Ryan rips into N.Y., N.J., Cal­i­for­nia over tax loads

Northwest Arkansas Democrat-Gazette - - NATIONAL - MARCY GOR­DON AND KEN THOMAS In­for­ma­tion for this ar­ti­cle was con­trib­uted by Cather­ine Lucey of The As­so­ci­ated Press.

WASH­ING­TON — The top House Re­pub­li­can on Thurs­day blasted high-tax states that de­liver bil­lions to the fed­eral govern­ment as he faced a back­lash from rankand-file GOP law­mak­ers over a sweep­ing tax-cut pro­posal.

But beyond the tough rhetoric from Speaker Paul Ryan, law­mak­ers met pri­vately with Re­pub­li­can lead­ers and reached for pos­si­ble com­pro­mises to break the im­passe. The GOP law­mak­ers from high-tax states op­pose the plan’s pro­posal to re­peal the pop­u­lar fed­eral de­duc­tion for state and lo­cal taxes. It’s used in large num­bers by res­i­dents of their states.

Ryan went on the of­fen­sive against high-tax states like Cal­i­for­nia, New York and New Jer­sey even though the GOP law­mak­ers from those states need to be brought on board to sup­port the tax over­haul plan.

But Ryan con­tended that the rest of the coun­try is “prop­ping up prof­li­gate, big-govern­ment states” that levy high taxes on their res­i­dents and spend reck­lessly.

“States that got their act to­gether are pay­ing for states that didn’t,” the Wis­con­sin law­maker said at an ap­pear­ance at the con­ser­va­tive Her­itage Foun­da­tion.

In fact, Cal­i­for­nia, New York and New Jer­sey send many bil­lions more in taxes to Wash­ing­ton than they get back in fed­eral spend­ing, new data show. Di­vided by to­tal state res­i­dents, New York gets back 81 cents for ev­ery $1 it pays in, New Jer­sey re­ceives 74 cents and Cal­i­for­nia 96 cents, ac­cord­ing to an anal­y­sis re­leased last month by the Rock­e­feller In­sti­tute of Govern­ment.

New York con­trib­uted $48 bil­lion more in taxes to the fed­eral govern­ment than it re­ceived in govern­ment spend­ing — the big­gest deficit the anal­y­sis found. New Jer­sey gave $31 bil­lion more in taxes than it got back, and Cal­i­for­nia $17 bil­lion more, the data show. The fig­ures were for the bud­get year end­ing Sept. 30, 2015.

The state-lo­cal de­duc­tion is claimed by around 44 mil­lion peo­ple and re­duces rev­enue to the govern­ment by an es­ti­mated $1.3 tril­lion over 10 years.

“There’s a num­ber of pro­pos­als on the ta­ble,” said Rep. Tom MacArthur, R-N.J., af­ter a meet­ing of his col­leagues from high-tax states with GOP lead­ers, in­clud­ing House Ma­jor­ity Whip Steve Scalise, R-La., and Rep. Kevin Brady, R-Texas, head of the tax-writ­ing Ways and Means Com­mit­tee.

“There’s more than one way to skin this cat,” MacArthur said, but added, “It has to be soon.”

MacArthur and oth­ers who at­tended wouldn’t spec­ify what com­pro­mises were be­ing con­sid­ered short of com­plete re­peal of the de­duc­tion. One pos­si­bil­ity they were asked about would cap the de­duc­tion at a sin­gle tax­payer’s an­nual in­come of $400,000, or $800,000 for a mar­ried cou­ple.

That would af­fect just the top 1 per­cent of tax­pay­ers, ac­cord­ing to Amir El-Sibaie, an an­a­lyst at the Tax Foun­da­tion. It could bring in $481 bil­lion in rev­enue over 10 years, com­pared with an es­ti­mated $1.8 tril­lion if the de­duc­tion were fully re­pealed, El-Sibaie cal­cu­lates.

At the White House, Trump’s chief eco­nomic ad­viser, Gary Cohn, dis­counted a news re­port Thurs­day that the pres­i­dent had ex­pressed con­cerns over the pro­posed re­peal. Asked whether Trump was re­think­ing the move, Cohn said no.

Some op­po­nents con­tend that re­peal­ing the de­duc­tions would sub­ject peo­ple to be­ing taxed twice and would amount to a fed­eral rev­enue grab on the backs of home­own­ers who pay prop­erty taxes.

“There will be a trans­fer of wealth of over a tril­lion dol­lars to the fed­eral cof­fers,” said Matt Chase, ex­ec­u­tive di­rec­tor of the Na­tional As­so­ci­a­tion of Coun­ties.

Randi Wein­garten, pres­i­dent of the Amer­i­can Fed­er­a­tion of Teach­ers, said that elim­i­nat­ing the de­duc­tion would not only “dev­as­tate fund­ing for pub­lic schools, in­fra­struc­ture, law en­force­ment and other vi­tal ser­vices” but also boost taxes on the mid­dle class. “For what? Tax cuts for the wealthy.”

The White House has ar­gued that the plan is fo­cused on help­ing mid­dle-class work­ers, con­tend­ing that low­er­ing cor­po­rate rates will boost jobs while the tax cuts and sim­pler tax code will re­duce their bur­den.

AP/SU­SAN WALSH

House Speaker Paul Ryan holds a copy of the pro­posed “sim­ple tax” post­card Thurs­day dur­ing a speech at the con­ser­va­tive Her­itage Foun­da­tion in Wash­ing­ton in which he crit­i­cized “prof­li­gate, big-govern­ment states.”

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