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California state Senate leader introduces workaround for tax law's SALT limit

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California state Sen. Kevin de Leon, a Democrat, introduced a bill Thursday that would allow the state to use a charity workaround to shield its residents from some of the impact of the GOP tax bill that passed last year. (AP Photo/Damian Dovarganes)

California state Senate leader Kevin de Leon introduced legislation Thursday that would allow taxpayers to skirt the new federal tax law's limitation on state and local tax deductions through charitable contributions, the latest effort by high-tax-state Democrats to blunt the impact of the GOP's federal tax overhaul.

"We won’t allow California residents to be the casualty of this disastrous tax scheme," said de Leon, the state Senate's president pro tempore.

The bill would allow taxpayers to make charitable contributions to a state fund and return credits applicable to their state taxes in return. The new federal tax law limits the deductibility of state and local taxes to $10,000 but leaves the deduction for charitable contributions uncapped.

Tax experts warned just before President Trump signed the tax bill that states and cities could use the charity workaround to try to shield their residents from taking a tax hit.

De Leon is a candidate for U.S. Senate, challenging Sen. Dianne Feinstein in the Democratic primary.

New York Gov. Andrew Cuomo, a Democrat, proposed this week that his state also set up charitable programs to fund services in a bid to circumvent the $10,000 cap on deductions for state and local taxes, commonly referred to as SALT.

California and New York residents are among the biggest beneficiaries of the deduction. The average taxpayer claiming state and local tax deductions deducted more than $22,000 in New York and $18,000 in California in 2015, according to IRS data.