(National Sentinel) Exodus: California Democrats are worried about what they think will turn into a mass exodus of wealthy people from the state thanks in large part to the Republican tax reform legislation President Donald J. Trump signed last month.
As part of the tax reform measure, the law limits the amount of deductions wealthy Californians can take off their federal taxes, including limits on property taxes, which are high in the Golden State.
“People with higher incomes pay a lot more money, and some of them may be tempted to leave,” Gov. Jerry Brown said when he unveiled his 2018-19 budget proposal last week. “This was an assault by the Republicans in Congress against California.”
Republicans denied that, saying that the reform measure, instead, should force Democrats and their voters to reconsider the effects of higher taxation.
Already California Democrats are looking for ways to circumvent the new federal tax law. Senate President pro tem Kevin de León authored legislation that will allow state residents to take their state property taxes off of their federal taxes by listing them as charitable contributions.
It’s already cleared committees and is headed for a vote on the Senate floor.
The Trump IRS, however, said that won’t pass legal muster.
Notes the Sacramento Bee:
Democratic state lawmakers are worried because California relies so heavily on the income taxes it collects from high earners to fund government services. The state’s wealthiest 1 percent, for instance, pay 48 percent of its income tax, and the departure of just a few families could lead to a noticeable hit to state general fund revenue.
“It is a genuine concern and that’s why the legislatures in high-tax states are swinging into action immediately,” Katie Pratt, a professor at Loyola Law School in Los Angeles who specializes in taxes, told the paper.
“The new tax law is kind of like icing on the cake for some who were thinking about moving out of the state,” said Fiona Ma, a Democrat on the tax-collecting Board of Equalization who is running for state treasurer. “If they don’t have to stay here because of work or family, it doesn’t give them a lot of incentive.”
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