‘Evil’ Tax Cuts? Nope, It’s Blue-State Panic

By Heather Wilhelm

Friday, December 08, 2017

Ah, the holiday season. It’s a magical time, bursting with joy and merriment, the laughter of children, jolly parties, twinkling lights, mildly terrifying mall-dwelling Santas . . . and the faint sounds of caterwauling blue-state politicians shrieking that the GOP tax bill signals the end of civilization as we know it.

Can you hear it? Fire and brimstone! The weeping and gnashing of teeth! According to Nancy Pelosi, this reshuffling of government regulations amounts to “Armageddon” and “the worst bill in the history of the United States Congress.” California governor Jerry Brown labeled the tax bill “evil in the extreme.” According to Bernie Sanders, the proposal amounts to “class warfare” and “one of the greatest robberies in American history.” In terms of sheer melancholy drama, comedian Patton Oswalt might win the prize: Because of the GOP tax bill, “there’s no America now. Not the one we knew. Sorry, feeling real despair this morning.”

Not to be outdone, the New York Times editorial board heaped scorn upon this supposed Scrooge-like attack on the poor: “Republican leaders’ primary goal is to enrich the country’s elite at the expense of everybody else, including future generations who will end up bearing the cost.” In additional comments, Jerry Brown — personally, I miss the days when he was known as “Governor Moonbeam,” that glorious nickname bestowed upon him by the late Chicago columnist Mike Royko — agreed: “Who’s to say that the rich need more money right now?”

Ah, yes. Thank goodness for people like Nancy Pelosi, Jerry Brown, the New York Times editorial board, and other blue-state stalwarts, whose No. 1 concern is to fight this pernicious money grab by a sinister, well-organized, and garishly wealthy elite! But hark, New York Times: What have we here? Why, it’s an analysis from your own news pages, dated December 5, with a doozy of a headline: “Among the Tax Bill’s Biggest Losers: High-Income, Blue State Taxpayers.”

Well, this is certainly awkward.

Let’s read on: “While the Republican tax overhaul would add up to an overall tax cut for individual taxpayers, at least through 2025, millions could still immediately receive a tax increase,” notes the report. Interesting! Who might those people be? “For many, particularly those in Democratic areas who earn $200,000 or more, the increase would come from the repeal of the state and local tax deduction, known as SALT.”

If you know anything about California, you likely now know why good old Governor Moonbeam is freaking out. California may be filled with natural wonders, but it’s also a Democratic area chock full of people who earn $200,000 or more — and it’s also known for high state-level income taxes, with a top marginal rate of 13.3 percent. In the bad old days, Californians could count on simply deducting this highway robbery from their federal taxable income, masking the state’s shenanigans and blunting the financial pain. The GOP tax bill yanks what is essentially a federal subsidy away, forcing blue-state residents to face the reality of their local high-tax, high-spending regimes.

This is basic federalism at work. In theory, it should encourage accountability, particularly among high-tax states long dependent on the federal tax code to soften the blow. But as we all know, accountability is no fun. Public panicking and blaming “the rich” — this is all rather hilarious, given that high-income earners in blue states are the losers here, with middle-class taxpayers and small businesses largely on the winning end — is apparently a far more amusing use of time.

Thus, moving forward, when Jerry Brown moans about the tax bill benefiting “the rich,” please loosely translate it as this: “Quick! We need a distraction! California has long been soaking its upper middle class. The GOP tax bill will make it crystal-clear that a significant chunk of this tax burden is coming from . . . from . . . US!” Meanwhile, when New York governor Andrew Cuomo claims that the tax bill will “rape and pillage” his state — yes, he actually said this — and somberly declares that the bill “taxes the taxes that New York families pay,” he’s laughably wrong, and he probably knows it. Why should Americans who don’t live in New York have to cushion the state’s unwieldy, ossified tax-and-spend regime? True tax pillaging, after all, starts at home.

It’s not news to point out that people are fleeing blue states for red states. Recent reports show that Texas gained 1.3 million new residents over the past ten years. (Texas, of course, has no state income tax.) During the same time period, Illinois and New York lost more than 2 million. The GOP tax bill, which rips the mask off of high state-tax regimes, could very well increase the bleeding. “High-income earners on the East Coast understand the implications of this,” a friend who works in finance told me this week. Some of his contacts on Wall Street, he added, are toying with the idea of voting with their feet.

If blue states can’t get their act together soon, perhaps that’s not such a shabby idea. It would certainly send a message, loud and clear: “It’s not the tax bill that’s the problem, dear high-tax state governments. It’s you.”