DEMOCRATS usually lament efforts by the rich to avoid paying taxes. Yet the bill President Donald Trump signed into law on December 22nd may spur Democratic-leaning states to concoct such schemes. The reform capped at $10,000 the deduction, from federally taxable income, of state and local taxes (the “SALT” deduction). As a result, those who pay large local levies are likely to pay more federal tax in 2018. The change is particularly bad for high-earners living in big houses in states like New York and California, which impose high taxes. These states—which tend to see the reform as Republicans shaking down their political opponents—may yet put up some resistance.
Just under one-in-three taxpayers made use of the SALT deduction in 2015. On average, they knocked about $12,500 off their federally taxable income, according to the Government Finance Officers Association—only a little above the new cap. Yet the deduction has been much more valuable than that to some. Those earning...Continue reading
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