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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]This opinion piece in a Cleveland paper argues that raising federal income taxes on residents who live in high tax areas (through a repeal of the SALT deduction) will prove a disaster for what he describes as legacy cities such as Cleveland, Cincinnati, Toledo and Youngstown.

http://www.cleveland.com/opinion/index.ssf/2017/12/gop_tax_bills_state_and_local.html[/quote]

Yep. How to turn Ohio blue in a heartbeat? Get the suburban Cleveland and Cincy voters aligned with East Cleveland and other predominately African-American voters.[/quote]

Also partnership entities, such as law firms, also are greatly affected by the elimination of the SALT deduction.  For example, a partner in a partnership must pay state and local income taxes in every jurisdiction that has an office.  So for a law firm, a partner of that law firm must pay state and local income tax in every state and city of the US where that firm has an office (DC, NYC. Boston, Chicago, Atlanta, LA, San Fran, Charlotte, Miami, Philadelphia, Denver, Austin, etc), every single one, even if that partner doesn’t practice out of that office or even visits that office.  This can result in an enormous amount of money.

Now that amount is limited to $10,000?  A law firm is just an example, but the scenario applies to any partners in any partnership.  These are also business owners.  I am surprised this isn’t getting more attention.  If you are a partner in any kind of partnership I woul wake up to the potential for this to cost tens of thousands or more, every single year, per partner.[/quote]

[i]Well these are people that Dems love to hate...big law, accounting, hedge fund.  plus the Pease reductions are still in place.  But we all will no longer being subsidizing public schools that are the equivalent of private,   lawn/leaf debris, trash pick up, water/sewer, etc.   You can't begin to imagine what some jurisdictions stick in property taxes.[/i]

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1) I disagree that [b]Democrats love to hate partnerships[/b], you think most Biglaw is comprised of only republican partners?  Or doctor groups, entertainment agents, or architects, or lobbying firms or any partnership entity?  2) it’s not the property taxes that are the big issue for partnerships, it is the requirement that each partner must pay state and local tax for each office, regardless of whether that particular partner works in that office.  So we will take Biglaw for example, let’s say it’s a huge firm, with offices all over the US.  Paying local and state taxes in ALL of those offices on an individual partner level can add up super quickly.  So they’re already subsidizing public schools, roads, etc in jurisdictions in which many partners never even work or set foot.  These amounts are way over $10,000.  And previously you could take those amounts as a deduction on federal taxes, but no more.  So what happens?  Sure, you’re punishing the high state income tax states like California, but what about those people who have to pay that tax but don’t live there or work there, they’re just a partner in a partnership that has a California office.  Well. Bye bye California office.  You may start to see a push for certain offices in those high tax states to close or consolidate or have them telecommute instead.  And there go all those support staff average joe jobs.  [b]It’s already being discussed at my firm[/b].  [/quote]

Either your post is poorly worded or you don’t seem to understand how state and local taxes interact with each other. Non-residents pay taxes on the income generated in any state where they are not a resident. . [b]They then will receive a credit on their resident state income taxes for taxes paid to the other state. [/b]

So, assume a partner resides in IL with offices in CA, GA, and NY. To keep things simple, assume each office generated exactly $1 dollar of income for that partner. The partner will report $1 of income to each of CA, NY, and GA and pay applicable taxes on that dollar to each respective state. SHe will then report $4 to IL (her state of residence) but IL will credit her (reduce her taxes owed dollar-for-dollar) for each tax dollar paid to other states. Note: that states will not grant the credit for city income taxes paid aother jurisdiction (like NYC taxes).

Either way, her [b]effective state income tax rate[/b] ends up being some weighted blend of what otherwise would have been her state effective tax rate had she only generated income in just one state. While this does add up in nominal dollars, a partner in a law firm who loses the SALT deductions is no worse off than any other high income earner who loses SALT but happens to live and generate income in just an individual state. 
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I put my quoted post in italics.   You people do not know the tax code in every state.  Have you ever filed returns as a partner in a pass through with a multi-state presence?

States write their own tax codes and are exceptionally greedy about these LLC's.   NYC taxes should be deductible in all states except NY.  It really is unique in the USA and is a city state as far as what exists and is funded.  No other city has so much ... Comparable institutions located in Wash DC are not pubic-private partnerships funded by local taxpayers as they are in NYC.

CA is a PIA.   File with the group non-resident and you pay a lot more.  Lot meaning thousands.  File individually and they will delay or hassle you to your grave or move the papers appropriately.  Horrible since CA's goal is to get $ not owed.   Very irregular.   Even if you never set foot in CA, never do a doc in DC for CA  business.  CA 's water problems created the low flush toilets which often mean double flush using more than the old water usage.   It's like that with taxes.

I'm sick of the press about CA and the Republican tax plans.  CA does not tax it's residents even on the same basis as MD or VA.  Look no further than the massive deductions and credits allowed on returns.  Then look at actual property taxes paid.

Montecito CA-near Santa Barbara.  14.7m with a 1.4m assessment.  7 acre estate.  taxes 2017=$15,204.  https://www.zillow.com/homes/for_sale/Santa-Barbara-CA/pmf,pf_pt/15882164_zpid/13712_rid/globalrelevanceex_sort/34.513346,-119.523011,34.283885,-119.976883_rect/10_zm/?

Million dollar townhouse and taxed at about 1000.  https://www.zillow.com/homes/for_sale/Santa-Barbara-CA/pmf,pf_pt/15883327_zpid/13712_rid/globalrelevanceex_sort/34.513346,-119.523011,34.283885,-119.976883_rect/10_zm/?

1 bed 1 bath condo for 1m taxed at 9500.   So CA doesn't reassess and in essence puts real estate property taxes in a form of rent control. [/quote]

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