Dems open door to tax-free 'donations' to restaurants, car dealerships, and gun-sellers
Liberals are distinctly unhappy with the limits on the deductibility of state and local taxes contained in the new tax law. The $10,000 cap on local deductions means that many of "the rich" will have to pay more taxes. This confuses me because:
1) I thought liberals hated "the rich";
2) I thought liberals loved higher taxes, because that's what needed to fund essential government services;
3) I thought liberals didn't mind if people in blue states paid higher taxes than people in red states, because the hallmark of a progressive tax system is one where some people pay vastly more than others without getting any increase in benefits.
But liberals don't like it, and when they don't like a federal law, they declare themselves immune to it. And now liberals have cooked up a way to become states that are sanctuaries not only from immigration officials, but also from federal income taxes!
Kirk Stark, a law professor at the University of California, Los Angeles, has suggested that states encourage residents to donate money to their state governments, then let the governments credit those donations against their state income taxes. Such donations would qualify as charitable donations, which are still fully deductible on federal taxes.
Kevin de León, a Democrat who is president pro tem of the California Senate, has announced plans to introduce legislation aimed at reducing the impact of the tax law. Mr. de León and other legislators concede that they are trying to game the system. But they argue that Congress left them little choice.
They have no choice! No choice at all! (Except cutting spending and local taxes – as I said, they have no choice!)
So under this new plan, people who have state and local taxes in excess of $10,000 would "donate" that excess (wink, wink!) to their local governments, out of the goodness of their hearts, and such "donations" would not be taxable, since it would be (involuntarily) "charitable"!
I like this idea because it is entirely consistent with Democratic philosophy. The words "charitable donation" mean whatever Democrats need them to mean – no more, no less – just as the words "immigrant" and "man" and "woman" mean whatever they need them to mean at the time they say them.
However, I wonder if opening the door on this issue will lead to unintended consequences. Conservative states might legislate in the same way to offer shelter from federal taxes for their own citizens.
Imagine a state like Texas passing a law allowing people to make charitable "donations" to restaurants in return for a charity dinner, or a charitable "donation" to a car dealership in return for a "symbolic" appreciation car, or a charitable "donation" to a gun-seller who gives the donor a "lifetime achievement award" in the form of an AR-15. States could legislate that these are charity donations, just as the "donations" to local governments in blue states are, and thus not subject to federal taxation. People would flock to conservative states because, out of the goodness of their hearts, they want to do more for charity...and less for the federal government.
Feel free to write in the comments section what kind of new and innovative charitable donations you'd like to be able to make under state and federal law.
Ed Straker is the senior writer at Newsmachete.com.