Tuesday, February 2, 2016

GOP Candidates Seek End to a Federal Tax Deduction for State and Local Taxes

Tax Break That Benefits Blue States Most
The major tax break that Republican presidential candidates are most eager to ax happens to be one that disproportionately benefits Democratic states.
Repealing the federal deduction for state and local taxes would make 23.6% of U.S. households pay an average of $2,348 more to the Internal Revenue Service for 2016. But those costs—almost $1.3 trillion over a decade—aren’t evenly spread, according to new estimates from two researchers at the Urban Institute, a think tank.
Ranked by the average potential tax increase, the top 13 states (including Washington, D.C.), as well as 16 of the top 17, voted twice for President Barack Obama. None of the four early-voting states that will winnow the Republican primary field—Iowa, New Hampshire, Nevada and South Carolina—is higher than 26th. And nearly one-third of the cost would be paid by residents of California and New York, two solidly Democratic states.
“After you’re told that your tax plan will increase the deficit by trillions of dollars, you need something to be on the chopping block,” said the Urban Institute’s Kim Rueben, who analyzed the deduction in a draft research paper with Frank Sammartino. “And the fact that more of the [tax] benefits go to blue states rather than red states, I think, feeds into this.”
Ted Cruz, Marco Rubio, Chris Christie, Jeb Bush, John Kasich and Ben Carson all propose repealing the break as part of broader tax plans. Donald Trump has talked more generally about limits on deductions.
Read the rest of the story HERE.

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