Do you like paying taxes on taxes? I thought you did! Tax reform is now the focus. Of course there are the losers and winners; focus can also be pronounced differently. The proposal on the table is to reduce the rates for individuals, but with a higher deduction, eliminating state and local tax deductions for those who itemize.
The theory is to increase efficiency having more people file a standard deduction return. But for those who itemize the mortgage interest reduction will remain. However, they want to give the boot to the deduction for real estate taxes and state income taxes. This will hurt those who live in states dependent on real taxes that fund school systems. States like New York, Connecticut, New Jersey, Massachusetts and California. These states voted for Hillary (jail the bird) Clinton. So they will be punished for doing so. But wait, there is something more common with these states, for by and large, they pay into Uncle Sam more than they receive. OK, now you get the picture. They are receiving it up the butt in more ways than one. Fair is fair – there is no equity here just because in those states almost 38% voted for Trump.
Mathematically speaking, lets look at the dollars. For instance if you live in New Jersey, which has a 6% state income tax, losing the deduction will be very costly. For example take a homeowner with a real estate tax bill of $10,000 and a state income tax of $4,500; loosing these deduction will be very costly because according to the new proposal the taxpayer will no longer be able to deduct them when itemizing, that is if they can itemize at all because of the new proposed higher deduction. But wait, the deduction comes nowhere near those who itemize in the above states. The cost to them will be closer to $2,500. Notice we did not take into account the deduction for a taxpayer who purchases a new car.
Again, as we shine the light on the winners and losers, The above states representatives and senators have a right to protest this major inequity and they should. Fair is fair.