After former Pres. Donald J. Trump leveled the playing field by signing the Tax Cuts and Jobs Act into law, Democrats went to work finding ways to furnish their wealthy donors with a loophole.
Needless to say, the party that thumbs its nose at the rule of law and elites paying their fair share created one. It’s called a ‘workaround,’ and 27 states enacted laws so that lawyers, hedge fund managers, and other people earning in the top tax brackets can make much larger deductions than the Tax Cuts and Jobs Act allows.
“This is like a benefit for the top 1 percent that Congress never enacted, but that Treasury has decided to give away,” Daniel Hemel, a University of Chicago law professor, reportedly said. “The Biden administration talks about making the tax system fairer. But here they are standing idly by and abetting a pretty galling unfairness.”
More specifically, the growing number of states that created this tax loophole for the rich allow them to restructure their business and personal resources to avoid the $10,000 limit on property tax deductions. The one-percenters and affluent Californians and New Yorkers lost a major deduction that working people never enjoyed. Recent reports indicate business owners are funneling personal income through their corporations and bilking the IRS for more than $10 billion annually.
“Much of the money flows to high-income people in California, New York, and New Jersey, while those in Illinois, Massachusetts, Minnesota, and Connecticut are likely saving hundreds of millions of dollars as well,” the Wall Street Journal reports.
California led all states in workarounds that avoided $14.9 billion in taxes that hourly-wage earners and small business owners were forced to make up in 2021. New Yorkers scammed the nation for $14 billion, followed by New Jersey at $3.7 billion and Connecticut at $2.9 billion. Each of the Top 10 workaround states has a Democrat governor who was eager to heap a heavier tax burden on working families.
“We find ourselves blessed with the resources to make the smart investments we need to rebuild California and set our economy on a robust path to recovery,” California Democrat Assemblymember Cottie Petrie-Norris reportedly said.
California’s elites are so pleased with not having to meet an equitable tax burden that the state’s legislature recently passed a measure to extend and increase the workaround. Known as S.B. 113, the bill passed unanimously after Democrat Gov. Gavin Newsome prompted lefties to return a state surplus upwards of $45.7 billion to the rich folk. The workaround update lets corporations lift a business tax credit limit previously set at $5 million. The “Golden State” estimates the well-to-do will keep $5.5 billion, and working people won’t see a dime.
Some Republican-run states have recently jumped into the workaround scheme. After 20 mostly Democrat-run states circumvented the law in 2021, it’s difficult to tell upper-crust conservatives they have to pay more than people in California, New York, Michigan, Minnesota, and Illinois.
“That’s logical from any individual state’s perspective, but in the big national scheme of things, it’s hard to see how this is a good thing,” Carl Davis, research director at the Institute on Taxation and Economic Policy, reportedly said.
Those approving workarounds haven’t met with much resistance. Middle and low-income families barely know the loopholes have been created because the scam hasn’t garnered the attention of the establishment media. Of course, the well-off media moguls can take advantage of the tax break themselves.
The IRS denied early maneuvers to commit what amounts to legal tax fraud for the rich. But tax lawyers sharpened their pencils and came up with ways to have money pass-through S-corps and sucker punch those with lower incomes.
At the federal level, House Democrats passed Joe Biden’s preferred way of tax-sheltering cash-flush liberals. Together they pushed through a bill that would raise the personal property tax deductions to $80,000, after Pres. Trump set it at $10,000 through 2025. The move would have handed millionaires thousands of dollars. One lawmaker estimated that people making less than $100,000 annually would get $20 had the measure passed the Senate. That’s correct, twenty bucks.
