IRS moves to block California and other states from helping residents avoid new tax-deduction limit

The L.A. Times reports:

The Trump administration has delivered another blow to California.

The Internal Revenue Service and Treasury Department on Thursday moved to block efforts by lawmakers in California and other Democratic-controlled states to help their residents avoid a new limit on state and local tax deductions.

The proposed rule, which is likely to face legal challenges, targets legislation in those states that would allow taxpayers to claim a charitable deduction for state and local tax payments above the $10,000 limit set in the tax cuts passed by Congress last year.

The Treasury Department said the legislation being considered in various states amounts to a tax dodge for wealthier Americans.


“Congress limited the deduction for state and local taxes that predominantly benefited high-income earners to help pay for major tax cuts for American families,” Treasury Secretary Steven T. Mnuchin said.

“The proposed rule will uphold that limitation by preventing attempts to convert tax payments into charitable contributions,” he said.

However, the limits on state and local tax deductions will hit some middle-class families in California hard even though the wealthy reap the most benefits from it.

Some 6.1 million California residents filed for the deduction in 2015, reducing their federal taxable income by $18,438 on average, according to the Tax Policy Center. Only New York and Connecticut had a higher average deduction.

An article well worth your time. The struggles of high tax , Blue America.