To hear it from some of the bluest of the blue-state politicians, the sky is falling now that the Republican Congress passed a tax reform plan that President Donald Trump signed Friday. The Democratic talking points have been trotted out for weeks — including, of course, that this whole plan is a sleight-of-hand shifting of cash from the poor to the rich.
But according to the Tax Policy Center — hardly a right-leaning outfit — 80.4 percent of Americans would see a tax cut in 2018. Oh, and never mind those 200,000 AT&T employees who will receive a $1,000 bonus thanks to the reform, or the workers with several other major companies that announced bonuses, wage hikes and more. To hear the hand-wringing from Democrats, rank-and-file employees just got scrooged.
It’s true that polls show only modest support for the tax cuts. Blame that on a progressive media fueling class warfare by parroting Democratic rhetoric about the “rich” and “corporations.” How else to explain a recent Wall Street Journal poll that found almost 80 percent of Americans mistakenly believe the patently false assertion that they’ll see a tax hike under the GOP legislation?
We’ll see what the polls say in a few months. Workers will see benefits as early as February, with larger paychecks thanks to IRS withholding adjustments stemming from the reform.
We’ll also see how voters in high-tax blue havens react when they learn the truth about how badly they’re being treated by Democratic leadership at the state and local levels.
States such as New York and California have relied heavily on the state and local deduction to hide the true cost of heavy tax rates on their citizens. In New York City, the average federal deduction for such taxes is $60,000. Under the GOP plan, however, such write-offs are capped at $10,000. Blue-state taxpayers, particularly high earners, will soon see the actual burden imposed on them by state and local governments. And Democrats are horrified by that prospect.
Sen. Dianne Feinstein of California tweeted: “The Republican tax bill caps the deduction for state and local taxes at $10,000. In 2015, more than 6 MILLION California households claimed the SALT deduction with an average deduction of $18,400. BOTTOM LINE: California families pay MORE so corporations pay LESS. #GOPTaxScam.”
That’s one perspective. A more compelling one is that the deduction perversely encourages California and New York to tax ever more, knowing their citizens are shielded from the full brunt of that blow while the rest of the nation picks up the slack.
If Sen. Feinstein and her fellow blue-state, high-tax compatriots are truly concerned about the financial hit these reforms might bring to their well-off citizens, they should advocate for lowering their state and local tax burdens. Otherwise, their citizens may soon demand it — which is what Democrats really fear.