Last week we talked about the “Blue State Tax Hikes,” which would be limiting or eliminating deductions for state and local taxes and the deduction on mortgage interest. Of course, those tax changes would go into effect nationwide, but taxpayers in the blue states would see the biggest increases in their tax bills.
Friday morning, the editors of the New York Times suddenly realized their readership would be hit the hardest under these proposals:
In their fiscal-cliff offer, Republicans have proposed raising $800 billion by capping deductions for the wealthy, though their proposal would inevitably affect the middle class in expensive states like New York and California. President Obama would prefer to raise tax rates, but he has also proposed deduction limits that would affect states that have chosen to impose higher income taxes. Governors, mayors and representatives of those states need to make their voices heard in support of that choice.
So after supporting tax hikes on “the wealthy” for ages, the editors now recognize that some who would be paying more taxes under the president’s ideas — i.e., every household making more than $250,000 annually — aren’t really at the income level most people think of “wealthy.”
The Times editors prefer to think of the deduction as the federal government’s way of rewarding “states that support their most vulnerable citizens and neediest cities.” But if the editors believe that the burden of funding government should fall upon those who can “most afford” to pay it, these are precisely the states that should pay more, as they’re among the country’s wealthiest by most measures: Maryland, New Jersey, Connecticut, Massachusetts, New York, California, etc.
So the Times editors support raising the tax rates on the rich, but not capping or eliminating their deductions, even though they have the exact same effect, which is these taxpayers sending more money to the government.