With tax reform on the books in Washington, liberal states like New York and California struggle to keep their tax rates at stratospheric levels. For years they’ve raked in billions for their own struggling citizens, pointing to the deductability of those taxes on federal tax returns. Now the party’s over.
Instead of addressing the brutality of their tax schemes, the Los Angles Times reports that Democratic politicians are pursuing creative — and some say legally suspect — maneuvers to allow people circumvent a $10,000 cap on deductions for state and local taxes that took effect Jan. 1.
In addition to considering a lawsuit to try to block the limit, elected officials are looking at ways to turn those state and local tax payments into charitable contributions that would be fully deductible or convert state income taxes into payroll taxes that would have the effect of giving people the benefit of the deduction.
It’s tax fraud, endorsed by state leaders.
Most of the states with significant numbers of residents who would be hit by the change are controlled by Democrats, which has led to accusations that Republicans targeted the deduction for political reasons.
The reality is, blue states are looking to deflect the blame for their own faulty tax plans.