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Senior Advisor

progressive to save the rich

When progressive talk about paying your fair share that means you not them and their rich buddies and donors.



Resistance to the Republican tax overhaul comes with an ideological twist for some Democratic state officials: They've styled themselves as champions of the working class but are pushing hard for measures that would reduce taxes mostly for the wealthy.

Democratic governors and lawmakers in a handful of high-income, high-tax states are promoting policies that are intended to spare their residents the pain of the new $10,000 cap on deductions for state and local taxes. Connecticut, New Jersey and New York are even planning to sue the federal government over the new cap, which was a key provision of the Republican tax overhaul adopted in December.



New Jersey Gov. Phil Murphy's office describes the push for a work-around to the new cap on local taxes as a matter of fairness, especially if many of the federal tax breaks expire as scheduled in 2027.

"If you eliminate the cap on tax deductions, rich people who are already getting a tax break would be getting a bigger tax cut," said Steve Wamhoff, a senior fellow at the progressive Institute on Taxation and Economic Policy.

His organization found that the average federal tax savings from eliminating the cap would be well under $1,000 per tax filer in every state for every income group, except the highest 20 percent of earners. But it would add up to tens of thousands in annual tax savings for the top 1 percent in most states — and more than $100,000 in California.

The New Jersey legislation would let local governments and schools set up charity funds. Taxpayers who donate would receive deductible tax credits toward their property taxes. Under the California bill, the contributions would be to state government entities, and 85 percent of the donations could count against state taxes.

The idea is that counting state and local taxes as charitable donations would allow them to continue being deducted from federal income. Critics say the IRS might not allow it, potentially putting tax filers in those states at risk.