Facing fiscal reality

Blue states panic over tax reform

The Republican tax bill has triggered a miracle, of sorts: It has led Democrats to disavow their perfunctory rhetoric about making “the rich” pay their “fair share.”

Instead, Democrats in high-tax havens such as New York and California are now concocting all sorts of creative schemes to shield their wealthy residents from the financial consequences of a reform limiting deductions for state and local taxes. In other words, they’re rushing to protect the rich from the taxman.

It’s called self-preservation.

The controversy centers on a provision of the new tax law that caps at $10,000 the write-off for state and local taxes. Previously, there was no limit to the deduction, which allowed progressive politicians in deep-blue states to disguise the true costs of their profligate spending. They’re panicked that there will be hell to pay when residents — particularly those in the upper-income brackets — see the difference on their next federal returns.

California Democrats have come up with a scheme that would allow people to make “charitable contributions” to the government instead of paying certain taxes. Two Democratic lawmakers in Connecticut propose replacing the state’s income taxes on individuals with payroll taxes on employers, the Associated Press reports. Desperate New Yorkisevenonthevergeofsuingoverthetrumptaxmeasure — a complete and utter waste of time and treasure.

All this highlights how far many Democrats will go to keep the stream of other people’s money flowing into state coffers. If, as many progressives argue, residents of states such as Illinois, Connecticut, New York or California are eager to pay more to the government in return for all the wonderful services and benefits the public sector provides, why the panic? Could it be that excessive taxation really does affect individual behavior?

The state and local tax deduction “is one of many maneuvers that have let states spend without facing fiscal reality,” Eileen Norcross of George Mason University’s Mercatur Center, told the Wall Street Journal’s William Mcgurn. “The states hurt most by the changes (to the deduction) are the same states that have relied on evasive budgetary tactics: low-balling liabilities, skipping pension payments and issuing debts to cover debts.”

Mr. Mcgurn notes how the reform also threatens to hasten the inevitable day of reckoning for big-spending Democrats and their government union benefactors.

New York Gov. Andrew Cuomo “and his fellow civil warriors will consider anything to hold the blue line — anything, that is, except address the root problem by lowering their taxes and spending,” he writes. “Because to do so would require taking on the public unions that drive much of state spending and debt, and are the key constituency of the 21st-century Democratic Party.”

For this alone, the tax bill is already a rousing success.

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