Resistance State: California in the Age of Trump
Between Sacramento and Washington D.C. sits the rest of the country, and a chasm. On immigration and taxes, guns and healthcare, cannabis and climate change, California is the federal government’s equal and opposite reaction. One year into President Trump’s first term, the push and pull continues—playing out under the Capitol dome, in the courts and on Twitter.
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Gov. Jerry Brown’s chief fiscal advisor says the Republican tax plan will raise the cost of homeownership by scaling back the mortgage interest deduction, making it harder to buy property in pricey California.
Finance Director Michael Cohen sent a letter this morning to members of California’s congressional delegation with a long list of concerns under the versions being considered by a conference committee. At the same time, House and Senate GOP leaders announced they had reached an agreement expanding tax cuts for the wealthy, but few details were immediately released.
A vote is expected next week. Republicans control 52 seats in the Senate but only need 50 votes to pass their plan since Vice President Mike Pence could break a tie. Their advantage will shrink by one seat once newly elected Democrat Doug Jones is sworn as a senator from Alabama.
The House bill would reduce the amount a homeowner can deduct to the first $500,000 of a new mortgage, while the Senate bill would keep the current $1 million limit. It’s been reported that negotiators have split the difference at $750,000.
“Given the high cost of housing in the state, mortgages for many mid-level homes are significantly above this cap,” Cohen wrote—noting that more than 4 million California tax returns claim the mortgage interest deduction at an average of over $12,000.
This was Cohen’s second letter to congressional delegates. As with the first, he expressed concerns about deficit-financed tax cuts at a time when the economy is at full employment and corporate profits are at all-time highs. He warned again how removing the state and local tax deduction while capping property tax deductions hurts a low-property-tax and high-income-tax state such as California.
Starting in 2018, the GOP plan would take away a deduction for personal loss, such as those experienced by victims of California’s wildfires. And it would make college less affordable by eliminating the deduction for student loan debt and and imposing a new tax on tuition waivers.
A day after Gov. Jerry Brown agreed to the Trump administration’s request to beef up the National Guard in states along the Mexico border, fellow Democrat Lt. Gov. Gavin Newsom said he would not have made the same decision as governor.
But Newsom, who is the front-runner in the race to replace Brown as governor, put a large asterisk on his disagreement with Brown:
Brown announced Wednesday that he would accept federal funding to add 400 California National Guard members “to combat transnational crime.” But he laid out a long list of conditions in an agreement with federal authorities: The troops will not build a border wall or enforce immigration laws, and the arrangement is approved only until Sept. 30. Brown also specified that when it comes to the state’s National Guard, he is the “commander in chief.”
America’s Commander in Chief responded Thursday on Twitter: “Thank you Jerry, good move for the safety of our Country!”