EDITORIAL: Deduction for state and local taxes deserves to be targeted

Chuck Schumer has spent years savaging virtually every Republican tax reform proposal as a sop to the rich. So it is with delicious irony that the Senate minority leader was back on the hustings this week urging Congress to preserve a tax break that primarily benefits the wealthy.

Sen. Schumer and New York Gov. Andrew Cuomo, both Democrats, held a news conference on Monday intended to pressure the Empire State’s Republican U.S. House members to oppose a provision in the Trump tax plan that eliminates the federal deduction for state and local taxes. Sen. Schumer called the measure a “dagger in the heart” of New Yorkers.

In fact, the deduction is used most liberally by well-off Americans living in high-tax blue states and allows progressive utopias such as New York and California to disguise the true cost of their hyper regulatory states. It’s also worth noting that, according to Bloomberg News, Sen. Schumer himself claimed a $58,000 write-off on his most recent federal return thanks to the loophole.

In a Saturday column for the Wall Street Journal, Laura Saunders reports that many economists of varied political backgrounds agree that too many deductions distort the market and are thinly disguised payoffs to well-heeled special interests.

“There’s surprising agreement among tax specialists of different political leanings about the poor design of top tax breaks,” she wrote.

In terms of cost effectiveness, state and local tax deductions received an average grade of D in a recent survey of experts. “Some specialists grade them C-plus because they encourage state and local governments to provide services,” Ms. Saunders reported, “while others give them a flat F, saying that they unfairly subsidize locales with high earners and higher taxes, encouraging bloated government.”

The goal of reform should be to make the tax code simpler and more equitable in an attempt to create an economic climate that fosters prosperity. The deduction for state and local taxes fails utterly in this regard and deserves its spot on the chopping block.

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