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D.C. Republicans’ big tax overhaul hinges on killing one of Minnesota’s favorite deductions

REUTERS/Kevin Lamarque
The GOP’s new tax-reform plan proposes eliminating the state and local tax deduction, or SALT deduction, which lets tax filers deduct the taxes they pay to state and local governments from their total taxable income.

The Republican Party’s message on their plan to overhaul the U.S. tax code has been straightforward: they are aiming to make taxes lower and simpler to file.

Last week, GOP leaders released a long-awaited “framework” illustrating how they would accomplish that goal. It’s the clearest statement yet of the party’s priorities as it attempts to make the biggest changes to the tax code in 30 years; much of what’s in it is likely to appear in whatever legislation they introduce in the coming weeks.

As Republicans make the case for their plan, there has been scarcely any talk of whose taxes might go up as a result of the plan. But one important element of the tax framework, if enacted, could increase tax bills significantly for some U.S. taxpayers.

The GOP plan proposes eliminating the state and local tax deduction, or SALT deduction, which lets tax filers deduct the taxes they pay to state and local governments from their total taxable income. For people who live in places with high income or property taxes, it’s a deduction that can save thousands of dollars a year, and it’s one of the most popular deductions in the entire U.S. tax code.

The SALT deduction has long been in the GOP’s crosshairs: they say eliminating it would only affect a small group of people — primarily in high-tax blue states, no less — while helping pay for significant tax cuts elsewhere. To hear others tell it, the SALT deduction saves families money and boosts the ability of state and local governments to provide services.

Minnesota is well above-average in the number of residents who claim some SALT deduction — roughly a third of tax filers in Minnesota do. The policy’s importance in the North Star State is fomenting interesting politics in Washington, with Minnesota Democrats generally in favor keeping a tax break primarily claimed by wealthy filers; Republicans, under pressure to back their party’s tax initiative, have been harder to pin down on the fate of the SALT deduction.

Deductive reasoning

The SALT deduction is as old as the federal income tax itself — it became law in 1913. Currently, it primarily protects people from getting hit hard with tax bills from federal, state, and local governments by letting filers deduct their state and local taxes from their total income that gets taxed by Uncle Sam.

When the deduction was implemented, however, it had a different intention, according to V.V. Chari, a professor of economics at the University of Minnesota. He explains that the ability of taxpayers to deduct state and local taxes from their income effectively served as a subsidy from D.C. to local governments: with residents feeling less of a squeeze from local taxes, jurisdictions felt freer to raise rates, increasing their budgets for goods and services.

“That was the original rationale,” Chari says, “that it would be effectively a transfer to the states, for a variety of local goods, principally education, but a variety of local and state-provided goods.”

That function is still important to state and local governments, Chari says, even if they receive federal assistance in different ways now. He uses the example of a Minnesotan making $1,000,000 — subject to a 9.85 percent state income tax rate and a 39.6 percent federal income tax rate — to illustrate the point.

Deducting that person’s $100,000 tax liability to the state of Minnesota, Chari explains, means their federal taxable income drops to $900,000.

“What that means is your federal tax liability is $40,000 less than it would have been if your state and local taxes were not deducted,” he said. “It’s as if the federal government is paying $40,000 to the state of Minnesota on your behalf.”

According to a report from the Tax Policy Center, a nonpartisan tax research think tank, “Federal tax subsidies through the SALT deduction and the federal tax exemption for state and local bond interest provided an additional $135 billion in implicit federal support for state and local governments.”

On the household level, the SALT deduction primarily benefits high earners who live in jurisdictions with high taxes, per the Tax Policy Center.

Among filers making over $100,000, 81 percent claimed the SALT deduction, while around 10 percent of filers making less than $50,000 did. The deduction applies to a broad range of state and local taxes, but income and property taxes account for 95 percent of the state and local taxes deducted.

The SALT deduction is one of the biggest tax breaks available, and it’s among the most popular: about 40 million taxpayers claim it every year. No surprise, then, that it’s among the most expensive to the federal government: it cost nearly $100 billion in 2016, and if it remains in place, it is expected to cost $1.3 trillion over the coming decade.

Minnesota is among the top third of states in percentage of people who claim the SALT deduction, a group led by Maryland, New Jersey, and Connecticut, states where over 40 percent of filers claim it.

The 32 percent of Minnesota tax filers who claim it deduct an average of $11,600. Fully half of Hennepin County households claim it, netting an average deduction of $17,600, according to the National Association of Counties.

Across the border in South Dakota — where there is no state income tax — the story is very different. Only 17 percent of filers claim the SALT deduction, and get an average deduction of $5,800.

Within Minnesota, the importance of the deduction depends on where you are. In the 3rd Congressional District, encompassing the affluent west metro suburbs, 46 percent of filers claimed an average deduction of $8,000, per a Bloomberg analysis. In the rural 7th Congressional District, however, only 25 percent of filers claimed an average deduction of $2,500.

A ‘non-starter’ for Democrats

If Congress eliminates the SALT deduction, the 32 percent of Minnesota tax filers who claimed the deduction would see an average increase of $2,261 in their federal tax bill, according to the Tax Policy Center.

Even the perception of a tax hike is anathema to most Republicans. But they are defending the elimination of the deduction by making two key points: that other tax cuts and tweaks elsewhere will mitigate the pain, and that the revenue generated by ending the SALT deduction is necessary to help pay for the broader tax overhaul.

Second District GOP Rep. Jason Lewis said in a statement that the tax framework’s proposal to double the so-called standard deduction, which would protect the first $24,000 of a filer’s income from taxation, would prompt fewer people to claim the SALT deduction.

“That saves you time and money preparing your returns, thus providing significant tax relief for families in the 2nd District,” he said. (Forty-two percent of Lewis’ constituents claim the SALT deduction, per Internal Revenue Service data.)

But GOP policymakers, making deep cuts elsewhere in the tax code, are desperate for some sources of revenue as they try to make the case to the public that their plan is neutral on the federal deficit.

The roughly $1.3 trillion that would be raised by ending the SALT deduction would help pay for the big tax cuts the GOP is proposing elsewhere. Chari estimates that savings could pay for 15 to 25 percent of the entire tax plan.

“If they do away with [eliminating the deduction], an important source of revenue will disappear, and the ability to reduce other taxes will be severely constrained.”

Chari cautions that it’s difficult to consider the SALT deduction in a vacuum, because it exists within the larger framework of a sweeping tax plan. “Once you start pulling on one string, the whole package might unravel,” he said.

On its own, however, getting rid of the deduction might prompt state and local governments to reduce their tax rates, Chari said.

“I think [the SALT deduction] is an inefficient way to provide to schools, and the cops, and there are more efficient ways of getting there,” he explained. “All this does is create incentive for politicians in state and local governments to free ride off everyone else and raise taxes more than they might otherwise.”

Groups that represent state and local governments are not buying that line of argument, and they have mobilized furiously against getting rid of the deduction.

The National Association of Counties, in fact sheets that have circulated on Capitol Hill, called the plan a “$1.3 trillion revenue grab by the federal government,” and argues that the SALT deduction “supports local school funding, home ownership, lower middle-income taxes, tailored social services, infrastructure development and local job creation efforts.”

The U.S. Conference of Mayors sent a letter to Congress this week urging members to oppose ending the SALT deduction, saying it supports “vital investments” in infrastructure, public safety, and education. The mayors of Burnsville, Rochester, Brooklyn Center, and Eden Prairie signed on to that letter.

The National Association of Realtors claims that losing the ability to deduct local property taxes, which accounts for 35 percent of SALT deductions, would discourage home ownership and lead to a 10 percent decline in property values.

First District DFL Rep. Tim Walz agreed that the deduction is important to local governments. “The GOP proposal to end the state and local tax deduction would hamper the ability of our local governments to provide essential services, such as public education, and would likely result in a tax increase for the middle class,” he said in a statement. “It is a non-starter for me.”

Scrambling politics

The nature of the SALT deduction is scrambling the typical, party-line character of tax debates in Washington. Democrats are largely arguing in favor of tax break that tends to benefit wealthier people, while Republicans are advocating for what is, on its face, a tax hike for affluent property owners, many of whom vote Republican.

Analysts have pointed out the irony that this proposal would hurt blue-state Republicans the most. Of the 20 congressional districts where the most people claim the SALT deduction, nine are held by Republicans. (One of them is the Minnesota 3rd.)

Republicans representing affluent districts in high-tax states have begun lobbying their colleagues and the administration to save the SALT deduction. Rep. Peter Roskam, a Republican who represents an affluent district in the suburbs of Chicago, said the issue “has to be dealt with” and that members from high-tax states “have to be accommodated.”

Though the revenue gained by eliminating the deduction would provide critical support to the GOP tax plan, the White House has signalled that preserving it is not totally off the table; top economic adviser Gary Cohn said it is “not a red line.”

While Rep. Lewis is in favor of getting rid of the deduction, Reps. Erik Paulsen and Tom Emmer were far more non-committal. (Paulsen is a member of the Ways and Means Committee, the tax-writing panel with enormous influence over this process.)

In statements provided to MinnPost, neither Republican specifically mentioned the SALT deduction, and both emphasized that the GOP’s nine-page tax framework is simply a starting point.

“The Republican unified tax reform framework is just that — a framework,” Emmer said. “I am encouraged with our jumping-off point.”

“We will be working to fill in additional details, and no final decisions have been made,” said Paulsen. “But tax reform is about helping families keep more of their hard-earned money and boosting paychecks.”

Comments (31)

  1. Submitted by Ray Schoch on 10/02/2017 - 11:00 am.

    Once again…

    …hypocrisy is the Republican trademark. Eliminating SALT deductions is important as a revenue source only if you’re going to give truckloads of money away somewhere else, since Republicans frequently give lip service to the notion of not increasing the federal deficit. In this case, what I’ve read elsewhere about the Republican tax plan suggests that one of its effects will be to significantly benefit the wealthy—the top 1%—and big corporations. Doubling the standard deduction for us “little people” will further reduce federal revenue, and the Republican solution for reduced revenue has been, for the past couple generations, to reduce federal spending on virtually everything except the military. Less money for the Library of Congress and the National Archives, less money for flood control, less money for maintaining deteriorating national parks and monuments, but many billions more for the Pentagon and a bloated military-industrial complex, not to mention hedge fund managers and many of the people in the photo at the top of the column.

  2. Submitted by joe smith on 10/02/2017 - 11:14 am.

    Move to a low or no income tax state.

    I love the Denocrats screaming about we need more tax money to grow our Federal Government bigger but don’t tax me for it. I’m not sure removing the SALT deduction is the way to go but it seems to me liberals are again saying “tax thee but not me”. That is the beauty of a 50 state Federal system, if you are in a low tax or no tax state this won’t affect you, if you live in a high state tax it will, your choice!

    • Submitted by Dennis Litfin on 10/02/2017 - 09:04 pm.


      to follow your thinking… it not the same that Republican high rollers and Corporations are in the same “tax thee but not me” category you mention when they want their Republican legislators to enact a taxing overhaul which would reduce their taxes….at the expense of taxpayers of a lower economic status ?

    • Submitted by Dennis Wagner on 10/03/2017 - 08:44 am.

      Following your thinking:

      How about a tax law that says for every $ you send to the fed you only get $1 back? Seems many-most of these low tax states are sucking pretty hard on Uncle Sam’s nipple, while states like Minnesota pay ~ $1.79 for every $1 back. So lets quit subsidizing these leech states at the federal level! Fair enough? Ironically the majority tend to be very red states, how can that be possible?

      • Submitted by Curtis Senker on 10/03/2017 - 10:07 am.

        There are a lot of dependents in the South “sucking on Uncle Sams nipple”. Southern states do not reward sloth, so the bulk of welfare comes in the form of USDA SNAP benefits.

        Cut the flow of those dollars and watch the influx into progressive blue states.

  3. Submitted by Curtis Senker on 10/02/2017 - 11:43 am.

    Removing the deduction of state and local taxes is long overdue.

    I’m a big fan of local control. When Minneapolis and St. Paul announce double digit tax increases to fund their progressive agendas, I cheer. They are getting what they want.

    Likewise, Minnesotans elect leftists to office on the promise of higher taxes and more free stuff…wonderful!

    But folks in New Mexico don’t have a say in anything that happens in St. Paul, and they’re paying for it. Unfair!

    Removing the deductions for all that progressive wonderfullness allows progressives to take ownership of their virtue by paying for it, and takes the burden off those who don’t see any virtue in progressive programs.

    It really is a win-win and deserves bi-partisan support.

    • Submitted by Frank Phelan on 10/02/2017 - 12:22 pm.

      You Sure About That?

      As they have gained control of state legislatures, conservatives have lost their appetite for “local control”.

      Just where do you stand on municipalities enacting higher minimum wages and sick time ordinances? How about zoning and permuting for frac sand mining? In WI, the conservatives now hate local control. At least, those who claim to be conservative.

      • Submitted by Curtis Senker on 10/03/2017 - 01:14 am.

        I’m fine with progressive programs in leftist municipalities, as long as I don’t live in them, and don’t have to suffer the consequences.

        Zoning, ordinances, regulations, whatever. Knock yourselves out.

    • Submitted by Richard Callahan on 10/02/2017 - 01:44 pm.

      This is a bad example

      New Mexico takes about $3.00 from the Federal Govt. for every $1 it pays out. Minnesota gets less back than it pays in so Minnesota is one of the states that already subsidizes New Mexico.

    • Submitted by Jeffrey Swainhart on 10/03/2017 - 08:35 am.

      Blue states already subsidize red states

      Blue states consistently fall short in the federal balance of payments equation. even with the local tax deduction in place. If the right wing wants to play those games they’ll end up shooting themselves in the foot.

  4. Submitted by Henk Tobias on 10/02/2017 - 11:49 am.

    Please point out

    the Democrat who is screaming for more tax money to “grow” the Federal Government. Also too can you provide an example of a Liberal saying Tax thee not me? I’m not seeing it in the context you present if as you imply it happens often so it shouldn’t be difficult for you to find another example.
    Finally, Minnesota is considered a high tax state I believe. Is it safe to assume that you are not a resident here?

    • Submitted by joe smith on 10/03/2017 - 08:14 am.

      Henk, if you back Obamacare,

      every Democratic in congress does, you are for bigger Government. If you think fining a working American citizen for not buying a $850 a month, $10,000 deductible bronze plan to comply with the ACA, you are for a bigger Government. If you are for a Government run carbon tax, you are for bigger Government. If you are not for a voucher program for ALL parents to decide what school is best for their child, you are for bigger Government. If you believe America should be in the “nation building” business, you believe in bigger Government. If you believe the USA should fund NATO, you believe in bigger Government. The list is endless.
      We, the American tax payer, fund our Government to the tune of 4 TRILLION dollars a year and that is not enough to run our country. That is obscene! If you think we need to pay more to D.C., you are definitely for bigger Government.
      I was a Minnesota resident for over a half century, they finally taxed me out. I am no longer a resident of my birth state.

      • Submitted by Dan Landherr on 10/03/2017 - 10:05 am.

        20% of GDP

        I never understand why people think words like million, billion and TRILLION are so scary (the last one so scary it requires CAPITALIZATION). It’s all just where you put the zeroes. The US GDP is 18.5 trillion so the federal government is roughly 20% of GDP. 60% of that federal spending is Medicare/Medicate and Social Security – health insurance and retirement for the elderly and disabled. Those programs are funded through a separate revenue stream than federal income taxes.

        That leaves the rest of the federal government as 8.5% of GDP. Of what remains, military spending and veteran benefits make up over half of the federal government that is funded by federal income taxes. That puts the cost of defending the country at 4.5% of GDP. BTW – international benchmark is between 2 and 3% of GDP for defense.

        Everything else the federal government does (agriculture, education, transportation, energy, housing, etc) makes up less than 4% of GDP. That’s the “running our country” part of the budget. It costs less than $600B in a country with 320M residents or roughly $1800 per person.

        We have a big economy that is growing. We should expect to have a big government that is growing too.

        • Submitted by joe smith on 10/03/2017 - 01:00 pm.

          A couple things.

          TRILLIONS is a scary number when you are talking about elected officials and many unelected appointees that are being bribed, bought and sold for our hard earned money. That is not their money to spend, that is our tax dollars. It always amazes me when folks say “no big deal” to the waste of money in the Federal Government. The Government can’t run on 4T a year and borrows billions to run the country, who do you think pays for the billions borrowed and the interest? Do you realize the Government doesn’t make money they just spend it? Are you concerned we as a country are 20T in debt with 10’s of TRILLIONS in unfunded liabilities ? I would hope you wouldn’t run your household at a 200k lifestyle on a 150k budget.
          Social Security, Medicaid & Medicare are all scheduled to run out of money in the near future, who pays for that? What is our Government doing being involved in agriculture, education, energy etc in the first place? The Government doesn’t make money in agriculture, the just subsidize it, same with education (which the Fed ruined), energy and every other industry they get involved with. Are you content with the Federal Government picking winners and losers in the free market?
          Crony Capitalism is ruining our country and our Government (who you seem to encourage) is leading the way down that path with the 4 (no big deal) TRILLION we give them a year to spend on running our country or pet projects.

          • Submitted by Dan Landherr on 10/03/2017 - 02:31 pm.

            I have a simple solution for your fears

            Change out the money and make new $1 = current $1,000. Then we only have a $4 billion budget and it isn’t as scary for people who can’t understand large numbers. You won’t have to use the caps lock key as often.

            Social Security and Medicare may run short (<100% of the $$ required to pay out) but that doesn't mean they will "run out" of money. Americans have more than $80T in wealth and GDP is $18.5T. Debt service is 6% of federal spending or 12% of the spending covered by income taxes, not the 25% you imply with your family budget analogy. Debt/income and debt/assets are lower than a typical American household with a new mortgage. I would hope you agree that this is absolutely NOT the time for a massive tax cut that would increase the deficit. End the deficit spending and pay some of the debt back. A huge tax cut would be fiscally irresponsible. Things are going well so build up the rainy day fund like Dayton did in Minnesota.

            The Federal government is involved in education, agriculture and energy for the same reason they are involved in defense. You can't run an army without troops that can read instructions, enough food to feed them and some source of energy to move a tank or aircraft carrier. A successful economy depends on those things also.

            If you're looking for wasteful spending, first consider the trillion dollars in extra money Americans spend on healthcare compared to the rest of the world every year. Then go after the documented $25B in yearly defense spending that is unnecessary (see Washington Post article).

            There are also plenty of winners and losers picked in the tax code itself. I hope you favor removing the mortgage interest deduction which picks winners and losers in housing. I also hope you favor repeal of the $2B in yearly oil and gas industry tax subsidies. Finally the carried interest loophole and low capital gain taxes overwhelmingly favor capital at the expense of labor income. Those income sources need to be aligned more fairly for income tax purposes.

            • Submitted by Frank Phelan on 10/04/2017 - 07:35 am.

              The Big Fish

              You’re missing the biggest, most wasteful fish. Despite lofty rhetoric to the contrary, Obama, a socialist and a closet Muslim (or so I’m told), and the Congress, approved a plan to spend ONE TRILLION DOLLARS on the US nuclear arsenal. Well, they could not have been quiet about it without the acquiescence of the liberal socialist media, which is owned by a few large private corporations (somehow).

              And that’s just scratching the surface of Pentagon/military industrial complex waste. While the Pentagon has no plan for success in Iraq or Afghanistan, it does have a plan to protect it’s own prosperity. We have spent $10 BILLION on missile interceptors that have never worked. You know, conservatives like to say that problems can’t be solved by throwing money at them, but they always forget that when the money goes to military contractors.

              While I’d love to reduce health care spending by ONE TRILLION DOLLARS, given the choice between saving that amount between health care and the Pentagon, I’ll reduce Pentagon spending first. the reason is jobs. While there is waste in healthcare, at least that spending is labor intensive. High tech weapons that don’t work are capital intensive in nature, providing fewer jobs. If we were to re-deploy that ONE TRILLION from the Pentagon any other sector of the economy, we’d have more jobs to show for it.

      • Submitted by Dennis Wagner on 10/05/2017 - 09:32 am.


        If you back more spending on defense you are for bigger government!
        Giving large companies special tax breaks while hitting the common man you are for unfair government!
        Giving special tax treatment to the wealthy “capital gains” while taxing sweat and blood, you are for corrupt/immoral government!
        Allowing companies farmers etc to pollute our waters etc. you are for ignorant/corrupt government!
        Doing nothing about gun laws that kill 30,000 a year you are for ignorant/corrupt government!
        Thinking that tax dollars don’t bring anything to peoples lives you are for ignorant government!

        And how do we know that $4T is an obscene number? We have all right wings running the show today, and they just increased the limit on the credit card! So the analysis, following your lead is, present leadership in DC is stupid/obscene government!
        Looks like anyone can play the:something, government game.

        Lived in MN since 1984, still here, been OK for me and my family. Quality of life isn’t all about taxes,

  5. Submitted by Hiram Foster on 10/02/2017 - 11:53 am.


    It’s something I go on a lot about. Fairness in taxes is meaningless because fairness is just to vague to serve as a basis of policy. And there is really no point in trying to craft a tax system that benefits the economy, since taxes will always be a drag on the economy just as what taxes pay for will always benefit the economy. What matters in political terms is whether I, as a voter, will pay more. And it’s pretty clear under Republican plans, I will.

  6. Submitted by Mike Downing on 10/02/2017 - 01:25 pm.

    Why subsidize high tax states?

    Low tax states currently subsidize high tax states through the SALT deduction. Is this fair? Why should low tax states subsidize high tax stated? Let high tax states pay their fair share of federal income taxes.

    • Submitted by Frank Phelan on 10/02/2017 - 03:09 pm.


      You think Mississippi is subsidizing Minnesota? You think Arkansas is subsidizing New York? You think Alabama is subsidizing California and Washington state?

      As John McEnroe said, “You cannot be serious!” The Red states are all on welfare, courtesy the Blue. And they never thank us.

      • Submitted by Curtis Senker on 10/03/2017 - 01:08 am.

        “Red states are all on welfare, courtesy the Blue.”

        That is partially accurate. There are several “red states” that pitch in more than they recieve, but many do take more than they send.

        That is because the South has large populations of welfare dependents, yet provide little state funding to support them. I can’t speak for them, but I don’t think I’m going too far out on a limb to suggest they would be happy to send their dependents to leftist ” blue states” and forgo the USDA money. You might even get a “thank you”, who knows?

  7. Submitted by Hiram Foster on 10/02/2017 - 01:46 pm.

    tax money

    The federal government, mainly, is an income transfer mechanism, an insurance company with an army. The federal government itself doesn’t grow. Congress has been stuck at 535 members since 1959, and the number of employees is in decline despite the population growth.

    We see the federal government’s size in terms of the money it takes in, and the money it pays out. But what does that mean in real terms. The logical implication is that when a retiree goes on Social Security, drawing on the money a worker recently paid in, the federal government gets larger. Do we think that’s true, in any negative or politically relevant way?

    The fact is, the government is us. What is done to the federal government is done to us. The federal government gets bigger when we have more children and we get older. To make the federal government smaller, we have to have fewer children and we have to die earlier. This is the demographic reality, one that many politicians have dedicated their political lives to obfuscating.

  8. Submitted by Joe Musich on 10/02/2017 - 08:33 pm.

    So this could be the

    Kansas miracle at the national level if implemented. We all know how that worked out economically And how that plan seems to be now coming fruition politically. Maybe it should be put into place to destroy GOP “humanitarianism” once and for all. The minutia of parts of this generous tax restructuring may not matter as most people are driven into the ground in return to a feudal social structure.

  9. Submitted by Joel Stegner on 10/02/2017 - 10:40 pm.

    Boon for trust fund babies like the Trumps

    Currently the richest of the rich (the top 0.2% of households pay estate taxes) and tTrump would use the elimination of the deductibility of state and local tax to hammer blue states and fund a huge windfall for the Trump children. Remember that Trump hasn’t been paying his fair share of tax, or in fact possible no federal income tax for 20 years, so that that money may have never been taxed. Also he wants to eliminate the alternative minimum which gets some tax out of rich people who game the system to pay no taxes. Trump’s plan should be called the Billionaire Boys Tax plan, with the Trump “boys” are the poster children.

  10. Submitted by joe smith on 10/03/2017 - 08:53 am.

    Trump uses the tax code to pay as little as

    possible to the Government. Jeff Immelt does the same thing personally and while running GE. I believe the tax code needs to simplified, have less loopholes and be lowered. If you don’t like the tax code try to change it, don’t call folks who use it “not paying their fair share”. While you are at it, please explain fair share?
    As far as estate taxes goes, why would you work your whole life to give the money to other people’s children or causes?? It is your money, which you payed taxes on, to do with it as you please. What right do you have to someone’s hard earned dollars? You must believe because you are an American you deserve someone else’s money….. wow, how not American is that thinking?

    • Submitted by Dan Landherr on 10/03/2017 - 10:14 am.

      Step-up basis of capital gains

      Most of the wealth owned by people affected by the estate tax is capital. Only capital that is sold is taxed, not capital that is held for the life of the owner. Upon death the value is “stepped up” to the current value when it is transferred and none of that increase in value is taxed. If they are eliminating the estate tax then they also have to eliminate step-up basis of capital gains. Otherwise you have years worth of gains that never are taxed. The tax system is already tilted to favor capital gain income instead of wage income due to the lower capital gain tax rates. Eliminating the estate tax and leaving step-up basis intact would allow wealthy families to keep all of that income without it EVER being taxed.

  11. Submitted by Dennis Wagner on 10/03/2017 - 09:17 am.

    Always a great subject:

    Lower taxes:
    1. Less $ for highways
    2. Less $ for infrastructure
    3. Less $ for education
    4. Less $ for social programs
    5. Less $ for fire and police
    6. Less $ for pollution control
    7. Less $ for recreation, hunting, fishing, snowmobiling, boating…

    And on an on and on, how much quality of life do we give up?
    PS: Local and state taxes seem to be exactly what the “R”‘s want in local control, (wasn’t that the last repeal Obamacare plan?), so this tax plan says lets “rob” the local control, because at the federal level we are incompetent, we can’t run a balanced or even a fair budget! Once again proving as bad as the left is, the right is incapable of effective governance. If they were, we would have a balanced budget proposal, not another, pipe dream, we are going to grow out of it, same old failed trickle down BS, only with a different name, instead another deficit enhancing proposal, from the so called fiscal chicken hawks! Looks pretty hypocritical from this vantage point.

    • Submitted by Curtis Senker on 10/03/2017 - 10:13 am.

      Bro, you been to Texas lately? They have freeways that would make a Minnesotan weep. The cities and towns are booming.

      I don’t know what you count as “quality of life” but Floridians seem to have themselves one heck of a good time.

      You folks are deluded into thinking government is the fountain of hapiness and prosperity; I’m here to tell you it ain’t so.

      • Submitted by Dennis Wagner on 10/03/2017 - 10:43 am.

        Yes sir:

        Been to Texas, and been to Florida, more than once:
        Texas is quite the repressive government:
        Crime rates, both Texas and Florida significantly higher than Minn. .
        Got a friend in Coral Gable, he’s afraid to look at someone cross wise for fear of (Hold your ground) Guess if you are OK with folks coming into grocery stores with pistols and rifles on their back go for it (Texas and Florida)
        Poverty rates, there is like 20+ states between Minnesota, lower, and Texas/Florida higher. Yep, they got good weather in the winter, but pretty unbearable in the summer, not to mention a Hurricane from time to time to wipe you out.
        Comes to education there is like 30 spots between Minnesota higher educated, and Texas/Florida lower.
        So, not sure what “Quality of life” means to you, but, these factors (Other than winter weather) sure seem to stack up in Minnesota’s favor. Not to mention a lot easier to get out on fresh water, cabins etc. around here in the summer. Significantly less competition for resources.

      • Submitted by ian wade on 10/03/2017 - 01:16 pm.

        Yeah…Texas born and raised here.

        Cities and towns booming? Some, but many aren’t. Property taxes are some of the highest in the nation. The regressive government hates the feds, until something happens. Then they can’t wait to beg for federal funds. Homophobia, racism and anti intellectualism are widespread. Household income is lower than in Minnesota. Schools are ranked 43rd in the nation in terms of quality. Add the repressive heat, high dew points, crime…no thanks. Outside of Austin and chicken fried steak, here’s isn’t a thing I miss about it.

        • Submitted by Frank Phelan on 10/03/2017 - 02:47 pm.

          Just Think

          How bad it would be if they weren’t blessed with oil. Oh wait, Mississippi. That’s what it would be like.

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