Hollow political posturing

Democrats, loopholes and ‘the rich’

As Republicans move forward with plans to allow Americans to keep more of their own money, Democrats have their worn hymnals open to the same tired page and are howling about “the rich.” Senate Minority Leader Chuck Schumer, the New York Democrat, dubbed the GOP tax plan “wealth-fare.”

Interesting, then, that Sen. Schumer and friends are scrambling madly to preserve one of the tax code’s biggest sops to high earners.

A primary goal of the GOP’S proposal — which is still in the “framework” stage — is to simplify the tax system. That entails reducing the number of income brackets and eliminating or paring back dozens of special-interest deductions that clutter up the code thanks to powerful lobbyists and pliant politicians. One of those tax breaks allows filers who itemize to deduct the cost of their state and local income taxes from their federal returns.

The perk is a huge benefit to the wealthy who live in hightax blue states, and it is one of the most costly deductions to the Treasury. Eliminating it would generate $1.3 trillion over 10 years, according to the Tax Policy Center. The center also found that “households with annual incomes exceeding $100,000 would bear roughly 90 percent of the increase; those with incomes over $500,000 would absorb 40 percent,” The New York Times reports.

Those who earn in excess of $200,000 receive an average deduction of more than $30,000 for state and local taxes. The New York Post reports that those in Manhattan lead the nation in taking advantage of the deduction, writing off an average of $24,898 last year.

Why then, aren’t progressives and their allies clamoring to close this giveaway and make the rich pay their “fair share”? Simple. The deduction allows liberal havens such as New York and California to disguise the true costs of their tax-spend-elect agenda.

Killing this deduction might prompt a revolt from angry taxpayers in blue enclaves who are increasingly being asked to pay for a bigger and more intrusive public sector. That could even mean difficult decisions on issues such as soaring government pension costs.

“Pressure to cut local taxes is likely to mean less spending on programs and services,” the Times explains.

While targeted deductions that enable taxpayers to shield some of their income from the taxman aren’t necessarily a bad thing, purging these special-interest loopholes would result in a fairer, more equitable tax code for all Americans. The fact that Democrats now desperately seek to preserve the deduction for state and local income taxes reveals their shrill rhetoric about “wealth-fare” and “the rich” to be nothing more than hypocritical political posturing.