I know what the one thing that Charlie Baker, the state legislature and every other state legislature and governor is absolutely afraid of. They aren’t going to tell you. They are just going to keep it to themselves.
In Washington, there is a move afoot that calls on the fed to eliminate or greatly reduce the so called SALT deductions on your federal returns. That is the State and Local Tax Deduction, the one that allows you to deduct your locals taxes on your federal return. It is one of the biggest deductions that is taken and one of the oldest and the one that some lawmakers would like to refine.
And, that is what has politicians quaking in their suits. You see it takes the sting out of the increases in state and local taxes.
Let's say that your state taxes go up 100 dollars. Under the current code the actual out of pocket effect is about 6o bucks. Not great. Not horrible. One hand washes the other.
That small deduction gives a false sense of security. It allows state legislatures the false sense that they can raise taxes and no one will notice. It’s coming off the fed return. No big deal.
The more they raise taxes -- the more they spend and the more we have states that have all kinds of red ink.
If the fed gets rid of the SALT deduction people on the state level will hope that no one notices. They will. It will give the taxpayer a truer look at what they pay in taxes and a rebellion possible that will make the Boston Tea Party nothing more than a noon time protest.
There is a need to refine the tax code. But everyone has to play.
The fed has to make a law that is coherent. The lawmaker in Washington has to spend only what they take in and the state lawmaker has to do their parts. It is unfortunate that no one thinks any of the entities mentioned are capable of doing that.
“The only difference between death and taxes is that death doesn't get worse every time Congress meets.”Will Rogers said that.
Anyone have any confidence as to how the tax code is going to come out?
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