Thursday, December 06, 2012

"BIZARRE ECONOMIC SUICIDE PACT": Jim Geraghty's Soak-the-Blue-State-Rich Tax Plan

Jim Geraghty is an evil genius:

...the assessment from Joel Kotkin of Forbes about how blue states voted for policies that are likely to hurt themselves was pretty fascinating:

With their enthusiastic backing of President Obama and the Democratic Party on Election Day, the bluest parts of America may have embraced a program utterly at odds with their economic self-interest. The almost uniform support of blue states' congressional representatives for the administration's campaign for tax "fairness" represents a kind of bizarre economic suicide pact.

Any move to raise taxes on the rich -- defined as households making over $250,000 annually -- strikes directly at the economies of these states, which depend heavily on the earnings of high-income professionals, entrepreneurs and technical workers. In fact, when you examine which states, and metropolitan areas, have the highest concentrations of such people, it turns out they are overwhelmingly located in the bluest states and regions

So I put together my "Soak the Blue State Rich" plan:

• Keep the tax rate on capital gains the same.

• Raise income taxes on the top income bracket for 2013, those making $398,350 and up (single filers, married joint filers, or head of household).

• Means-test, or eliminate entirely, the mortgage-interest deduction (which benefits taxpayers in areas with the highest real-estate values and mortgages -- i.e., Hawaii, D.C., New York, California, and Connecticut).

• Means-test or eliminate entirely the federal deduction of state and local taxes, which is disproportionately utilized by those in high-tax blue states: “In 2005, taxpayers in California and New York together made up 20 percent of those claiming the deduction and accounted for 30 percent of its value. Itemizers in New York, New Jersey, Connecticut, and California claimed on average over $12,000 per household.”

Of course, there are some wealthy right-leaning folk who will get snared under this plan. But they will have at least two options to alleviate their tax bill: first, move to red states with lower real-estate prices, lower state and local taxes, and lower costs of living...

I'm Doug Ross, and I endorse this tax plan.

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