Glenn Reynolds: It's Time to Put High-Income Blue-State Liberals' Alleged Support of "Paying Your Fair Share" to the Cash-Money Test

Trump's proposal to make Blue States pay their fair share -- by ending federal tax deductions for exorbitant taxes paid to (blue) states -- is a good idea.

Though I'm actually sorry about the many, many conservative blue-staters that will be hit by this.

Democrats have been saying for years that we need tax increases, and that paying taxes is one of the greatest forms of patriotism. Now it looks like President Trump is going to put their beliefs to the test.

Trump's new tax plan would hit blue states hardest, by eliminating the federal deductibility of state income and property taxes. That]s going to make it harder for blue states to maintain the high tax rates they've traditionally levied.

Right now, if you pay state property or income taxes, you can deduct them against your federal income taxes. In effect, it means that if you're in a high federal bracket, your state taxes may be offset by that federal deduction to the tune of 40% or more.

End the federal deduction, though, and high state taxes come straight out of taxpayers' pockets with no offset. As economist Nicole Kaeding told The Hill, by allowing deductions for state taxes, "the federal government is essentially subsidizing high tax rates in states like California and New York."

The National Journal's Ronald Brownstein calls this "an offensive against blue states," but as Brad Todd replied on Twitter, "I think what you mean is it ends imbalanced federal subsidy for big government at the local level."

I think that's right. States should be able to set their own levels of taxing and spending, but I see no reason why a Walmart cashier in Tennessee (which has no state income tax and low property taxes) should be subsidizing a hedge fund mogul in New York or a studio executive in Hollywood.

Right, a state imposing high tax rates -- with the federal government then permitting that state citizens to pay less in federal taxes -- allows a state to avoid giving its full share of tax money to the federal government, keeping much of it for their own graft and boondoggles.

It's the sort of scheme that a red state would favor -- keep the money closer to home. Except red states are generally anti-tax, rather than interested in gaming the tax system to raise more tax dollars but keep them closer to home.

As the blue states are cheating the Fed of its well-earned tax dollars -- aren't liberals fond of quoting "I do not mind paying taxes; it's how I pay for civilization" -- they should be happy to pay for both their close-to-home boondoggles and the federal boondoggles they also impose on the rest of us.

Alternatively, they can give up House seats proportional to how much tax revenue they steal from the federal government, so that they have less power to impose higher tax and spending levels for the rest of the country they're mooching from and not paying their Fair Share to.

posted by Ace at 01:34 PM

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