This article on QZ.com is disingenuous and not persuasive. It’s headline: The Republican tax bill punishes American families who use public schools.
Under both the GOP Senate’s nearly 500-page bill (pdf) and the House version, the amount that US households pay in state income taxes (which can be as high as 13% in states like California) and local taxes is no longer deductible on federal income tax forms, with the exception of property taxes up to $10,000.
Making state and local taxes no longer deductible from federal income taxes essentially subjects US households to “double taxation,” by taxing them twice on the income they earn, according to a report (pdf) from the Government Finance Officers Association (GFOA), a non-partisan group of state and local finance professionals from the US and Canada.
Why do I think the article is disingenuous? For a few reasons.
First, they don’t tell us how many people will be affected. Only about 30% even claim this deduction.
Second, they don’t mention that what people lose from this deduction, they will gain some, all or more back in the changes in the standard deduction and tax rates.
Third, they don’t mention how many taxpayers will still get to deduct up to $10,000 in property taxes.
When you take the above into account, I suspect that the impact of the change is minimal.
The authors also claim that the removal of this deduction will pressure citizens to lower their taxes, which could be devastating to school district budgets.
That made me LOL.
First, because I highly doubt that would happen. By the time you take the factors I mentioned above into account, it wouldn’t be worth enough people’s time to do that.
Second, if they did pressure local school districts to lower taxes, good for them. They should hold their school districts accountable. This is how the world should work.
Finally, the authors don’t even mention that one of the 2nd or 3rd order consequences of this deduction is already offset in higher home prices, which is a pretty well-known and accepted fact in the economics world.
So, if you do pay more taxes because of losing this deduction you will likely gain it back in home affordability.
Overall, I suspect the individual impact of this change in the tax code will have a minimal financial impact on most folks.
I could be convinced otherwise. But, this article falls well short of making that case. This article is a good example of the type of paper my high school composition teacher would have handed back with “Needs More Work” written on it. Unfortunately, the standard teachers used to hold students to, don’t seem to apply in journalism these days.