On Friday, the Senate achieved the nearly-impossible and passed long-overdue tax reform legislation.
While the legislation will surely be changed in the conference committee, whatever final legislation emerges will provide tax relief for many Americans and provide some incentives to job creators to invest in the economy.
Many Californians have voiced their anger with the plan because it impacts some of the tax breaks that Golden State residents have relied upon over the years. These include the ability to deduct our state property taxes, and state and local taxes. However, it is unclear at this point what the final proposal will mean for these tax breaks.
A Los Angeles Times article from earlier this week decried this move, noting that Californians claimed about $100 billion in tax savings from the federal state and local tax deduction, but ranked just 17th among states for claiming federal property tax deductions.
But the ire of Californians over losing these tax breaks are really misdirected. It’s not Paul Ryan or Mitch McConnell who are raising your taxes. It’s Sacramento politicians who raised your taxes long ago.
It is astonishing to me that Californians are claiming $100 billion in deductions for their state and local taxes each year. That shows just how massive a tax burden that liberals in the Legislature have imposed on each of us over the years.
The generous federal tax breaks we’ve all become accustomed to really masks just how expensive California’s state and local tax burden has really become.
In the 1970’s, California’s property tax burdens had soared to unaffordable levels. Taxpayer anger resulted in the passage of Proposition 13. That California’s property tax rates are now in the middle-of-the-pack of the states on the amount of federal property tax deductions claimed shows that Prop. 13 is working in keeping property taxes low.
Much like in the 1970s, our local and state tax burden today have reached unaffordable levels, but we didn’t really feel the entire pinch thanks to the federal tax deduction.
Repealing this federal tax giveaway will hopefully start a much-needed conversation about taxes and spending in California.
Tim Anaya is communications director for the Pacific Research Institute.