Taxing the Rich

Savor the irony: Progressive politicians like Mayor de Blasio and Gov. Cuomo are freaking out over a key way President Trump’s tax reform would soak the 1 percent.

Trump wants to end the federal deduction for state and local taxes — while doubling the standard deduction and ending the Alternative Minimum Tax, so that the middle class doesn’t get slammed.

The loophole is a huge boon for high earners in high-tax states like New York and New Jersey. Nationwide, the Tax Foundation estimates, 88 percent of the benefits go to taxpayers with over $100,000 in income.

And the Empire Center’s E.J. McMahon calculates that the overall Trump plan would still leave New York families earning under $500,000 better off. (The AMT, in particular, is a bane on the upper-middle class, though it’s supposed to only hit “the rich.”)

The pain only gets serious for those pulling in more than $2 million a year — the folks Cuomo just hit by extending New York’s “millionaires’ tax,” and the ones de Blasio is always eager to see pay “their fair share.”

Of course, these politicians’ real fear is that, should the wealthy feel the full impact of New York taxes, they’d be more likely to move away.

As the Manhattan Institute’s Steve Malanga notes, New Jersey lost an estimated $200 million a year in tax payments when a hedge-fund manager fled to Florida (a no-income-tax state) last year.

No one really knows how many fat cats would flee if Trump gets his way. After all, they’re willing to pay a hefty (if smaller) premium to live here now.

Whether it’s the city’s restaurants and cultural institutions, the region’s beauty, having family nearby or the company of their neighbors, they think it’s worth it. They certainly can afford to pay, as de Blasio will tell you.

Heck, plenty of them support raising taxes on the rich — Wall Street was big for Hillary Clinton, and Barack Obama before her.

Yes, Trump’s reforms would put more of the federal income-tax burden on high-tax states — but mainly because they’re also rich states. New York, New Jersey and Connecticut (which is fast becoming high-tax under Gov. Dan Malloy) have lots of gazillionaires and median incomes well above the US average.

If you tax the rich more, you’re going to take more from New York and less from Mississippi. That ought to be something that the likes of Bill de Blasio support.

How progressive can it possibly be to protect a tax write-off for the rich?