Republicans Reverse, May Allow State Income Tax Deduction

One day after the top Senate Republicans realized they probably should have read the tax bill they voted for in the deep of the night on Saturday morning, and announced they are seeking to repeal the Alternative Minimum Tax they passed just days earlier, realizing it could punish growing companies, they now also appear to be reversing on the controversial repeal of State and Local Tax Deductions, and as Bloomberg reports, Republican lawmakers "are discussing a compromise on state and local tax deductions that would allow taxpayers to deduct state income tax, House Ways and Means Chairman Kevin Brady said."

According to one proposal being discussed, taxpayers could deduct both their state income tax and state and local property taxes up to a combined limit of $10,000. This differs from the currently circulating bills which preserve the individual deduction for state and local property taxes - capped at $10,000 - but not for income taxes. The push to include income taxes could help those in high-tax states who don’t own property.

Mitch McConnell confirmed he’s open to tweaking final tax legislation to appease lawmakers who want to let constituents deduct state income taxes: "There’s some in the House who would like to see that applied not just to property, but to income tax, you know, where you can sort of pick which state and local tax you want to deduct,” the Kentucky Republican said on conservative radio host Hugh Hewitt’s show. “That sounds like a kind of reasonable idea.”

Summarizing the conference process, McConnell said "There are a lot of these things that are floating back and forth,” adding that he cannot predict “exactly how the final product turns out” once the House and Senate complete their conference negotiations.

Indicating that SALT repeal was conceived as an entirely political move meant to punish "rich", predominantly blue states, House Republican leaders - hearing significant pushback from their own constituents - signaled openness to "relieving the burden for residents of high-tax states."

Plans for the so-called SALT deduction have prompted more tension in the House than in the Senate, because there aren’t any Republican senators from states with the highest taxes. Twelve out of the 13 GOP House lawmakers who voted against the bill last month were from high-tax states. Still, including the property tax deduction in the Senate bill was a last-minute change to help get the support of Republican Senator Susan Collins of Maine.

 

Two House members from New Jersey -- Leonard Lance, a Republican, and Josh Gottheimer, a Democrat -- plan to submit a joint proposal to the conference committee that would maintain SALT in its entirety.

 

The lawmakers said repealing the break will lead to "double taxation" and "pay for reform on the backs of just a few states that already pay significantly more than other states in federal taxes." One of those net donor states, they note, is New Jersey.

Brady, who’s overseeing the House-Senate conference committee for tax negotiations, said Wednesday that allowing income tax deductions is one of five options on the table. Others include potential adjustments to rates, brackets, the individual alternative minimum tax and the family tax credit.

There is just one problem with the bill which is already cutting it dangerously close to the $1.5Tn extra deficit limit: where does the money come from?

As Bloomberg writes, it's unclear how lawmakers would pay for any such modifications to the state and local tax break. Preserving the property tax deduction up to $10,000 would cost about $148 billion over a decade, according to the Joint Committee on Taxation. McConnell has been said to want any proposed changes presented with ways to pay for them.

Among the proposed revenue offset include changing estate tax rules about stepped-up basis and closing what they call a loophole for charitable donations to private foundations as ways to offset some of the lost revenue that would result from keeping SALT.

Comments

nmewn MozartIII Wed, 12/06/2017 - 18:38 Permalink

Bloomberg reports.////Wut?...Bloomberg sux...Deutsche Bank Records Said to Be Subpoenaed by MuellerBy Steven Arons and Shannon PettypieceDecember 5, 2017, 2:16 AM EST >>>Corrected December 6, 2017, 12:46 PM EST<<<

  • Corrects Dec. 5 story that said subpoena ‘zeroed in’ on Trumps
  • Subpoena is said to seek information on affiliated people

https://www.bloomberg.com/news/articles/2017-12-05/deutsche-bank-said-t…

In reply to by MozartIII

MoreFreedom MozartIII Wed, 12/06/2017 - 22:54 Permalink

Typical GOP establishment RINOs who want bigger government.  Their tax cut overall is small.  What they really need to do is cut spending but they don't want to, even though they claim they do.  They could do it easily, but like every boondoggle including Planned Parenthood, Amtrack and the Export Import banks.  And there's no fair tax, but the SALT deduction is an incentive for states to tax more, whatever the feds allow people to deduct from their income.  Neither the feds or states shouild play favorites like that.  A a better incentive would be for states to allow citizens to deduct their federal taxes from their income, which creates an incentive for states to to help keep federal taxes low.

In reply to by MozartIII

nmewn curbjob Wed, 12/06/2017 - 18:33 Permalink

Yeah, that ObamaCare was just a swell idea! And that Obama/Pelosi/Reid tax cut...holy shit!...I'm saving so much money I'm burning it the fireplace!/////And the best part...they cut the debt & deficit IN HALF in Obama's first term just like he promised!Budgets on time, every year...it was like fiscal fucking nirvana compared to this! ;-)

In reply to by curbjob

nmewn curbjob Wed, 12/06/2017 - 19:09 Permalink

"actually governing, not so much."...lol.We'll be ready to RULE on day one is not "governing"...unless Chicago is your idea of being "governed". /////Oh I luuuv's me some downies...lol...MOAR!!!...shall we talk about Solyndra, A123, Tesla, Fisker or GE plants in Wisconsin (and elsewhere) moving to China or moar mundane centrally planned things like the Michelle's "healthy lunch programs" that kids wouldn't eat (thus, went home hungry) or "rogue IRS agents"? //////"actually governing"...lol.

In reply to by curbjob

takeaction MANvsMACHINE Wed, 12/06/2017 - 18:49 Permalink

HORSE SHIT......ALLOW DEDUCTIONS on100% Mortgage Interest...100% State and Local Taxes.100% Property Taxes...To put a cap on this shit is LUDICRUS....Unless you go to a TRUE FAIR FLAT 15%  NO IRS and NO DEDUCTIONS...How fucking hard is this???  It is called TAX CUTS...FUCKERS.AND IF YOU ELECTED FUCKERS WERE TRULY FAIR...15% Tax is FAIR...and EVERY FUCKER PAYS...I don't give a shit how fucking poor you are...YOU USE THE MOST SERVICES.  You earn $1.00 at a fucking lemonade stand...you owe 15 cents.  

In reply to by MANvsMACHINE

swmnguy takeaction Wed, 12/06/2017 - 19:03 Permalink

They're trying to make the middle class so miserable they'll go for any sort of vandalism.  If you're pay you don't pay any of this except Payroll Tax and the portion of your rent that's property tax, and that's still more than you can afford.  If you make $200k or more (unless you live in NYC or SF or someplace where they US Dollar is worth about a Brazilian Real, 33 cents or so; in which case let's move that up to $500k), you could afford this hit.I remember when I paid no taxes.  It really fucking sucked, because it meant I was bringing next to no money and living like shit.  Now I pay a lot in taxes and it's great; not because of the taxes but because I have so much more left after paying the taxes, I can actually live more or less nicely, by my standards.

In reply to by takeaction

rockstone takeaction Wed, 12/06/2017 - 20:57 Permalink

No deductions? 15% minus the cost of the lemons? Or does that include the cost of the lemons? And what else? Do I get mileage to the lemon store? I’ll need water and one of those machines too. 15% and the cost of that stuff or what?

It’s not often one has concrete proof to say this but......you don’t know to run a lemonade stand pal.

No deductions......lol.

In reply to by takeaction

Anteater Drop-Hammer Wed, 12/06/2017 - 18:35 Permalink

Move your principal residence and driver's license to Guam.They have no income tax. You still pay Federal income tax,but it goes to GovGuam, not to the Luciferians. If you reallywant to stick it to Trump, become a 'resident' of Guam, putall your employment into W-1099 with business address inGuam, and then live and work in rental housing back in USA.Once a year, have a tax-deductible 'annual meeting' of yourGuam business on the tropical beach, and celebrate that nota single red pfennig went to the Luciferian Satanists in NOVA.Having said that, Gov Guam is deeply in hock to Goldman, soyour income taxes go to The Chosen, not to the Right Stuff.Either way, 1/3rd of your income goes to global genocide.Sad.

In reply to by Drop-Hammer

Herdee Wed, 12/06/2017 - 18:34 Permalink

Just get rid of the Fed and the Income Tax system. No Capital Gains taxes. Just land tax and Value Added Tax on spending. And the best part is no more IRS.

swmnguy Wed, 12/06/2017 - 18:58 Permalink

I'd lose a little bit of money if they reinstated SALT deductions but capped combined property tax and SALT at a combined $10,000.  Living here in Minneapolis, my property tax bill is about $3,600 annually, and I've paid about $7,500 in state income tax.  So I'd have close to $1,000 no longer deductible.  Much better than getting double-taxed on the $7,500, which is what I've been expecting.Whatever.  Here in Minneapolis we have safe clean street, really good water right out of the tap, public services mostly work, good schools (for those kids who arrive at school ready to learn, that is) and no areas of town that are simply unsafe.  Not that I'd wander down a dark alley downtown at 2:00 AM alone, mind you, but there are some cities where some neighborhoods you just don't go.  There aren't any such areas here, despite what some would say.I'm more interested in whether or not they've figured out what they want to do with income from disregarded entities, like my LLC.  I've seen nothing but contradictory bullshit about that so far.

swmnguy ElTerco Wed, 12/06/2017 - 19:42 Permalink

Since I derive almost all my income from my business (my wife has W2 income), I have my accountant handle it all.  The last time I tried to do my own taxes was about 14 years ago, and it was so confusing then I realized if my time had any value at all, it was a better deal to hire somebody to do it for me.  Not to mention, the accountant I hired found me about 3x the refund I thought I had coming, and only charged me about 1/3 of that refund as a fee.  Screaming deal.  I haven't done anything but basic bookkeeping since.  I total up all the income, divide up the various costs into the categories the accountant lays out for me, total them up, and Bob's Your Uncle.

In reply to by ElTerco

swmnguy MuffDiver69 Wed, 12/06/2017 - 19:39 Permalink

Not yet.  Actually, I'll let my accountant do it.  If I were a gambling man, I'd lay a nickel on paying almost exactly what usually pay, proportionate to income.  This year has been a very good year as corporations are spending money on parties for themselves like it's going out of style, so I'll pay more than I did last year.  But that's due to increased income, not anything else.  If I see a decrease, that would be remarkable.  if I see an increase beyond the proportionate, that'll get my attention.

In reply to by MuffDiver69