In an effort to keep up with their self-described “resistance” movement, California Democrats are engaged in a full-fledged attack against recently enacted federal tax reform legislation that provides tax cuts for most Americans and Californians.
Ironically, these same Democrats who claim to be focused on the poor and needy are engaged in nonstop howling over two provisions of the new tax law:
- A cap of $750,000 on mortgage interest deductions, and
- A $10,000 limit on the deductibility of state and local taxes (SALT).
In other words, they’re complaining the new tax law doesn’t do even more to help the wealthy – who also happen to be their constituents. In Rep. Nancy Pelosi’s San Francisco district, the average home is worth a million bucks. In Rep. Ted Lieu’s West Los Angeles district – the second wealthiest in the nation – home prices are even higher.
Sure, if you can afford to live in an affluent area of the state such as the Bay Area, where the median home price has skyrocketed above $900,000, there’s a possibility you could be left with a higher tax bill.
However, if you live in poorer areas of the state such as the Central Valley or an inner city, chances are you probably won’t come close to needing to write off astronomical amounts of mortgage interest.
As a matter of fact, the median home price for the rest of the state rests well below elite coastal areas like the Bay Area. Average inland home prices are typically in the mid $300,000s or lower.
Further, the mortgage interest deduction is a non-issue for the nearly half of Californians who don’t own homes and are forced to pay the highest rents in the nation.
What about the state and local tax limits you ask?
According to research done by The Pew Charitable Trusts, the average state and local income tax deduction taken by Californians amounts to roughly $12,600. True, it’s conceivable some residents of the state could see a modest tax increase.
Yet, information from the Tax Policy Center shows that most people who take advantage of the SALT deductions earn $100,000 or more. And available census data show the median salary for California residents is well below that number, so it makes you wonder whom the Democrats are really fighting for.
Either way, there are plenty of other deductions in the new tax code that could offset potential tax increases, such as an overall 2 to 3 percent reduction in marginal tax rates, a doubling of the standard deduction for married couples from $12,000 to $24,000, and a doubling of the child tax credit. For many Californians, calculating taxes will be simpler because they will no longer need to go through the hassle of itemizing.
Furthermore, the Tax Foundation estimates the tax changes will create more than 38,000 new California jobs.
But, the Democrats won’t tell you about that.
As I’ve written before, changes at the federal level should inspire state politicians to create a tax code that would benefit all Californians. Instead, some lawmakers are coming up with cockamamie schemes that look like tax evasion, such as turning state income tax payments into charitable contributions in order to benefit their wealthy constituents.
The current state of affairs of California may elicit some sympathy, but let’s not get silly. Lawmakers and the media should tell the whole truth about the impact of tax reform, including how it will help the less fortunate among us.