SALT Cap Workaround

[Lee B]

Excerpted from Bloomberg News:

 

Now, various states are considering circumventing that limit by switching from a state personal income tax to an employer-paid state payroll tax calibrated to produce the same amount of revenue. Employers can deduct payroll taxes fully on their federal return.

This would be a tax on Gross Wages paid by the employer. Supposedly New York is leading the way down this road.

[Lion EA]

And, NY, NJ, and CT governors have come together to work on a lawsuit.

[Abby Normal]

Finding ways around new tax laws is inevitable, and fun to watch.

[jklcpa]

Bloomberg projected that these workarounds could cost upwards of $154 billion in lost revenue to the U.S. Treasury.  This could get messy....

To read more of the details, google "Bloomberg & State Tax Workarounds" and look for the article from 5 days ago.

[Patrick Michael]

Maybe I'm missing something, but how is switching from an income tax to payroll tax going to help the workers?  Sure, businesses can deduct the payroll tax (until the congress changes the law to exempt the deduction) but the businesses will still end up paying out more then the deduction is worth. I assume the businesses are not going to just eat this increased expense and will lower wages to make up for it. I can see businesses that use minimum wage (or near minimum wage) employees laying people off since they will not be able to lower wages to make up for payroll tax.  I live in NY and wish Cuomo would work on lowering taxes by controlling spending instead of spending money on a law suit that is doomed to fail.

[Abby Normal]

That's what I was thinking, pay cuts for everyone, so net pay remains the same. Not sure how this would affect self-employed or those living on investment income, retirement income or rental income.

[Gail in Virginia]

Am I the only one that thinks Strategic Arms Limitation Treaty every time I see SALT?  Just wondered.....