Kevin de León, California’s State Senate president pro tempore, is fighting mad. For years, he and his colleagues have worked to expand California’s social safety net, even as much of the rest of the country turned away from any semblance of anti-poverty, progressive politics. Now he feels that the GOP-controlled Congress, in overhauling the tax code, has gone after his state’s residents in the most personal of ways—by raiding their wallets to fund tax cuts for wealthy individuals, big businesses, and the political donor class. “The Republican tax increase bill disproportionately hurts California taxpayers by capping SALT (state and local taxes) deductions. Today, the average California taxpayer takes a $22,000 deduction,” de León pointed out. The GOP measure he said, would “cap it at $10,000, meaning Californians will be double-taxed.”
De León is one of many who believe the tax “reform” legislation was a deliberate attack on those “states that overwhelmingly voted against Donald Trump.” As a result, he argues, California is now in uncharted territory, faced with a hostile federal government and a vindictive president “who personally seeks to negatively impact the sixth-largest economy in the world.”
De León and his colleagues in California’s political leadership have thus concluded that they are in “a race against the clock right now. We’re working feverishly with national tax-law experts to mitigate the damage to California taxpayers.”
As the holidays kicked in, the Senate, the House, the governor, the state’s finance commission, and an array of tax experts began formulating California’s responses. In the first weeks of the new year, these conversations will go public. If, in 2017, California fashioned itself as the epicenter of resistance to Trump’s environmental and immigration policies, in 2018 it will likely aim to position itself at the fore of resistance to Trump’s plutocratic tax policies.
There are three ways the bill hits residents of California, New York, New Jersey, and a handful of other states—all of which are already “donor states,” meaning that their taxpayers send more money to Washington than they get back in federal spending—peculiarly hard: First, in capping the amount of state, local, and property taxes that taxpayers can deduct from their federal income calculations, the bill ensures that middle-income earners in these states will be double-taxed when they pay federal taxes. Approximately 3 million Californians, experts calculate, already pay more than $10,000 a year in state taxes.
Second, in limiting the homeowner mortgage-interest deduction, the bill deliberately targets the middle classes of states like California, where property costs far more than any other state except Hawaii. While progressives have long urged reform of this part of the tax code, their hope was that in eliminating a boon to homeowners, money would be liberated for social spending on affordable housing, health-care expansion, debt-free higher education, and other social goods that would benefit the whole community, including the taxpayers being asked to foot higher bills. Instead, homeowners in Los Angeles, San Francisco, New York, Boston, and other high-cost cities will now be subsidizing billionaires’ tax breaks and a rollback of the estate tax for America’s wealthiest families.