Tax Plan isn't just about Well Off vs Not Well Off

[kennetha]

The Republicans have decided its time to disfavor a certain subset of the well off in order to strongly favor another segment of the well off. They are aiming to punish the urban/suburban professional class, clustered in certain prosperous regions of the country, concentrated in blue states mostly, but also in blue districts in red states. They are sticking it to that segment of the well off who live mostly off EARNED income -- i.e wages ... and rewarding that portion of the well off who live mostly off UNEARNED income. That's why they do things like cap the SALT deduction for INDIVIDUALS at 10K while leaving the SALT deduction for CORPORATIONS unlimited. You can go down the list. And once you do you see that this isn't just about the wealthy vs the poor. It's about which well off people really COUNT in Republican eyes and which don't.

They clearly have come to view the urban/suburban class ... which has turned less and less Republican and more and more Democratic over the years ... as no longer part of their core constituency. I think they believe that this class of the well-off needs to have its class consciousness raised. They are too supportive of the welfare state, too supportive of progressive taxation schemes, too supportive of even moderately redistributive schemes. And they think that if they put the screws to the suburban/urban professional class, they will eventually join the side of the entrepreneurial, keep it all for yourself class. That will help turn California and New Jersey and New York into the mirror images of Texas or Alabama or Florida, where state and local taxes are low and there is far less investment in public goods and public infrastructure.

And you don't have to take my word for it. Check out this quote from the Governor of Tennessee.

"We think it actually will encourage both investment growth and population growth in Tennessee," Haslam said.

from the following informative article.

http://www.chicagotribune.com/news/nationworld/politics/ct-gop-tax-plan-cuts-20171217-story.html


And don't worry, the screws will soon turn on the less well off too. Because once this monstrosity blows an even bigger hole in the deficit, the relentless pressure for "entitlement reform" will only grow and grow and grow.

[Hoyt]

1. Hopefully, those high earners will contribute to and vote for Democrats in 2018.

But I suspect the cut in their taxes from the rate reduction and other factors will offset any losses due to cap on state and local taxes.

[kennetha]

3. Not a chance of other factors offsetting

This proposal is designed to punish earned income at the expense of unearned income. People most of whose income comes from wages and salary are typically not in a position to take advantage of the offsets.

Californians are going to see HUGE increases in their taxes and SIGNIFICANT declines in their net wealth, as their property values take a serious all at once hit.

[Hoyt]

5. Maybe for people earning over $150K, but a 3% reduction in rates also produces a tax savings

of about $4,500 for $150K income, the equivalent of roughly a $15,000 deduction. How much would someone in California have to make to have $25,000 in deductions for a property and local income taxes?

I don't think it is going to hurt too many people living paycheck to paycheck.

To be clear, I think the tax plan sucks, but most people are going to see more money in their paychecks and they aren't going to care about the same stuff we care about.

[kennetha]

7. In Silicon Valley

150K is basically a middle class income. The purchasing power of the incoming is equivalent to 50 - 75K or so in less insane parts fo the country

[Hoyt]

8. Ok, so there are a few areas where they might get hurt a little, but hardly devastated.

I bet most make do and absorb any small increase to stay there.

But it's hardly the whole state.

[kennetha]

9. increases won't be small

they will be quite significant for million Californians. Because of our high cost of living, 35% of Californians claim the SALT deductions. That's a LOT of people. And the per claimant average is 36K. THat's a lot of money.

One can easily pay 20K in property taxes in the 9 bay area counties and in LA and San Diego and another 20-30K in state income taxes.

Plus many many mortgages are over 750K.

So we're talking significant increases in taxes and also reduced property values for several million tax payers.

That will put serious pressure on the state legislature to lower taxes.

That will make us less able to fund our already overly stressed public infrastructure.

But that's the purpose. Republicans want to pressure prosperous highly taxed blue states that are willing to invest in public infrastructure to become Texas like or Florida Like or Alabama like.

[lostnfound]

10. Agreed. And the effect on state budgets wont be pretty either.

Property values will fall — less people able to qualify — so revenues will fall.

[marybourg]

2. And when - and if - they move to TN

or SC or AZ, they'll turn those states blue too!

[kennetha]

4. Don't count on it.

That's mostly wishful thinking. How many Californians moving to Floria would it take to make Florida introduce an income tax. Ain't gonna happen.

The Republicans are trying to enforce a rush to the bottom. They want to remake Blue America in the image of Red America.


And they just might succeed.

[spanone]

6. weaponizing legislation....punish political rivals