In all of the arguments about the fiscal cliff, I don't understand the Democrat resistance to closing tax loopholes on the rich. Closing loopholes is the ultimate in fairness. No one should get a bigger break on these loopholes than others. And in a recent Wall Street Journal article it shows how these loopholes favor wealthy Democrats.
But suddenly liberals are having second thoughts, and our guess is that this is because residents of high-tax Democratic-run states are about twice as likely to take advantage of tax loopholes as taxpayers in low-tax states. For example, 44% of Connecticut filers itemize their deductions, but only some 21% of North and South Dakota residents do.
One tax writeoff in particular illustrates the point: the deduction for state and local income taxes. This allows a high-income tax filer who pays, say, $20,000 in state and local income taxes to deduct those payments from his federal taxable income.
Raising the tax rate on earners making over $250,000 is irrelevant if they can turn around and use loopholes to avoid the higher taxes.
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