Here's something local politicians, regardless of party, would like you not to know: The local taxes they levy are much higher than they seem, because as of now Uncle Sam picks up much of the tab by letting you deduct those taxes from your federal taxable income. That makes it easy for them to sock you for the cost of various local levels of government while making it feel like you're not paying as much as you really are.
Those local politicians are in a panic now, because the deduction for state and local taxes might be going away in whole or in part. In exchange, you'll get a much higher standard deduction, which will go equally to everyone regardless of their state and local tax liability. That means that in the future, when local politicians try to raise taxes, their constituents are actually going to feel it.
From Pataskala, Ohio, to Conroe, Texas, local government leaders worry that if Republican tax-overhaul plans moving through the U.S. Congress become law, it will be harder for them to pave streets, put out fires, fight crime and pay teachers.
A tax plan approved by the House of Representatives on Thursday would sharply curtail a federal deduction that millions of Americans can now claim for tax payments to state, county, city and town governments.
Ending that deduction, the local leaders say, could make their taxpayers, especially in high-tax communities, less likely to support future local tax increases or even tolerate local taxes at present levels.
The proposed repeal of the state and local tax (SALT) deduction is part of an “assault on local governments” by Republicans in Washington, said Elizabeth Kautz, the Republican mayor of Burnsville, Minnesota, near Minneapolis.
“My hope is that we look at being thoughtful about what we’re doing and not ram something through just to get something done before the year is out,” Kautz said of the plan being rushed through Congress by her own party.
An "assault on local government"?
An "assault on local government"? Hardly. Unless local government needs to levy taxes in strictly stealth fashion, there is no assault here. Quite the contrary, in fact, one might argue that what's been going on at the local level is an assault on taxpayers, who are asked to pay for far more government than they probably realize.
Consider the manner in which local taxes are levied. Property taxes usually pay for your city and school district, as well as county government, intermediate school districts and in many cases even regional government. Taxpayers are also asked to pay special levies on things like mass transit, community colleges and other special services.
That's an awful lot of local government, and it's worth asking whether all of it operates as efficiently as it should, or whether we even need that many levels. What exactly do intermediate school districts do anyway, and is it something that could be folded into local districts? Is it the fact that your city, county and state all have health departments really making you healthier? Yet you pay taxes to support all of them, the effect of which is largely hidden not only by the federal tax deduction but also by the fact that it's hidden as escrow in your mortgage payment.
Generally speaking I believe that local government is more efficient and accountable, and provides more value to taxpayers, than state governments or, certainly, the federal government. If a problem needs to be handled by government, I would rather see it handled at the local level any day if that's at all possible.
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Panic time for local politicians who are used to you not really noticing how much they're socking you
But local government is less accountable and less responsive when people don't feel the full impact of what they're paying in taxes. And making state and local taxes deductible on your federal return is one of the ways that impact is hidden. It makes much more sense to simply expand the standard deduction for everyone instead of making it dependent on your state and local tax burden.
But yeah, it's panic time for local politicians who are used to you not really noticing how much they're socking you. It's time you started noticing, and it's time they stopped relying on you not noticing. The Reuters story makes this sound like a crisis because they think you might say no to something politicians want. Sometimes you should say no, or they should make a better case, or they should find more affordable ways to do what they're asking you to support.
If they can't do that to your satisfaction and you say no, that's not a crisis. That's how democracy is supposed to work.
Here's something local politicians, regardless of party, would like you not to know: The local taxes they levy are much higher than they seem, because as of now Uncle Sam picks up much of the tab by letting you deduct those taxes from your federal taxable income. That makes it easy for them to sock you for the cost of various local levels of government while making it feel like you're not paying as much as you really are.
Those local politicians are in a panic now, because the deduction for state and local taxes might be going away in whole or in part. In exchange, you'll get a much higher standard deduction, which will go equally to everyone regardless of their state and local tax liability. That means that in the future, when local politicians try to raise taxes, their constituents are actually going to feel it.
