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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsWhy all the tears for those left with lower SALT deductions?
I agree with Bernie.
I own a home in SoCal.
I paid more in taxes after losing SALT deductions.
Losing SALT deductions affects the top 10%, those making $138k+ a year. I've made 2x that for more than 10 years running...
Fortunately I own my home so I don't deduct mortgage interest. But my number still falls well above the $10k limit and I pay more in taxes than pre 2018.
Just a few facts:
If you're paying more than 10k/year on SALT, you're NOT hurting for money, in fact you're certainly a 10%'er.
YOU can still deduct mortgage interest up to a 1 MILLION dollar mortgage. You can't even QUALIFY for a 1 MILLION dollar mortgage without an income of $300k+
Like Bernie said... we really hurt our own position standing up for the Blue state wealthy after talking about wealth inequality.
SoCalDavidS
(9,998 posts)Real Estate Taxes in So Cal can be quite high. He's about 1K over the limit, but by no means is he in the top 10%.
jimfields33
(15,789 posts)He still gets the 10K counted. He loses about 30 dollars on the missing 1,000 dollars.
WarGamer
(12,440 posts)SoCalDavidS
(9,998 posts)Sorry, but it hits the middle class more than you think. Depends upon where you live, and when you bought home.
jimfields33
(15,789 posts)But that 220 is going to services that help the entire country.
SoCalDavidS
(9,998 posts)All I'm saying is that in a high tax state, like CA or NY, between State Tax Withholding and Property Taxes, it's very easy to reach $10K, even if you don't make a ton of money.
jimfields33
(15,789 posts)Maybe something can be done to change the rules a bit.
lagomorph777
(30,613 posts)The real purpose of killing SALT is to hurt the blue states, who are subsidizing the red states already. Also it helps pay for the billionaire tax cut.
fescuerescue
(4,448 posts)And the IRS is ran by a wonderful President.
Not billionaires
lagomorph777
(30,613 posts)That's what I'm referring to. No, the IRS, nor the President get to keep the $220. It is used to offset the budget hit caused by the billionaire tax cut.
qazplm135
(7,447 posts)I'd buy it, but you can, in multiple ways.
fescuerescue
(4,448 posts)That $220 is helping unemployed people.
That $220 is helping people pay their health insurance.
He should be proud to pay the $220 to the Feds.
Tell him to pay the $220 and stop acting like a Republican.
SoCalDavidS
(9,998 posts)I am just putting him out there as an example. I have plenty of clients here in CA that are in the same situation. That was my point.
And SALT was a repub position. The Democrats were opposed to it. It's sole purpose was to Fuck people in certain blue states like CA, NY, IL, because they would be hit hardest. It was not designed to bring more money towards the things you mentioned. The law was passed while the repubs controlled the WH & Congress. None of the things you mentioned were even a consideration.
fescuerescue
(4,448 posts)SoCalDavidS
(9,998 posts)People in Wyoming or Montana are not affected by this. But many in CA, NY, IL, etc., will be.
IMO, it's a bad provision, and I believe it's being discussed now, because the Democrats would like to get rid of it.
fescuerescue
(4,448 posts)And blue states are the proudest to pay extra to help others.
It's the red states that have a problem with it.
WarGamer
(12,440 posts)So a client with 11k in SALT only pays an extra (tax level) x $1,000 extra?
JohnSJ
(92,187 posts)and you easily exceed the 10K limit
It's my house. Assessment is 423k, current value 800k+
$5k a year
JohnSJ
(92,187 posts)it easily exceeds 10K
There is a reason some people are moving out of California
If it wasnt for prop13 it would be much higher
Not everyone works for google, and multiple members of a household pay for mortgage and property taxes
Sympthsical
(9,073 posts)My taxes this year came in at $5,200.
This is in the Bay Area.
Fresh_Start
(11,330 posts)is transferred so while it might be only 5K to you...if someone buys it from you it will be 15+K to them. So you shouldn't be comparing your valuation you should be comparing your purchase price, since it is paid off, I'm guessing your purchase price was under $250K.
JohnSJ
(92,187 posts)property tax, and it will go up from there each year
If you are paying 5200 in property taxes you bought your house quite a while ago
and when your house is sold the property tax will not be 5200, but more like 9600
Sympthsical
(9,073 posts)I just wanted to give a data point.
Taxes arent that, that bad here. At least not for us.
JohnSJ
(92,187 posts)buyer would be paying 9600 in property tax
and if you moved to a new place, the property tax would be 1.2% of what you bought the new house for
Sympthsical
(9,073 posts)It was just under 800k when we bought.
Unless how much we put down has something to do with it? I honestly dont know the details of how it works. My partner managed our property taxes. I just know how much we paid.
But I freely admit I could be missing something somewhere. I just remember that I thought $5.2k seemed low to me. I want to say my parents property taxes in Illinois came in somewhere like $3k for a $240k home. So when I saw our tax bill for a much more expensive place in Cali, I kept wondering why people complained about CA taxes.
This is my first home - Ive always been a renter. So Im a bit clueless on how the taxes work. I just wrote a check when asked, lol.
JohnSJ
(92,187 posts)bought at, the property tax on that House initially is 1% of the price of the house. A House bought at 800K would have an initial property tax of 8000 dollar a year in this case, and any increase in property taxes are limited to 2% or the rate of inflation, whichever is lower
That is the law here in California, and has been around since 1978.
questionseverything
(9,654 posts)By that standard a $800,000 house should be $18,000
JohnSJ
(92,187 posts)your property taxes would start at 9600, and go up every year, unless the value dropped
Add the state income tax which is quite high, it is easy to exceed the 10K cap
but you are right, in a lot of other states like Washington state, the property tax is very high
This is not a simple issue where one size fits all
Ace Rothstein
(3,161 posts)Areas just to the north of me are considerably higher as well.
NutmegYankee
(16,199 posts)JohnSJ
(92,187 posts)than California
In California, any sale on the house results in 1.2% property tax on the selling price, and it will go up from there. Add to that the very expensive SIT we pay in California, and they have taken away the personal exemption, it can get expensive
A good number of people who are not in the top1%, are paying more in taxes than they were before trumps tax cuts
pnwmom
(108,977 posts)than people who are more recent buyers -- for the exact same houses on the same block on the same street.
PoliticAverse
(26,366 posts)So unless they have itemized deductions that would exceed that amount the 11K in SALT is still less than the $ 12,500 standard deduction they can take.
Ilsa
(61,695 posts)and we pay a state income tax as well. We've been hitting the maximum SALT since they changed the tax laws.
qazplm135
(7,447 posts)in taxes for my home valued at 245 in Texas. So, property taxes vary wildly from state to state.
JohnSJ
(92,187 posts)significantly over the years, plus add SIT, and limit the deduction to 10K, along with the removal of the personal exemption, and they are paying significantly more taxes than before trumps tax bill
jpak
(41,757 posts)That pay more in federal taxes than they receive in federal spending.
Not giving them a pass.
They are vile swine.
Yup
WarGamer
(12,440 posts)Capped at 10k
jpak
(41,757 posts)But it does affect people in blue states.
My property taxes are $787 a year and I have a nice house on a nice lot.
Other folks are not as lucky.
Response to WarGamer (Reply #12)
jpak This message was self-deleted by its author.
pnwmom
(108,977 posts)You're not personally feeling the brunt of it because you bought your house long ago.
unblock
(52,208 posts)If it wrote part of a comprehensive plan to make tax treatment fairer and more progressive for all, then sure, I'd agree that the national interest in an unlimited mortgage interest deduction has run its course and could stand to be scaled back in some way.
However, it was instead part of a tax package that made things worse overall, and offset the budget impact by selectively screwing people in mostly blue states for partisan reasons. This made it stink to high heaven.
Combining a limitation on mortgage interest with a limitation on state and local tax deductions really confused the matter. I don't think it's a easy to defend limiting the deduction on state and local taxes and combining the two is just a mess.
Finally, mortgages made prior to the law going into effect probably should have been grandfathered, but that's a "one-time" issue that doesn't matter in terms of long-term policy.
WarGamer
(12,440 posts)PoliticAverse
(26,366 posts)rental payments.
qazplm135
(7,447 posts)can't deduct their principal payments, so you aren't comparing apples to apples.
NutmegYankee
(16,199 posts)Because I don't make 138k and I get hit with the SALT deduction limit for a 1500 sq-ft house in one of the poorest towns in Connecticut. This claim that only the wealthy benefit from the SALT deduction is fucking bullshit! Absolute bullshit! Pants on fire and go to hell for lying bullshit. This has been debunked time and time again, but keeps popping back up just like the Trump election fraud claims.
obnoxiousdrunk
(2,910 posts)dsc
(52,160 posts)due to having lower property values.
Yavin4
(35,438 posts)States like NY and CA depend heavily on taxes from their wealthy residents to fund local programs like free Pre-K school for kids here in NYC.
The wealthy are okay with that so long as they can deduct the higher SALT taxes from their federal income taxes. Without that deduction, the wealthy will move to no state income tax states like FLA and TX.
Bernie is dead wrong about this.
JohnSJ
(92,187 posts)who will
lostnfound
(16,177 posts)And had to retire early
But you dont want to understand so I wont bother
Its unfair because it was sudden and not in the deal that was made
OilemFirchen
(7,143 posts)The elimination of the SALT deduction means that individuals are being double-taxed. Regardless of your income, that's simply antithetical to a fair tax structure. And, as noted above, it encourages some to move to locations without state and / or local income taxes. Further, it incentivizes states with those taxes to eliminate them.
What actual progressive truly thinks this is a good idea?
JohnSJ
(92,187 posts)MichMan
(11,915 posts)OilemFirchen
(7,143 posts)Used to be independent of state and local taxes.
MichMan
(11,915 posts)Johonny
(20,841 posts)It's a huge issue for low tax Orange county people and places like that. It was huge in 2018 and will be a big issue in 2022 if the Dems deliver.
It does nothing to hurt in solid blue districts. They don't care.
ripcord
(5,372 posts)They shouldn't be subsidized by the federal government.
Hortensis
(58,785 posts)Also those who identify with them. They donate also. One way or the other.
Building voter support by extending benefits upward into classes of those who seldom need them but often resent paying taxes every year toward benefits they would never qualify for has always been a major reason we do this.
So whatever else might be going on, put that at the top. After all, to be able to help those in need, you first have to first get elected. Considering that the alternative is what the Republicans have become, we have both a moral and existential duty to win the next two elections.
I'm grateful and relieved that Sanders has been as responsible and helpful as he has since 2018, but when I think of the danger of losing to the Republicans, 2016 always leaps to mind. Not good judgement and commitment to progressive government. Very narrow winning and winning margins and the very grave prospect of losing to the fascistic, kleptocratic right are even more dangerous now than then.
SoCal Roomba
(44 posts)It was a measured change in the hopes that the avg uninformed voter would now have a better idea of the level of their states taxation rate.
The end game being that said person would become frustrated with their state tax level and start to vote red, because simple minded people think thats the way to fix the problem.
Its simply a way to punish blue states that pay more than they get in federal taxes, as well as punishing the middle class in states where the cost of living is higher. I may be in that 10% bracket nationally, but in California Im in the 20% range.
Its literally a gambit/punishment for blue voters that tend to support higher local taxes for programs and infrastructure.