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The Real Tax-Cut “Mafia Thugs”

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©Andrey Armyagov @Adobestock.com

Who will foot the tax bill in high tax states if the successful decide to pick-up and leave? With all the hand wringing by blue state politicians about this tax cut triggering “an economic civil war” or comparing Republicans to “mafia thugs” maybe they should consider creating more ways to keep successful Americans living there. The WSJ has more here:

You can figure out who most needs reform by the decibels of protest. Amid other apocalyptic warnings, New York Gov. Andrew Cuomo last weekend declared that the GOP bill’s limit on the state-and-local tax deduction will trigger “an economic civil war” between high- and low-tax states. California Governor Jerry Brown has likened Republicans to “mafia thugs” while Mr. Cuomo calls the bill a “dagger at the economic heart of New York.” By heart, he apparently means the state’s top earners who pay for Albany’s ever-higher spending.

The truth is that few taxpayers even in high tax states will be hurt because they won’t need a deduction beyond the $10,000 state-and-local cap in the bill. Tax writers estimate that only about 5% of households will even itemize their deductions because the bill nearly doubles the standard deduction to $24,000. Most affluent households who do itemize will also be held harmless because of tax-rate reductions.

But the tax math will be tricky for many high-earners in states with the highest tax rates. The bill reduces the top federal tax rate to 37% from 39.6% and increases the threshold at which it kicks in to $600,000 from $470,000 for couples filing jointly. Our friend Don Luskin did the math and says that high earners in states with top rates exceeding 6.56% could see their tax bills increase.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.
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