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First, I have to ask what is magic about the $250K number for a family of four? Why has the two professional wage earner family, or small business person become the target of envy for every politician in the country?
Second, tax policy is largely siloed. This is one area where state and federal government act largely independently while claiming to be integrated. In California the State Legislature has proposed an across the board income tax increase (just the opposite of what the Governor’s Commission on Taxation recommended) and justified it as reduction in tax payers federal income tax. Do they think we are that gullible?
The federal standard deduction will not be adjusted to cover the increase in California or any other state taxes. Only filers who use the so-called federal “long form” would receive any federal adjustment. On average, a federal deduction is worth about 20 cents less in federal tax owed for every dollar of deduction claimed. So, an increase of, for example, $500 in state taxes paid would result in a $100 reduction on federal tax owed. So, Sacramento — get serious – an across the board tax increase is exactly that!
