The Ugly Questions Californians Must Ask Themselves Now That GOP Tax Reform Has Passed

ALPERN AT LARGE--As with the Affordable Care Act, the GOP-drafted Tax Reform Bill of 2017 will have dramatic economic, political, and potentially cultural changes for all of us.  Presuming that the president will sign this bill, and it will become law, the big question so many of us are asking ourselves is ... will our taxes go up or down? 

Maybe it's funny, maybe it's tragic, and maybe it's just a sign of the times that this question is being asked by just about everyone, rich or poor or middle-class.  The confusion and inability to grasp this bill mirrors the atmosphere surrounding the passage of the Affordable Care Act--it's big, it's huge ... but what the heck is it, and how does it affect Joe/Jane taxpayer. 

GOP partisans love it, and Democratic partisans hate it, and certainly it can sink or support one political party if this bill either succeeds or fails to help the economy. 

As with the question of "who is responsible for the improving economy, Trump or Obama?" the answer may vary wildly between individuals asked.  And complicating things is that many who despise the Orange Man occupying the White House often begrudgingly support his economic policies even though they hate everything about him. 

So is Trump a madman hell-bent on destroying the United States, is he beholden to the very rich and trying only to support his own financial fortunes, or he is the cretinous CEO who we personally despise yet accept the fact that he knows the cruel realities of economics and will keep us employed?  Or maybe he is trying, in his own unorthodox way, to "MAGA". 

But enough about "that guy".  There are bigger issues and questions to answer: 

1) This bill was probably focused mainly on bringing back capital and jobs back to the United States by lowering corporate business taxes to 20%, which former President Bill Clinton was calling for over the past decade. 

The reason the new rate is 21%, and not 20%, is to make sure a few crumbs got thrown at the rest of us to make sure we all had something to potentially like about this bill.  Perhaps it's just "optics", and perhaps it's true ethics/morals, but give Senators Rubio and Lee credit for holding their ground and demanding higher child credits...even for those paying no income taxes. 

2) Will there be a "trickle-down phenomenon"?  Maybe, or maybe not, but it's interesting that AT&T and Comcast are giving bonuses to their workers, even union workers. 

Is this all just a PR ploy, or is it part of a new wave of "better corporate citizenry" for big businesses to return to the United States and be accepted?  One can only hope for (and demand) the latter. 

3) The $10,000 limit was insisted on by Senator Susan Collins--an unabashed moderate if ever there was one--for deductions for State And Local Tax (SALT).  Pass the SALT, please, but high-tax blue states like California, New York, and New Jersey will be particularly interested in this issue.   

A lot of us might have our income taxes "here" and raised "there" because of the SALT limitation, but here in the Golden State two, perhaps three, questions must be asked: 

1/2) WHY are our state and local taxes so damned high, and what are we getting for them? 

3) What about sales taxes, fees, gas taxes, etc.?  Because they're NOT deductible already. 

Again it comes down to "what are we getting for our higher taxes", because clearly this new tax bill is going to shine the bright hot spotlight on state capitals and raise the question of whether or not our state income taxes should be reconsidered. 

4) Finally, now that home loans above $750,000 will not get greater allowance for deduction on the interest, the question of why Californians pay so damned much for their homes and condos will be more important than ever. 

Certainly, the rise in home values due to supply/demand issues makes sense, but presuming that the costs can go up because the tax deduction is worth it, and the willingness of so many of us to pay the minimal amount only (interest only, at times) does not make so much sense. 

The former (supply/demand) makes economic sense, but the latter (loan interest deduction, and a lack of required pay down of the principal), is a recipe for another housing/loan/economic crash. 

And it's NO secret to anyone that foreign nationals, particularly Chinese citizens, are buying up properties and jacking up the home prices to nonsustainable levels and preventing American citizens (including those of Chinese descent) from buying their own homes after decades of saving. 

So ... why the heck does California not do the right thing by its law-abiding citizens who merely want to buy a home and have a place to live. 

And ... for you "house-flippers", is it ethical, and/or is it dangerous, to treat houses like stocks when they really should just be places to live that will hopefully go up in value over time? 

And ... for those of you in the local and state halls of power, why DO Californians of all ethnicities increasingly decide they need to bail from the Golden State if they want an affordable house (and affordable college at a public university, to boot, for their kids)?  

Lots of questions, and they should be directed at those in Sacramento and local halls of power who all scream at the Orange Man and the creepy GOP...but out of legitimate concerns or just to distract from their own, more home-grown and local, blatant mismanagement. 

Is it all about distracting from the pension crisis, which suggests that state/local government cares waaay more about its public sector workers/unions/interests than its taxpayers and citizenry? 

Or is it just narrow-minded, shortsighted political elite who don't really give a damn about the middle class and doesn't have the smarts and/or courage to do the right thing by the middle class? 

All good questions and they can be downright uuugly to answer. 

But now that the rules for taxes are changing, and pressure will be brought to bear on blue states with high SALT content and higher home prices, those questions are more in need of an answer than ever.

 

(Kenneth S. Alpern, M.D. is a dermatologist who has served in clinics in Los Angeles, Orange, and Riverside Counties, and is a proud father and husband to two cherished children and a wonderful wife. He is also a Westside Village Zone Director and Board member of the Mar Vista Community Council (MVCC), previously co-chaired its Planning and Outreach Committees, and currently is Co-Chair of its MVCC Transportation/Infrastructure Committee. He was co-chair of the CD11 Transportation Advisory Committee and chaired the nonprofit Transit Coalition, and can be reached at alpern@marvista.org. He also co-chairs the grassroots Friends of the Green Line at www.fogl.us. The views expressed in this article are solely those of Dr. Alpern.)

-cw

BLOG COMMENTS POWERED BY DISQUS