Bush's promised tax overhaul has caused much speculation about how he plans to go about it and who the winners and losers may be. Naturally, those of us in the middle or below should be suspicious. This article in the Atlanta Journal Constitution
http://www.ajc.com/today/content/epaper/editions/today/news_146a9c8e15507108003d.html repeats theories that federal deductions for state and local taxes would be eliminated. Subscription required, so I'll post some highlights.
Washington --- President Bush's plan for "revenue-neutral" tax reform needs losers to balance its winners, and people who take the federal deduction for state and local taxes may be in administration planners' sights, news reports say.
The federal deduction for state and local income taxes "predominantly benefits the blue states," said William Gale, a tax policy expert at the Brookings Institution, a liberal-leaning research group. "There is definitely a political calculation to this."
But before conspiracy theorists get too carried away, political observers note that by eliminating deductions for state income taxes, Bush would be inflicting political pain on two of the nation's most prominent Republican governors, George Pataki of New York and Arnold Schwarzenegger of California.
And they'll be watching closely to see if Bush will also seek to end the federal deduction for property taxes.
Losing the federal deduction would "effectively increase the price of state and local taxes" for people who itemize on their tax returns, according to Harley Duncan, executive director of the Federation of Tax Administrators, a group representing state tax officials.
As many as 40 percent of taxpayers itemize, and they tend to be the people with bigger incomes, so they definitely would feel the tax increase if they lost that federal deduction, he said.
If this plan actually is what's coming down the pike, then all holy hell needs to be raised. This is a tax increase on many of us. If it walks like a duck...