Congress Made It Harder to Give Teachers Raises

Bob Lord

Bob Lord Tax Lawyer

In just a few months, we’ve seen teachers in five states walk out of the classroom to protest their abysmal pay.

Stingy state budgets are mostly to blame for low teacher pay and poor school conditions, but there’s a federal tax connection, too. Unfortunately, last year’s Republican tax plan could make keeping good teachers in the classroom more difficult than ever.

Raising teacher pay requires money, which at some point requires new state tax revenue.

Now, most state taxpayers will tolerate tax increases when they know those taxes will fund education. But in many places, state lawmakers have only so much room to raise taxes before voters express their displeasure come election time.

The jam state governments may find themselves in is that Trump and his Republican friends in Congress effectively just increased state income and property taxes. A lot. Which means voters won’t be too keen to see another increase so soon.

How can Congress increase state taxes? By increasing the real cost of state taxes people already pay, that’s how.

From the enactment of the federal income tax in 1913 until last year, most higher-income state taxpayers could deduct their state income and property taxes on their federal returns.

In recent years, an affluent taxpayer would receive about $1 back, in the form of a federal income tax reduction, for every $3 of state income or property tax paid. So a $3,000 state income or property tax bill felt like a $2,000 expense.

The Trump-Republican tax plan changed all that.

The deduction hasn’t been eliminated entirely, but it’s now capped at only $10,000 in state income and property taxes. For the majority of Americans, who no longer claim itemized deductions, the itemized deduction for state income and property tax is now meaningless.

Which means that $3,000 state income or property tax bill now feels like a $3,000 expense. That’s the same as a 50 percent state tax increase — which will feel even worse if states pass modest tax increases to cover long overdue raises for teachers.

Was there a good reason Republicans put state lawmakers in such a bind? No — only a very bad one.

Congressional Republicans and Trump officials claimed that the deduction for state and local taxes was a subsidy to high tax states that burdened low tax states.

But they had it backwards. It’s the absence of a deduction that creates a subsidy, which burdens high tax states and benefits low tax states.

Suppose I pay an additional $300 in state income tax to pay teachers. The teachers who receive that $300 will pay federal income tax on it, plus federal employment tax. And the state or county paying those teachers will pay federal employment tax as well.

When you do the math, the $300 going from my pocket, to the state treasury, to teachers would nearly break even for the IRS.

Which means the folks subsidizing deductions of state taxes are the teachers and other workers who pay federal taxes on their wages. But thanks to congressional Republicans, the state taxpayers no longer see a federal tax reduction.

Which means that the states that pay their teachers a decent wage are now subsidizing the states that pay their teachers poorly.

That’s probably what Trump and his Republican friends wanted all along. But it’s not what the people who educate our kids deserve.

***

Reposted from Inequality.org

Posted In: Allied Approaches

Union Matters

He Gets the Bucks, We Get All the Deadly Bangs

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

National Rifle Association chief Wayne LaPierre has had better weeks. First came the horrific early August slaughters in California, Texas, and Ohio that left dozens dead, murders that elevated public pressure on the NRA’s hardline against even the mildest of moves against gun violence. Then came revelations that LaPierre — whose labors on behalf of the nonprofit NRA have made him a millionaire many times over — last year planned to have his gun lobby group bankroll a 10,000-square-foot luxury manse near Dallas for his personal use. In response, LaPierre had his flacks charge that the NRA’s former ad agency had done the scheming to buy the mansion. The ad agency called that assertion “patently false” and related that LaPierre had sought the agency’s involvement in the scheme, a request the agency rejected. The mansion scandal, notes the Washington Post, comes as the NRA is already “contending with the fallout from allegations of lavish spending by top executives.”

***

More ...

Corruption Coordinates

Corruption Coordinates