As California taxpayers (those of you who actually pay some taxes) we are the new Jerry's Kids. Your special recognition will come on April 15th, not on Labor Day as when Jerry Lewis did his charity gigs on TV. Jerry Brown will be recognizing us on Tax Day. Yesterday's Wall Street Journal highlighted how the states with the highest state income taxes are most at risk as the Fed wrangle over the federal tax rates. Here's the essence: of the $249.7 billion that was federally deducted for state income taxes
$51 billion of those writeoff were claimed by residents of one state, California....a mere five states accounted for nearly half the federal revenue lost from this tax deduction....we believe in federalism, and if affluent liberals want to pay 13.3% of their income to live in San Francisco, that's their foolish privilege. But it becomes everyone's problem if some of that tax burden is effectively borne by residents of Knoxville, Lubbock and Orlando because of the federal tax deduction.
So our little, local band of Jerry's Kids had better watch out. If the Journal is in favor of eliminating a deduction where 20% goes to good old California, it's no great leap of faith to think that a bunch of Congressional bean counters will come up with the same plan--or worse. Throw in elimination of part or all of the mortgage deduction on all of our "jumbo" loans and you will see a cliff the size of Half Dome on the horizon.