Tax bill: California unveils plan to skirt Trump's SALT deduction cap

Tax bill: California unveils plan to skirt Trump's SALT deduction cap

According to The Mercury News, UCLA law professor Kirk Stark is advising lawmakers on the matter and notes that California already offers a similar deal in which donors to conservation easements or private school vouchers receive a state tax credit and a federal tax deduction for the contribution.

Senate leader Kevin de León on Thursday introduced legislation to allow Californians to make a charitable donation to the state - to the California Excellence Fund - in exchange for a dollar-for-dollar state tax credit.

But California would not be the only state to provide deductions for donations to higher education, even where funded by state coffers. The Golden State's "per-filer" average SALT deduction is a middle-class $12,682.

"This tax provision hits the blue states by eliminating the state and local tax deductibility and uses that money to finance the tax cut in the red states", said New York State Gov. Andrew Cuomo on CNN's "New Day".

In Bergen County, N.J., where Gottheimer and Murphy made their announcement, IRS data shows the average claimed for state and local taxes in 2015 was $28,257, or almost three times the limit allowed under the new federal law.

Because states are not registered as charities, their tax codes would have to be modified for them to be considered charitable organizations, said Joseph Callahan, a lawyer with Mackay, Caswell & Callahan in NY.

California's attempt to skirt the GOP's new $10,000 cap on local and state tax deductions is officially in play.

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


A new proposal in California would allow residents to make donations instead of paying taxes in order to avoid the new federal tax plan's cap on deductions of state taxes.

A basic way it might work is this: Say you pay $30,000 in state income and property taxes in 2018.

De León's bill is one of several efforts that elected officials in high-tax states are taking to mitigate possible federal tax increases facing their residents.

Taxpayers will then be able to deduct their contribution to the Fund from their federal taxes, as they have historically done with their state tax payments.

The federal Tax Cuts and Jobs Act of 2017 was signed into law by President Donald Trump on December 22, and Chris Smith, a CPA with CB Smith and Associates, said the majority of Forsyth County would pay a lower amount in taxes in 2018. Combined with new limits on the mortgage interest deduction, the $10,000 cap on state and local deductions was expected to generate an additional $668 billion over the next 10 years, according to the Joint Committee on taxation. For most states and taxpayers, this doesn't matter-some states don't have income taxes, for example.

In fact, about a third of Californians claim around $18,000 a year.

As recently as October 2011, the IRS chief counsel reviewed a Missouri law that provided a 25% state tax credit for contributions to domestic violence shelters and decided that benefit would not be treated the same as a public television tote bag.

Related:

Comments

Latest news

Investor Research Report on Fiat Chrysler Automobiles NV (NYSE:FCAU)
Shares posted an 8.3% rise on being readmitted to trading. (NYSE:RJF) has risen 41.57% since January 3, 2017 and is uptrending. Over the past 50 days, Fiat Chrysler Automobiles N.V. stock's 4.63% off of the high and 29.37% removed from the low.

Micromax Bharat 5 Plus with 5000mAh found listed on company's website
In terms of connectivity, the dual-SIM device comes with 4G VoLTE support, WiFi, Bluetooth, GPS and USB OTG support. The Bharat 5 Plus is backed by a 5,000mAh battery, which the company claims will offer 21 days of standby time.

How Analysts Feel About Eli Lilly and Company (NYSE:LLY)?
This number is based on a 1 to 5 scale where 1 indicates a Strong Buy recommendation while 5 represents a Strong Sell. The stock of Eli Lilly and Company (NYSE: LLY ) earned "Outperform" rating by Leerink Swann on Thursday, November 12.

MLS 2018 schedule includes 9-day break for World Cup
But those two teams will each play the Vancouver Whitecaps just twice, impacting the point system for the rivalry's annual trophy. The Timbers will face the Sounders on May 13 at Providence Park, June 30 at CenturyLink Field and August 26 back home.

Swift Winter Storm Unleashes Snow and Snarls Travel in NY
The frigid temperatures in our area also continued to cause trouble Wednesday, and heating experts were working around the clock. SC saw its third heaviest snowfall in one day on record in Charleston, where 5.3 inches of snow was measured Wednesday.

Other news