Wednesday, April 18, 2018

The Rest Of The Country Is Tired Of Subsidizing California's High Taxes

Until recently, California could get away with ridiculously high state and local taxes in part because those taxes could be claimed as a deduction on federal income taxes.  As a result, while Sacramento got to keep the money raised by those taxes, Washington didn't get as much money from California.  There's an argument to be made that the rest of the country was thereby subsidizing California's high taxes.

I'm not saying that the Republican Congress and Republican President intended to shaft California specifically, but honestly, could you blame them if they did?  Regarding the tax reform bill signed into law in December, here's the keening from The People's Republic of Kalifornia, Ignorer Of Federal Law and everyone's favorite Sanctuary State, where illegal aliens have more rights than American citizens do:
President Donald Trump’s tax cuts will be anything but for about 1 million California taxpayers who will owe Uncle Sam more money a year from now.

They’re the Californians who will lose a collective $12 billion because the new law caps a deduction they have been able to take for paying their state and local taxes, according to a new analysis by the Franchise Tax Board.

Very wealthy Californians earning more than $1 million a year will pay the lion’s share of that money, with 43,000 of them paying a combined $9 billion.

But some middle-class Californians will pay more, too.

About 751,000 households with incomes under $250,000 probably will owe more tax. All together, they’ll owe an extra $1.1 billion...

He (Governor Moonbeam) also said in January that he’s worried that the changes will provide an incentive for wealthy Californians to leave the state, potentially starving the state of tax revenue. The state’s wealthiest 1 percent, for instance, pay about 48 percent of the state’s personal income tax.
What was it Margaret Thatcher said about socialism and running out of other people's money?

Update, 4/26/18:  And this from the Wall Street Journal:
About 90% of taxpayers are unaffected by the change. But high earners in places with hefty income taxes—not just California and New York, but also Minnesota and New Jersey—will bear more of the true cost of their state government. Also in big trouble are Connecticut and Illinois, where the overall state and local tax burden (especially property taxes) is so onerous that high-income residents will feel the burn now that they can’t deduct these costs on their federal returns. On the other side are nine states—including Florida, Nevada, Texas and Washington—that impose no tax at all on earned income.

3 comments:

Mike Thiac said...

He (Governor Moonbeam) also said in January that he’s worried that the changes will provide an incentive for wealthy Californians to leave the state, potentially starving the state of tax revenue. The state’s wealthiest 1 percent, for instance, pay about 48 percent of the state’s personal income tax.

Wait, you mwan people are not static when it comes to taxation?! They don't just take it and say, "Thank you sir, may I have another?" as more and more of their money is taken. Who would have thunk it!

Anonymous said...

California has a law that all residents of California must pay State Income Tax. All non-residents must pay State Income Tax for the proportion of income made in California.

United States of America has a law that all citizens must pay Federal Income Tax. No other national government has this law.

Darren said...

Anonymous: huh? Wha? No other country has income tax?

BTW, not all citizens pay US income tax. There are plenty who don't earn the required minimum before income tax kicks in.