seem to be very much ‘actually pursuing it’, although I don’t make any predictions about what the final result will be.

[Shodan]

@Ravenman

However, if you chose to make a donation to a particular organization that support vouchers for kids to attend private schools (including religious schools) in Florida, Arizona, Louisiana, Alabama, or South Carolina, you would receive a 1:1 tax credit on your state income taxes.

So, If I understand you, I live in one of those states, and I change my withholding for state taxes to zero. At year’s end, the state says “you owe us $5000”. I produce a receipt that says I sent $5000 to that organization. I then owe nothing to the state. Correct?

I do think California would be on better ground if it sought to create a similar charitable organization focused on a single mission (like the other states did with education) rather than a supplement to California’s general fund.

As I mention, I don’t see a difference between a charitable organization that contributes to the CA general fund, and CA state taxes in general. In the one case, CA spends the money, in the other, CA spends the money.

California is pretty obviously trying to re-implement the federal deductibility of CA state taxes, ISTM. But if they get to spend the money, it is still state tax.

Regards,
Shodan

[Pork_Rind]

@Arizona_Mike

But in the second hypothetical case, there would be no need for someone with $100,000 income to donate to the California Excellence Fund to avoid SALT. You can deduct state taxes on your federal income tax, under the new tax bill, until your state taxes hit 10K a year (and a portion would still be deductible). In California, you would need to earn more than 140K a year before you owe 10K in state taxes.

My understanding that this $10k cap is for combined State, local and property taxes. Not hard to go above that at all.

[octopus]

@septimus

This sort of childish snark is why it’s hard to take right-wing banter seriously. Who has time to sift through confusion and gibberish hoping to find insight?

But, just in case your question was sincere, most of us would prefer a fair tax system.

Fair is very subjective. As for accusations of childish snark for a comment directed at intellectual dishonest statements on policy, don’t be so defensive when inconsistency and hypocrisy are rightfully pointed out.

[octopus]

@Riemann

As a general principle, it seems logical and fair that you should only be taxed on money that you actually receive, not some abstract theoretical number. So, if you’re being taxed by two entities, the second one should only tax you on what you have left after the first one takes its cut. In other words, either State taxes should be deductible from Federal, or Federal from State.

Fine. Federal should be deducted from state and state should be deducted from municipal.

[ITR_champion]

@Johnny_Ace

Are you kidding? How many of the rich take every possible tax advantage to pay as little as possible, and have the means to hire the CPA’s who will find and use those advantages? How many are not already incorporated to take advantage of business rates and loopholes? $10K is a pittance to them.

If you think the new tax bill (I guess I should say ‘law,’ shouldn’t I?) isn’t going to end up reducing taxes on the wealthy at the cost of everyone else, you’re deluding yourself.

No, I am not kidding. What I said was that the particular provision in question, limiting how much state tax can be deducted on federal returns, leads to higher taxes for the rich. There are obviously many provisions and in total, some rich people will be paying more and some less.

My point was that Democrats in California are trying to create a new loophole that will only benefit the rich.

[Johnny_Ace]

@ITR_champion

No, I am not kidding. What I said was that the particular provision in question, limiting how much state tax can be deducted on federal returns, leads to higher taxes for the rich. There are obviously many provisions and in total, some rich people will be paying more and some less.

My point was that Democrats in California are trying to create a new loophole that will only benefit the rich.

Then, by that same rationale, SALT deductions only benefited the rich before they were capped, right?

[D_Anconia]

Why don’t the high tax states simply lower their state and local taxes?

[Captain_Amazing]

@D_Anconia

Why don’t the high tax states simply lower their state and local taxes?

Probably because then they’ll have less money to pay for the things they want to do, I’d assume.

[D_Anconia]

@Captain_Amazing

Probably because then they’ll have less money to pay for the things they want to do, I’d assume.

Right. Want to do, not need to do.

[Johnny_Ace]

@D_Anconia

Right. Want to do, not need to do.

Yeah. Silly little things like caring for the poor, rebuilding and maintaining roads, paying for public services, etc.

[OldGuy]

@Pork_Rind

My understanding that this $10k cap is for combined State, local and property taxes. Not hard to go above that at all.

This is correct and of the 586 total counties, there are 32 with average annual property taxes > $7,000. There will be a lot of people going above the $10,000 limit.

[thelurkinghorror]

@Johnny_Ace

Yeah. Silly little things like caring for the poor, rebuilding and maintaining roads, paying for public services, etc.

I see your point, but ever been poor in California or driven on its roads? Taxes don’t necessarily make it to the right place.

[Arizona_Mike]

@OldGuy

This is correct and of the 586 total counties, there are 32 with average annual property taxes > $7,000. There will be a lot of people going above the $10,000 limit.

The problem with using that average is that those 32 counties have a high number of millionaires and billionaires, whose high level of property taxes (very expensive homes in those areas) and state taxes pull the average up much higher than will affect the majority of taxpayers.

Again, it’s a progressive tax. Democrats use to be in favor of those, suddenly now they’re not.

[Ravenman]

@Arizona_Mike

Again, it’s a progressive tax. Democrats use to be in favor of those, suddenly now they’re not.

The unanimous vote of Democrats against a tax bill intended to take care of billionaires and corporations belies your silly and ill-conceived attempt to make conservatives look they they care about any other constituency.

[Shodan]

@octopus

Fair is very subjective.

Actually his standard is quite objective - tax breaks for the wealthy are bad, except when proposed by Democrats.

Regards,
Shodan

[Johnny_Ace]

@thelurkinghorror

I see your point, but ever been poor in California or driven on its roads? Taxes don’t necessarily make it to the right place.

Yes to both, as a matter of fact. For a brief time when I was a kid my family was on welfare, and I’ve lived here for all but about two years of my half-century-plus life. As for the roads, compare them to, say, Houston before the flooding. (I experienced that as well.) Pretty damn good overall, if you ask me. There are rare pockets where maintenance is spotty at best (looking at you, L.A. County land), but Houston was ridiculous. You needed a 4WD to drive safely around town and keep your axles, unless it was on the Loop.

*Note: County land isn’t anywhere near all of the land within the county; it’s only where areas are unincorporated otherwise.

[Steve_MB]

@ITR_champion

octopus does have a point. If there’s one thing that Democrats have said consistently for decades, it’s that the rich should pay more in taxes. The recent tax overhaul by the Republicans eliminates the deduction for state income & property taxes only for those who pay over $10,000 on such taxes. Obviously this provision will lead to the rich paying more taxes. (First of all, it’s mainly the rich who itemize. Second, only the rich pay over $10,000 in state taxes.) So this a provision that increases taxes on the rich, and if the Democrats believe what they say they believe, they should be entirely in favor of it.

Instead we see Democrats desperately trying to create a new loophole.

Here we see a textbook example of Standard Pubbie Scam #137 “Set Up The 70ish-99th Percentile As Scapegoats To Protect The One Percent”.