California Democrats unveil plan to skirt provision of GOP tax law

Senate President Pro Tempore Kevin de León, D-Los Angeles, on Thursday unveiled his plan to allow Californians to skirt the provision of the newly passed federal tax overhaul that caps the state and local tax deduction (SALT), in just the latest effort by Democrats in the Golden State to thwart the Trump agenda in Washington.

Under the plan, state residents could make charitable contributions to a state fund, called the California Excellence Fund, and be able to deduct those payments on their federal taxes. 

The move would decrease the amount of taxes Californians have to pay under the new law, as the deduction for charitable contributions remains uncapped.

“The Republican tax plan gives corporations and hedge-fund managers a trillion-dollar tax cut and expects California taxpayers to foot the bill,” de León said in a statement. “We won’t allow California residents to be the casualty of this disastrous tax scheme.”

In California, the average taxpayer claimed $18,000 in state and local deductions in 2015, according to IRS data. Under the new law, the deduction is capped at $10,000, a provision that hurts high-tax blue states.

The “Protect California Taxpayers Act” essentially allows state taxpayers to reclassify their tax payments as charitable deductions, letting them deduct the entire amount on their federal tax returns.

Additionally, the legislation could serve as a model for other states to circumvent the law. Just recently, Gov. Andrew Cuomo suggested that New York will take its own action, possibly mirroring California’s.

“Washington’s tax plan uses New York and California as piggy banks to finance tax cuts for Republican states,” Cuomo said in his recent annual state of the state address. “We must take dramatic action to save ourselves and preserve our state’s economy.”

While it’s not entirely clear if the proposed law would comport with current IRS guidelines for charitable deductions, similar frameworks, on a smaller scale, have been upheld by the U.S. Supreme Court.

In 2011, the U.S. Supreme Court upheld a tax break for religious schools in Arizona Christian School Tuition Organization v. Winn, ruling that a dollar-for-dollar tax credit that pays for children to go to religious schools cannot be challenged on constitutional grounds.

The High Court found that the plaintiffs did not have standing to bring suit.

And while Congress could simply pass a new law or the IRS could change the rules for charitable deductions, that is unlikely because existing tax credit regimes provide school choice opportunities, an issue popular with Republicans.

“This could end up in extended litigation, perhaps before the U.S. Supreme Court,” tax policy expert Alan Auerbach told KQED. “I don’t think this will be a smooth thing to do.”

For the California state Senate leader, the bill also provides fuel for his primary campaign against longtime incumbent Sen. Dianne Feinstein to show the state’s liberal voters that he’s more equipped to aggressively combat Republicans in Washington.

 

18 comments

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  1. Hood
    Hood 5 January, 2018, 10:57

    Doesn’t this strike people as a needless attention-seeking gimmick, even for DeLeon? Someone has to pay for government. People who have million dollar homes are often middle class in California. But though the “average” California taxpayer declared $18,000 in deductions, the median taxpayer did not. This new tax law does not hurt the vast majority of Californians in that way. The mortgage deduction is very unpopular with economists because it discriminates against renters and it makes sense to trim it.

    Reply this comment
  2. franklygross
    franklygross 5 January, 2018, 11:10

    of course no one mentions its a state tax problem, nothing more than that! go around fed tax laws to hide the fact your state taxes are way too high!

    Reply this comment
  3. Mark
    Mark 5 January, 2018, 11:11

    What an IDIOT. Why as a resident of CA would I want to give the state money money to piss away. We are already paying the highest taxes in the US.
    Another stupid LIBTARD idea…….

    Reply this comment
  4. John Q.
    John Q. 5 January, 2018, 11:31

    Just another way to get Californian’s money!

    Reply this comment
  5. mdcrandell
    mdcrandell 5 January, 2018, 12:30

    In other words give us your money and you get to deduct all you Contribite… California and New York shame on you for thinking people are so stupid!

    Reply this comment
  6. Phere
    Phere 5 January, 2018, 12:32

    Just simply following up being an absolute freakin’ idiot, to being a full ahead MORON!

    Reply this comment
  7. KT
    KT 5 January, 2018, 12:32

    I can choose to give to a charity or not. So does this mean I can choose not to pay my state taxes because I don’t choose that charity?

    Reply this comment
  8. b12day
    b12day 5 January, 2018, 12:51

    Kevin Alex Leon – now Kevin de Leon – What a fraud, changes his name so he could run for political office. Is he ashamed of his parents?

    Reply this comment
    • Roger
      Roger 5 January, 2018, 13:37

      He can change his name all he wants, he’s still a wetback with illegals in his family here in California.

      Reply this comment
  9. Dude
    Dude 5 January, 2018, 17:10

    So, the Demwits “solution”….. give it to us instead of President Trump. Patrioric American’s response? Kiss my Obama you corrupt, obstructionist, anti-American, SORE LOSERS. Every day, more and more seditious Demwit politicians are being replaced by Republican patriots. Soon the Green Party will hold more seats in Congress. Donald Trump will be elected to a second term and your party will go the way of the dodo bird. MAGA!

    Reply this comment
  10. ricky65
    ricky65 6 January, 2018, 08:44

    To believe that the IRS would allow this sort of obvious tax dodging scheme is laughable.
    One thing that isn’t being talked about is how these ‘donations’ are transferred to a special state fund called the “California excellence fund”.
    Supposedly, the State treasurer would administer the fund and rebate the money back to the taxpayer. If that is not a money laundering scheme I’ve never seen one.
    Given the kleptocratic nature of this corrupt state government, the more likely scenario is the state just keeps the money-especially after it is declared illegal in federal courts.
    The question then becomes what to do with all that banked money”. Think it will be refunded to the duped taxpayers? My bet it goes to De Leon’s hairdresser and the Dem favorite groups.
    D-Rats: Please pass this bill. It will be a hoot to watch what happens.

    Reply this comment
  11. Tim
    Tim 7 January, 2018, 08:44

    How funny that they seem so concerned for the resident’s of California now. They didn’t seem that concerned when they raised the gas tax and vehicle registration fees.

    Reply this comment
  12. Queeg
    Queeg 7 January, 2018, 13:31

    Comrades

    History will repeat…..change is always underestimated by the corrupt ruling class…..

    Reply this comment
  13. Bill 'Super Genius' Gore
    Bill 'Super Genius' Gore 7 January, 2018, 20:26

    Ha Ha! I think I just peed myself! No further proof of the utter stupidity of California Libtards is needed. This is because I’m SURE the Trump IRS will certify the State of California as a 501(c)3 tax-exempt organization, especially after the Obama IRS ABUSE of the Tea Party organizations. Remember Lois Lerner? Hmmmmmm?

    Reply this comment
  14. Tobi12
    Tobi12 8 January, 2018, 00:56

    California Democrats have finally lost what was left of their addled minds. They are really nuts!

    Reply this comment
  15. No Bias Kinda Guy
    No Bias Kinda Guy 12 January, 2018, 10:22

    If contributions to the California Excellence Fund can be made in lieu of state taxes, and can then be deducted from federal taxes, then I think de Leon’s got something. I don’t see how any Californian be against that.

    Reply this comment
  16. Sue
    Sue 13 January, 2018, 09:46

    Leave it it to the Dirty Dems to to scam more of our money. Let’s vote out all the scum, time to Drain the Swamp. Wake up California.Vote for John Cox.

    Reply this comment
  17. Ted. Mentor to the doomed....
    Ted. Mentor to the doomed.... 15 January, 2018, 18:10

    Thank GOD for Democrats—- seems like he GOP is ok with racism, spending, taxing and threatening nuclear war……

    GOP is about all done— only morons left!

    2018/2020 baby!

    Reply this comment

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