Blanca Ocasio-Cortez, the mother of the new socialist superstar in Congress, did what dozens of parents I know have done: move from New York to Florida.
Birds may migrate south for the winter, but financially savvy empty-nesters move to the Sun Belt for financial benefit. Ocasio-Cortez’s mother — shall we call her BOC? — conceded as much.
“After the children graduated from college, I figured it was time for me to move to Florida,” BOC told the Daily Mail. “I was paying $10,000 a year in a real estate taxes up north. I’m paying $600 a year in Florida. It’s stress-free down here.”
Maggie Haberman of New York Times had some thoughts.
So she’s one of the people who recognizes that New York got soaked in the federal tax bill that potus championed? https://t.co/qi2gOeMqPq
— Maggie Haberman (@maggieNYT) March 4, 2019
Because Haberman is an objective news reporter, and usually a fair and excellent one, I’m going to go ahead and give her the benefit of the doubt that she simply didn’t read the whole piece, which states that BOC, who purchased her house in 2016, moved there “shortly before Democrat AOC filed her candidacy” months before the Tax Cuts and Jobs Act was even signed into law. But for the sake of this article, let’s pretend that Haberman was correct and explain why New York didn’t get “soaked” by the TCJA, but rather that Florida got justice.
A pivotal point of the TCJA was the capping of the state and local tax deduction. Prior to 2018, Americans could, in general, deduct the entirety of their state and local taxes from their federal tax bill, but the TCJA capped that deduction at $10,000. Naturally blue states blew up at the prospect.
Democratic New York Gov. Andrew Cuomo blamed the SALT deduction cap for the loss of $2.8 billion in state tax revenue. Critics of the cap say it punishes high-tax states. Really, it just makes them pay their fair share.
Let’s use a purely hypothetical example. Consider that there are two states, Red and Blue. The effective state tax rate of an average Red resident is 5 percent, and the effective state tax rate of an average Blue state is 15 percent. Now, let’s say that the effective average tax rate of the federal government is 30 percent. If two people in the two states earn the same amount of money, under the old system, the federal government would effectively subsidize the Blue state’s higher tax rate, allowing the Blue state residents to pay less federal taxes. Not only would residents of the Red state be effectively paying for the Blue state’s fiscal irresponsibility, but within the Blue state, the SALT deduction would favor more prosperous areas, rendering it regressive.
So even if BOC moved to Florida four years after her youngest child graduated from college, it wouldn’t be because the new law unfairly punished New York. Instead it would be because the new law finally made New Yorkers pay their fair share of federal taxes.
But why cap it at $10,000? We ought to just end the SALT deduction altogether, and force Cuomo and the likes to get their budgets in order.
