Sticking It to Blue States

Yesterday Republicans came out with a tax reform plan that Jonathan Chait says isn’t that bad, or at least, isn’t stupid. Chait may just be astonished that a Republican can so much as tie his shoes. He admits the plan isn’t likely to raise revenue (why bother?).

The New York Times and Sahil Kapur at Talking Points Memo point to an interesting feature of the Republican plan — in effect, it raises taxes in blue states. Red states, not so much.

It does this in two ways. One, it would o longer allow people to subtract what they pay for state and local taxes from their tax bills. Who pays state income taxes? Who pays substantial local taxes? Blue state dwellers and city folks, that’s who.

Families making $450,000 and above would pay 35 percent instead of the current 39.6 percent, which is a tax cut, like they needed another one. But the mortage interest deduction would be limited, to make up for it. The NY Times says,

One big break that would be affected is the mortgage-interest deduction. By limiting it to $500,000, the plan would hurt many middle-class families that must borrow more than that to afford a house in expensive markets like New York. Even worse, it would repeal the deduction for state and local taxes, a deliberate attempt to make it more difficult for “blue” states to provide the services and safety-net protections that they have decided are necessary.

Mr. Camp’s plan is open about this intention: “This deduction redistributes wealth to big-government, high-tax states from small-government, low-tax states.”

Huh? It doesn’t redistribute anything. The low tax-states are getting more federal benefits than they pay in taxes, courtesy of the high-tax states. You’d think they’d be thankful.

4 thoughts on “Sticking It to Blue States

  1. “The low tax-states are getting more federal benefits than they pay in taxes, courtesy of the high-tax states. You’d think they’d be thankful.”

    You might think so.
    But you’d be wrong.

    Instead, they bite the hands that feed them.
    And the fingers.
    And the arms.
    And the femur’s.
    And the thighs.
    And the ankles,
    And the toes.
    And the head.
    And the other head.
    And the nuts – or, on women, that V-word that Conservatives hate!!!!

    Someone please remind me WHY we people in Blue States, would want to keep all of the states in America, “united?”

  2. Gulag, remember; one nation under god, invisible, er, indivisible; with liberty and just us for all. Something like thus and such, without maps. You know.

  3. So what would happen if the Senate incorporated the higher taxes with real corporate tax reform that closed loopholes and did raise revenue? This was a spiteful dig at the city dwellers – NYC and San Fran. Let’s see if they can take populist reform mixed with their bill – send it to committee – and vote. They want democrats to reject their plan so they can say we won’t do anything. I say pass real reform in the Senate, and sell it to the public and make THEM vote it down in the House.

  4. “You’d think they’d be thankful.” Actually no. This is the “I hate you, mommy” crowd.

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