BERKELEY, Calif., Nov. 21, 2017 /PRNewswire/ --The elimination of state and local tax (SALT) deductions would increase the tax burden on California residents and harm the economy. Rosen Consulting Group (RCG) analyzed Internal Revenue Service (IRS) tax data and found that of the nearly 18 million federal income tax filings by California residents, approximately one-third used itemized deductions. Within the group that itemized deductions, more than five million deducted state and local income taxes and most of those also deducted for state and local property taxes.
California residents claimed nearly $110 billion in SALT deductions in 2015, according to IRS data. Eliminating the ability to deduct these state and local taxes would increase the federal tax liability of California residents by up to $38 billion.
Isolating the SALT deduction elimination by assuming no additional tax liability offsets can highlight how detrimental the tax plan is to California. By sending an additional $38 billion to the federal government, which returns less than a dollar for dollar in spending to California, local consumption and investment would be reduced in cities throughout the state. The increased tax burden would mean that California is even more tax disadvantaged relative to other states, and businesses and households may leave the state. As individuals and corporations migrate to other states, and businesses in California choose to expand workforces elsewhere, the reduced consumption would lead to thousands of fewer jobs, less consumer spending, and reduced state and local government tax receipts.
About Rosen Consulting Group
Rosen Consulting Group, LLC (RCG) is a leading independent economics and real estate consulting firm headquartered in Berkeley, CA. Founded in 1990 by Kenneth T. Rosen, RCG provides economic advisory services and unbiased real estate investment guidance to the financial services, real estate, construction and institutional investment industries.
SOURCE Rosen Consulting Group