GOP Tax Overhaul Got You Down? California Has a Plan

SACRAMENTO, Calif. (CN) – California’s battle with the Trump administration and the GOP-dominated Congress continued on multiple fronts Thursday, not the least of which involved the introduction of a bill designed to help Californians avoid repercussions from the recently passed federal tax overhaul.

The leader of the California Senate, Kevin de Leon, introduced Senate Bill 227 Thursday in a bid to outmaneuver congressional Republicans who removed federal deductions that favored high-income blue states like New York and California.

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

If passed and signed into law, the Protect California Taxpayers Act will allow state taxpayers to make a donation to the California Excellence Fund, which contributes funding towards higher education, and in turn receive a dollar-for-dollar tax deduction.

In the past, if a taxpayer paid $22,000 in state taxes – the average for Californians – you could deduct the entire donation from federal taxes. Under the tax overall, that number is capped at $10,000.

Critics say the California Excellence Fund poses as a charity and that taxpayers are in effect giving money to the state government. But California would not be the only state to provide deductions for donations to higher education, even where funded by state coffers. Similar funding and deduction vehicles are in effect in Illinois, Montana, Minnesota and Pennsylvania.

Even red states like Alabama, Louisiana and Arizona, use similar tax incentives to fund education, and in some cases the states use it to fund private schools or vouchers.

The fund will help Californians from bearing a larger financial burden from federal taxes, according to California lawmakers.

“This legislation will protect Californians from losing money as a result of the federal tax ripoff, said state Sen. Jerry Hill, a Democrat representing Santa Clara and San Mateo. “I applaud Senate President de León for leading this effort that will help many of my constituents and residents all over the state.”

The move is not without its critics, as some fear the other nonprofits and charities who rely on tax-deductible donations might get hurt.

Meanwhile, Republicans in Sacramento also said a better way to help California taxpayers is to state taxes across the board.

“California tax code should help everyday California families to be able to live and work in our state,” said Assemblyman Vince Fong, who represents conservative Kern County.

Fong said he will introduce a bill to cut state taxes for California’s middle class and reduce taxes on small businesses.

But with a Democratic supermajority in the California Legislature, it is unlikely the Republican coalition can accomplish much.

De Leon appeared more vexed about the possibility that the Trump administration will interfere with California’s plans by supporting legislation or by executive order.

“This is the clash between the state government and the federal government,” he said in a recent interview with National Public Radio. “And we will see it soon.”

The tax overhaul is just the latest fracas in a battle between California and the federal government. Other fronts include climate change, recreational marijuana, water rights and offshore drilling.

 

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