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

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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There is Dignity in All Work

There is Dignity in All Work