Overheard this morning in the Tobak household:
“Have you seen this year’s property tax bill?”
“I know, right? They’ve piled on a laundry list of local bonds, taxes and initiatives. And the assessment went up.”
“Trying to figure out how we’re going to pay it by Friday.”
“Take it out of the home equity line of credit?”
“That’s nearly maxed out. Besides, didn’t we get a notice that Wells Fargo is winding that down this year?”
“Shit, that’s right.”
“Should we sell some stock?”
“May be a good time; the new income tax bill is going to kill us in 2018.”
“I know, it’s crazy: We’re going to lose our state and local deductions plus half our property tax deduction. Good time to sell some stock.”
“Good time to move out of California.”
“That’s what I’m thinking. Who would have thought, after a Republican sweep.”
“No shit. Tax cut my ass.”
I’m sure we’re not the only ones having that sort of conversation around this time of year. Sort of puts a damper on the holidays and all.
Not to complain, but, what the hell: With skyrocketing healthcare costs and living expenses and stagnant income and interest rates, it’s hard to believe that what’s being sold as a massive tax cut could screw millions of hardworking and retired people who own a home and live in a high tax state like California or New York.
I’ve been pushing for tax reform for years, but this is far from the simplified overhaul I’d envisioned. Granted, we needed lower corporate and small business taxes to boost the economy, but the corporate rate cut may not go into effect until 2019, and it’s not at all clear that this bill will help most business owners. It certainly won’t help this one, that’s for sure.
Call me a sore loser if you want, but whenever governments try to pick winners and losers, there are always unintended consequences. As a life-long fiscal conservative (I said fiscal), I can’t help but feel like I’ve been thrown under the bus. Besides, if you’re going to call it “the biggest tax cut in U.S. history,” that’s what it should be. For everyone.
It’s not. Not even close.
Funny thing is, my long-time tax accountant retired last year and moved to Washington, a state with no income tax. How the hell did he know to do that? Strange how some people just have an amazing sense of timing [sigh].
P.S. Although both House and Senate bills killed state and local income tax deductions and limited property tax deductions to $10K, now that the bills have passed, lawmakers from high-tax states like California and New York are fighting to bring back those deductions in the reconciliation process. Makes no sense to me, but that’s politics, and I’m not complaining. Stay tuned.
Image credit: YouTube screen shot by Wochit Politics
Steve,
Don’t get me started. You are dead right. I never figured I had all my marbles paying $20K in property tax annually on our place here in NY state. Even Paychex founder, Tom Golisano who could afford to pay taxes on his property moved out in defiance of taxes. Serves me right for being a complete dumbass and being too busy treading water and pushing like hell every day. It’s not just property tax; it’s the base economy here. Try finding local investors outside of NYC. The money is nowhere else in the state because innovation and thoughtful risk-taking will find fertile ground elsewhere. State government here is enormous. And New York state borrows from the teachers union. Does anyone think we have the guts to negotiate with them once they own us like that? The New New York ad campaign that Cuomo was touting and spending zillions to market it is a complete bust. All you have to do for 10 years worth of tax breaks is to let local state school professors get in your pants and let the young book-smart hammerheads micromanage you and tell you how to run your business. Would really love to see those success metrics. The problem is that many of us have waited too long, and now there is no one to sell our homes to as we try to leave. Yep; I am not feeling too smart.
Steve, two points. One, we’ll save you a spot here in Phoenix. The number of California license plates we see while driving around town seems to be on the rise, and for good reason. When my family and I moved from Texas, we looked at property in Los Angeles, San Diego and Phoenix. After three long weeks of searching and soul searching, Phoenix rose to the top — it was a no brainer. Yes, we have a state income tax, but nothing like what you endure in California.
Second point. Like you, I’m a fiscal conservative, but the problem in Washington isn’t that the Republican’s aren’t trying their best, it’s that the tax code is so ridiculously complex that no matter what changes Congress makes with the code, everyone loses. The Republicans can’t fix this mess…and neither can the Democrats. Until we, the citizens, can do our taxes on a damn post card, or go to a straight (simple) VAT tax, the government wins, and we lose.