Monday, October 30, 2017

OBSCENE Local Tax Burdens aren't just a Blue State Problem....

"But the former governors who were before me laid burdens on the people, and took from them bread and wine, besides forty shekels of silver. Yes, even their servants bore rule over the people, but I did not do so, because of the fear of God."
Nehemiah 5:15

We attended an event with Congressman Roger Williams related to federal tax reform efforts this morning; out of respect to our host, suffice to say we found the Congressman long on platitudes and short on specifics.

But this is as good of a time as any to bring up something we've been meaning to discuss: Perverse incentives in the federal tax code subsidize high property taxes, and Texas' congressional delegation appears content to continue this subsidy.

The federal tax code contains a loophole that allows individual taxpayers to deduct the cost of their state and local taxes, but only if they itemize their deductions.  Unfortunately, middle class taxpayers rarely itemize their deductions.  So the federal "state and local" tax loophole subsidizes higher local property taxes.

Unfortunately, Texas' own Kevin Brady seems inclined to preserve this tax subsidy to spendaholic local politicians:
House Republicans' top taxwriter said Saturday he would add a federal tax break for state and local property taxes back into the tax plan set to be unveiled next week, bowing to pressure from members of his conference from blue states with high taxes.

Kevin Brady, the chairman of the Ways and Means Committee, said he was restoring a deduction for property taxes "to help taxpayers with local tax burdens."

The Trump administration and congressional Republicans had proposed to entirely eliminate the ability of federal taxpayers to deduct state and local taxes in order to pay for lower tax rates.
This is absurd.  Brady's concession doesn't "help taxpayers with local tax burdens"; it just raises the tax rates paid by middle class taxpayers to subsidize spendaholic local politicians.  In one pocket and out the other.

Furthermore, this isn't just a blue state problem.  Texas currently has the sixth highest property tax burden in the nation.  Thus, federal subsidies for spendaholic local politicians hurt middle class Texans just as badly as it hurts middle class taxpayers in any blue state.

Obviously, Texans need the Texas legislature to strengthen property tax rollback protections.  The legislature should also take a long look at the appraisal system (if not outright elimination of property taxes).  But the fact that the Texas legislature has failed to act within the areas of its jurisdiction doesn't excuse the Texas' congressional delegation if they fail to eliminate subsidies for spendaholic local politicians in the federal tax code.

Bottom Line: From Democrats like Steve Adler in Austin and Sylvester Turner in Houston, to Republicans like Betsy Price in Fort Worth and Craig Doyal in Montgomery County, it's not a secret that local politicians across Texas love to spend other people's money.  Loopholes in the federal tax code subsidize that spending.  It's a shame that Texas' congressional delegation appears more interested in preserving those subsides than in making local officials be honest with their voters.

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