Tuesday, April 18, 2017

GOP Targets Trillion-DollarTax Breaks for Democratic States



Bloomberg by Sahil Kapur

-- Conservative activists and House Republican leaders want to eliminate a trillion-dollar tax break that mostly benefits wealthy filers in Democratic states, a push that could further imperil President Donald Trump’s hopes of winning bipartisan support for a tax overhaul.

Ever since the inception of the federal income tax in 1913, taxpayers have been allowed to deduct the state and local income taxes they pay from their taxable income. Anti-tax crusaders, including Grover Norquist, the president of Americans for Tax Reform, say the deduction represents bad policy.
“When you allow people to deduct their state and local taxes against the federal tax, you in effect subsidize tax increases at the state and local level,” Norquist said an interview. “The way to solve that is to get rid of the deduction. It’s good tax policy. It’s good tax reform.”

The deduction is a rare tax break for high earners that conservatives want to abolish and Democrats want to protect, a dynamic that scrambles the traditional partisan divide.

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