Trump v. California

Democrats outline how tax plan hurts middle-class Californians

California taxpayers could see as much as a 22-percent increase in personal income taxes.

Eliminating the state and local tax deduction forces Californians to pay taxes on taxes they have already paid.

And capping property-tax deductions effectively raises the property tax for California homeowners, while reducing the mortgage deduction will make it harder for middle-class families to buy homes.

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These are among a bevy of concerns Democrats are taking to their congressional delegates, saying the Republican tax plan would hurt the middle class in California—a state with high property values and scarce housing stock.

State Assembly Speaker Anthony Rendon of Paramount announced Thursday that he and 53 other Assembly Democrats signed a letter urging representatives to take their time on tax legislation rather than aim to pass a measure by the end of the year.

Assembly Speaker Anthony Rendon. Photo by Max Whittaker for CALmatters

“There should be no rush,” they wrote. “Better to give Californians legislation they can be thankful for than to rush to pass legislation by Thanksgiving.”

Assembly Republicans were invited to sign the letter, which was addressed to House Majority Leader Kevin McCarthy and Minority Leader Nancy Pelosi. None did.

Senate Democrats also chimed in, asking Congress not to exacerbate California’s housing crisis. In a letter being prepared for McCarthy and Pelosi, President Pro Tem Kevin de Leon of Los Angeles led his caucus in seeking to preserve a 4-percent low-income housing tax credit and a tax exemption for the private activity bond program, which they say are critical to the affordable housing package California passed this year.

Senate President Pro Tem Kevin de Leon. Photo by Rich Pedroncelli/AP

“We approved this robust bipartisan package because we recognized that the housing shortage is hamstringing our state’s economy and threatening our long-term prosperity. Our investments in housing are estimated to generate more than 70,000 units and over 190,000 jobs in the next five years,” Senate Democrats wrote.

The fretting doesn’t stop there.

Following Gov. Jerry Brown’s plea for GOP delegates not to support the tax proposal, his finance director, Michael Cohen, outlined Thursday many other ways the GOP measure would harm middle-class Californians.

Specifically, he wrote that the plan takes away a deduction for personal loss, which would harm thousands of victims of last month’s Northern California 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.

As the state’s chief fiscal advisor, he questioned taking on a $1.7 trillion deficit over the next 10 years in order to stimulate the economy when unemployment is low and corporate earnings are at all-time highs.

“Deficit-financed tax cuts are not likely to lead to significant growth because the negative economic effects of the debt would crowd out investment,” Cohen wrote.

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