Riley: Raimondo‘s Confused Tax Reform Priorities
Tuesday, January 23, 2018
Several blue states with high income and local property taxes are behind an effort to skirt recently imposed caps of a combined $10,000 per tax filer per annum. Notably, New Jersey and New York have led the charge.
The plan would work like this: towns create charitable funds and give homeowners a credit off their property tax bills for all or most of what they donate. The towns would use the donations for the same purposes as property taxes, such as schools and police and snowplows.
The homeowner would pay roughly the same amount. But on his or her federal tax return, the charitable contribution would not be subject to the new $10,000 cap that Republicans in Congress put on the deduction for state and local taxes in the law signed by President Donald Trump just before Christmas.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTAccording to the Urban-Brookings Tax Policy Center, the average SALT deduction claimed in 2015 was $17,850 in New Jersey. Internal Revenue Service data shows it was $28,257 in Bergen County, where Gottheimer and Murphy made their announcement.
Governor Andrew Cuomo said “new opportunities for charitable contributions” was part of a multi-prong strategy he was planning to attack the deduction cap that also included a lawsuit and possibly changing state taxes imposed on employees to those imposed on employers, because businesses will continue to be able to deduct all state taxes.
Where is Rhode Island‘s Governor?
Gina Raimondo has been vociferously opposed to virtually any tax reform for months regardless of the plans final version. In late November she said “millionaires and billionaires are going to get a tax break, on average, of $50,000 a year,” citing numbers produced by the Center on Budget and Policy Priorities. “If President Trump and his Republican friends really want to reform the tax code, they should put working families first.”
Despite the fact that home mortgage deductions and State Income taxes were surprisingly ultimately capped harming thousands of Rhode Island citizens,Raimondo seemed oblivious to the changes upon the final vote. Why are the other blue States like California, NY and NJ trying to address the mortgage cap and State income tax cap while Raimondo and Rhode Island remain silent? Is it because she got away again with the controversial “carried interest” deduction? How much was that little ditty worth to her and her insider buds? Seriously why is she never asked that? I run a hedge fund and don’t get “carried interest” treatment -- but she does?
As I have said before, the combination of the fact that Raimondo continues a top-down government style and her continued “boot on the throat" of Rhode Island business is a serious threat to Rhode Island when all the while Trumps America soars.
Rhode Island will still be standing on the sidelines afraid to return tax dollars to citizens while Providence sits on the verge of bankruptcy with an intransigent and incompetent Mayor. Meanwhile, Mayor Elorza works the back room of the State House for a bailout. Hence the latest $1 billion debt issuance for building new schools. This solution pushes Providence bankruptcy off of both Raimondo and Elorzas plate temporarily. Imagine how Providence finances could be helped if the rest of us paid for a rebuild of Providence and their schools. This will be done by billing State taxpayers, as the Governor proposes, through issuing a billion in State debt for a few schools is a cynical abuse of state taxpayers.
We can’t expect Raimondo to trust taxpayers with a return of their own dollars. For her, it's higher taxes and picking winners and losers. But just in case she continues to be wrong, I propose the Governor immediately to donate all her gains + carried interest for the 4 years she has improperly kept her investment in the State Pension plan. She should never have asked for an ethics ruling. She knew better and now she should contribute all her unethical, conflict-ridden money to a charity that supports either children and/or healthcare for the poor in Rhode Island.
Michael G. Riley is vice chair at Rhode Island Center for Freedom and Prosperity and is managing member and founder of Coastal Management Group, LLC. Riley has 35 years of experience in the financial industry, having managed divisions of PaineWebber, LETCO, and TD Securities (TD Bank). He has been quoted in Barron’s, Wall Street Transcript, NY Post, and various other print media and also appeared on NBC News, Yahoo TV, and CNBC.
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