To Avoid Trump Tax Reform, California Dems Want to Convert State Taxes to Charitable Contributions

Tax formCalifornia’s Democrat-controlled state government wants to re-classify state taxes as charitable contributions to avoid the new $10,000 cap on state and local tax (SALT) deductions in President Donald Trump’s new tax reform.

For decades, California Democrats have demanded higher and more progressive tax rates as a social justice cure to address income inequality. But they are appalled that President Trump’s Tax Cuts and Jobs Act progressively hurts the state’s highest income earners by capping SALT deductibility.

Gov. Jerry Brown called limiting SALT deductibility to about an upper middle-class income level as “evil in the extreme,” and hissed at Trump’s Republican allies for “acting like a bunch of Mafia thugs.” California Senate President Pro Tem Kevin de León (D-Los Angeles) snarled, “Republicans in Washington have once again zeroed in on California to punish us and make our state the single biggest loser in their reckless tax scheme.”

California is the most populous state, but only has the fourth-highest percentage of residents that claim SALT deduction, at 34.5 percent. The Golden State’s “per-filer” average SALT deduction is a middle-class $12,682. But due to rich coastal and multi-property owners, California has the highest “per claimant” SALT deduction of any state, at $36,802. For California’s rich, tax reform means an effective increase in state taxes.

De León is promising to introduce legislation next week that would allow California’s highest income earners to continue deducting 100 percent of state and local taxes over the $10,000 limit by renaming them charitable contributions.

Final negotiations between the U.S. Senate and House versions of tax reform maintained deductions for actual charitable contributions to support popular programs to support poverty relief, non-profit schools, and the arts.

But IRS Publication 526, which defines what qualifies for federal charitable contribution deductions, specifically allows deductions for “federal, state, and local governments, if your contribution is solely for public purposes (for example, a gift to reduce the public debt or maintain a public park).

It is not clear that California’s gambit would pass the test — but Democrats may try.

This article was originally published by Breitbart.com/California

Comments

  1. What if you choose to “not contribute”?

    • I agree What a bunch of effing idiots. Charitable contribution implies it is voluntary. I wouldn’t “contribute” to Kalifornistan for any reason under the current A-holes running the state.

  2. Do the “rich” have businesses that benefit from a reduction in the tax cuts? A substantial cut that is not mentioned, both in corporate and small business as well as 401K type portfolio holdings that should be swelling. The rich also were able to get their hands on cash during the last decade via TARP or Dodd-Frank that others were excluded from. All facts, past and present, must be presented to paint a complete picture. Notice how the Dems trash the 1% until their rich constituents complain and the Dems campaign funds at risk.

  3. Mark Davis says

    If they change to Charitable Contributions. I will not contribute!

  4. maybe the State could qualify as a 501(c)3 and make the “contributions” self directed. ha. General Fund for pensions all the way.

  5. TheRandyGuy says

    The IRS will put a quick stop to that, as they should. Ironic that Brown and the Clowns complain about this after laying a $5 billion dollar tax increase that affects even the poorest California residents.

  6. retiredxlr8r says

    Self serving crooks!
    That’s what California has for legislators.
    Corruption.
    Sorry, but I’m hating Democrats more and more every day.
    If they can nullify federal law I can nullify state law!

  7. David Norwood says

    You folks making statements that you would not contribute if state taxes become deductible as a charity contribution are MISSING THE POINT.

    Normally I agree that CA State Representatives do not come up with the best ideas,

    However, the idea of changing the State Taxes to a Charitable contribution WOULD give you a deduction that you CANNOT get if it classified as a state tax.

    By not supporting the change you IN FACT would not be able to get the maximum deduction you would get as a State Tax and IN FACT would pay more taxes.

    So, stating you would not contribute state taxes because it is a deductible charitable contribution item DOES NOT MAKE ANY SENSE.

    Cutting off your nose to spite your face.

    • David, you correct. I don’t understand why so many do not grasp the concept. They are trying to lessen the impact of the new tax reform. It couldn’t be clearer.

    • As much as I hate to agree with this rationale, the way California is losing money, it is definitely a nonprofit operation.

    • we need clarity on who would direct the “contributions”

    • John Shipman says

      Sorry, David, but you are missing the point. If the SALT payments are considered charitable donations, then they are by definition voluntary. Therefore, I would elect NOT to pay my taxes since they are “voluntary to a charitable organization”.

  8. In case you didn’t know, the new tax bill going to negatively affect those of us who live in California. Not everything these clowns do is horrible. This idea is actually very clever.

    We’ll be voting for new lawmakers in California soon enough. Just remember to vote them all out. Jerry Brown needs to go.

    • sweetsuzee says

      Susan, If you are truly going to be affected by the new tax laws, get on your knees and thank God you are fortunate enough to be so wealthy. My CPA friend who grosses half a mil/year isn’t even going to be affected.

  9. Gov. Jerry Brown called limiting SALT deductibility to about an upper middle-class income level as “evil in the extreme,” and hissed at Trump’s Republican allies for “acting like a bunch of Mafia thugs.” California Senate President Pro Tem Kevin de León (D-Los Angeles) snarled, “Republicans in Washington have once again zeroed in on California to punish us and make our state the single biggest loser in their reckless tax scheme.”

    Really? The new gas tax isn’t regressive? Who are the thugs?

  10. Pat Arnold says

    I am beginning to wonder if California is even a part of the United States anymore. Every week there are stupid ideas coming out of our Democrat controlled legislature. Now Governor Brown thinks he can mandate what the national tax code says and give the upper income earners in California a way to get around tax law. Where does this end?

  11. They say you can’t take it with you, I’m having trouble getting enough to go.

  12. Just another example of a majority of a Democratic state legislature affected by Trump Derangement Syndrome…
    President Trump could tweet that the Earth is round and Cali legislators would reflexively write laws to state that the Earth is flat in response…
    I do believe that President Trump IS giggling at the panic from the “Resistance” movement in Mexifornia, now that the tax structure has been modified to expose their profligate spending activities and egregious fiscal mismanagement that only benefits their benefactors and “gimme” constituents…

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