Will Congress kill a $101-billion tax break for Californians?
California and New York receive nearly a third of the deduction’s total value, the Tax Foundation found. Of the top 10 states for the deduction, President Trump carried only three in last fall’s election.
“The only reason to single out state and local taxes is because the Republicans view it as a poke into the eye for the blue states,” said Edward Kleinbard, a USC professor and former chief of staff to Congress’ Joint Committee on Taxation. “They view this as a war on blue states and that’s really quite unfair.”
Officials from California and other states whose residents would be hit hard by the loss of the deduction are concerned. They worry about the cost to taxpayers and the broader effect of possibly increasing resistance to state and local tax hikes.
“California’s got a deal that’s working well and allows our state to deliver the services that our citizens need and if you pull something like that it disrupts it,” said Rep. Mike Thompson (D-St. Helena), a member of the tax-writing House Ways and Means Committee.
“I think you’re going to see opposition come out of the woodwork,” he said.
New York Gov. Andrew Cuomo has warned that eliminating the deduction would be “devastating” for his state, California and others. New Yorkers used the provision to reduce their taxable income by $68 billion in 2014, according to the Tax Foundation.