In one post you suggest we ask our state to lower the property tax, but in another you suggest that whatever the federal wants, we just suck it up. I don’t think there is much consistency in these arguments. And I was not the one who came up with the idea that taxing the SALT was undesirable double taxation. An financial advisor was arguing just that last week on the radio.
Here, the way it works is property taxes and school taxes are local. You can deduct those from your income for state tax purposes, and the state taxes what you have left. The federal government then allows you to deduct local and state income tax (or alternately some amount of sales tax), and taxes you on what you have left. Until now, at least, when there will be a cap to how much you can deduct (why allow any?) Personally, I think that sounds like a fair method of doing it. Apparently at least one other human in history thought so as well, since that is how it has been done.
For our rental properties, presumably we will still be able to deduct the property taxes. (Why? - they could get a lot more money if they didn’t allow it, and isn’t getting as much as possible the goal?)
@emilybee “But landlords still get to deduct their property tax and businesses still get to deduct their state taxes and property tax. Both of which are state imposed.”
Businesses get to deduct it not as SALT, but as a business expense, a cost of making their taxable profit. Just like they can deduct employee salaries but you cannot deduct a nanny’s salary. Fair? Probably. Individuals start with no deductions other than those given to their income. Businesses are taxed on net, gross minus expenses.
I would argue a nanny, train ticket etc is a cost of making the employee salary too, but it would s what it is.
Shall we send the needy to the low/no tax states?
Congress initially intended the distortion in the SALT bc those are generally high cost of lives no states. The deduction was a poor substitute for the fact that $200k in NY is not the same as $200k in Iowa (high COL vs low). So kiss that goodbye too!
This is a mess of provisions thrown in and out just to move the revenue/cost bar into a specific zone. No real discussion with experts or people who know how it works (or even how the tax law itself works). It is shameful.
Where the “charity” is their own churches. In other words, they buy religious community centers for themselves. Remember that Houston preacher of the mega-church that wouldn’t open its enormous church complex as a hurricane shelter? Because reasons?
I agree with your point above, @hebegebe (it was you, yes?), that the calculations for federal expenditures by state are badly handled and aren’t really useful. I’m going to argue though, that calculations of charitable giving by state are also badly handled, since they count, for example, donations for upkeep of religious institutions as charitable giving—and while I do agree that that’s charitable giving, I’d argue it’s a different sort of charitable giving than donations for, say, feeding the destitute (including donations to religious institutions that go for such purposes).
Of course, in both cases we’re faced with the problem of not having access to good enough statistics to tease everything apart properly, and so we’re left with measures so blunt as to be quite literally worse than useless.
Do you think you get to write it off at full value now or last year or year before? Not if you were paying AMT which practically everyone was/is paying.
We looked at moving to NH back in 2003. The property tax on a new $220,000, 2300 sq. ft. house was $12,700. It seemed awfully high.
Does anyone know what happens to business expenses for employees? Aren’t these rescinded? We will lose about $10k in deductions if so. It looks like our $40k-ish in deductions will be the standard $24k next year. We also have complex taxes that we pay a CPA to prepare for us that is no longer deductible. Not thrilled.
CF we went through this before about 100 pages ago. 3/4 in income range that matters for deduction pay AMT. It’s not creative arithmetic. It is looking where it counts. What’s the point in including people taking standard deduction?
