High-Tax States’ Lawsuit Over Federal Tax Reform Is a Frivolous Distraction

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Posted by Doug Kellogg on Tuesday, July 17th, 2018, 5:42 PM PERMALINK

It turns out attorneys general in some big spending, high tax states would rather waste resources filing blatantly stupid lawsuits than stop their abuse of taxpayers.

New York, New Jersey, Maryland, and Connecticut filed a lawsuit today over the cap on state and local tax deductions in the Tax Cuts and Jobs Act (TCJA).

This is a transparent attempt to play politics with President Trump and distract from their own responsibility for their own high taxes. They’re suing over reform that is putting money in the pockets of the vast majority of their residents.

Federal tax reform is saving 90 percent of wage earners money. In New York, for example, the average household will save over $1,000.

With the new cap on state and local tax deductions (SALT), some high tax areas will see higher income earners pay more. Obviously, the taxes they are paying more of are state or local burdens. Which (in a shocking twist) are controlled by state and local politicians who could move to cut taxes and reduce spending.

These unaffordable states often drive up local burdens with mandates as well.

Of course, that is why many of the leaders driving the lawsuit, like New York Governor Cuomo or Governor Dan Malloy in Connecticut, are upset. They don’t like the pressure to reduce, or not raise, taxes on their high earners.

They want taxpayers in other states, who can’t vote for them, to keep subsidizing their uber expensive policies. They want to keep spending on their allies through Hartford and Albany and Trenton.

The IRS has indicated the charitable contribution entity scheme New York and New Jersey tried is going to flop, now these state officials are desperate.

So when they whine about the SALT cap, and talk about how TCJA hurt their states, they are talking about government, not people.

Even in New Jersey which is estimated to have the most households paying more in taxes, only 10.2 percent will see any increase in what they owe, and the state could move to reduce their property tax burden if they wanted to help them, rather than trying to absurdly blame Washington.

The short of it: this lawsuit is a doomed waste of resources by states that refuse to take responsibility for their high tax burdens - and driven by Governors Cuomo, Malloy, and Murphy, as an excuse to tussle with President Trump.

Photo Credit: Wikimedia Commons

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