John Stoehr: GOP tax bill tests the limits of liberal tolerance
The Republicans passed a tax cut Wednesday. Most of the attention has been on its enriching of the fabulously rich (like President Donald Trump) and on the GOP’s hypocrisy. Less attention is paid to this, though: It’s a tax on blue states.
To pay for permanently lowering rates for corporations and the rich, and temporarily loweing rates for the middle class, the GOP needed a reliable source of money. They focused on what’s called state and local tax, or SALT, deductions. You and I can deduct our state and local taxes from our gross federal income tax. Getting rid of that gave the GOP most of the money it needed.
It could have been worse. Senate Republicans originally wanted to eliminate SALT deductions entirely. That changed to a partial elimination. Tax filers can now deduct up to $10,000 in state and local taxes. Combined with other things, middle-class taxpayers in blue states will probably see a slight decrease in taxes in the short term.
After 10 years, they might see a slight increase. My point, however, is about blue states as a whole. Connecticut has a lot of affluent residents paying more than $10,000 in state and local taxes.
As a whole, Connecticut and blue states will see a net loss.
This is on top of an existing net loss. Compared to red states, blue states are richer, more educated and more diverse.
They send the U.S. Treasury more money than red states do while receiving less. That means blue states are currently subsidizing red states. Because blue states lean liberal and red states lean conservative, that means blue states are currently subsidizing conservatism. The Republicans have tried spinning this.
They have said SALT deductions are a subsidy. If that were true, blue states would see a net gain in their share of federal money. They don’t. The Republican spin is false.
Liberals usually don’t mind paying more, because liberals tend to believe everyone should pay for their share. Liberal states are richer, on balance, so don’t mind helping conservative people in red states live in ways a majority of them deems appropriate, even if that results in the disenfranchisement of minority groups.
Conservatives usually don’t believe in everyone paying their fair share, because they usually believe that someone is taking unfair advantage of the system (think: “welfare queens,” “deadbeat dads,” “anchor babies”). All things being equal, liberals tolerate this in deference to the constitutional right of states to pursue their fates.
But this new GOP tax bill tests the limits of liberal tolerance.
Conservatives don’t want people to take unfair advantage of the system, yet they are doing precisely that. Blue states pay their share, but red states want more. It looks less like a tax cut and more like plunder.
It’s more than that.
Because Connecticut is about to send more money to red states, it can’t spend as much on infrastructure, education, and programs a majority of state residents deems important. As Yale’s Jacob Hacker noted in a coauthored op-ed in the New York Times : “Republicans have put the majority of their tax cuts on the nation’s credit card, but they handed most of the rest of the bill to blue states.” I’ll take that a step further to suggest that red states may be violating our sovereignty.
That should sound familiar. After former President Barack Obama enacted the Affordable Care Act, which was enormously generous to red states, conservatives fought to prevent the law from reaching and helping their poorest residents, citing their right not to be told what to do by the federal government. They brought their complaint to the Supreme Court and partly won.
History is about to repeat itself. Attorneys general from California, New York and New Jersey have said they plan to take the federal government to court. Our AG, George Jepsen, better get on board.