Agreement- at least in modern day America- comes slowly, if at all.

Of course, when one party takes it upon itself to harm citizens of states that vote for their counterpart, it becomes even more evident why such problems exist.

Which brings up the tax changes passed by TheDonald and his GOP minions back around Christmas 2017.  Besides the big presents provided the richest Americans, the Tax Cut and Jobs Act (sic) stuck it to those states that lean towards the Democratic Party where citizen services and education are more likely considered (OK- let’s be truthful and omit “more likely”) than for those states that vote GOP.

How did they stick it to the Blue States?  By limiting the deductibility of the total of state/local/property taxes  (aka, State and Local Taxes, SALT) to a total of $ 10,000.

Which led states like New Jersey and New York to immediately pass legislation that would allow folks to make donations to the state coffers in lieu of taxes, thereby bypassing the $ 10K maximum deduction.  Up until then, there were 113 such programs in 32 states where similar practices had been condoned for decades.

Um, No!  Just like the Commonwealth of Virginia did when same sex marriage was being allowed- by outlawing common law marriage (when couples cohabited for 7 years or more) to preclude that long-standing pathway, the Feds outlawed the practice of donating funds to state coffers to provide for needed services.  (Note that C corps that paid the taxes still got to deduct the amounts on their 1120 and were were not subject to the new limitation.)

That didn’t stop states from looking for ways to help their citizens.  As I reported back in January, New Jersey found a wrinkle for those citizens who are members of pass-through entities (unincorporated businesses, partnerships, LLC’s, and S corps).  They passed PT-BAIT (Pass Through Business Alternative Income Tax), which lets such folks pay their state obligations at the entity level.  Which means there no longer would be a $ 10K limitation.

And, just the other day, the Treasury Department gave its blessing to this arrangement.  (Of course, this is also generally a benefit to the more financially able, which is why the GOP-led government proffered its blessing. Steve Mnuchin considered it  “necessary steps to provide fairness for America’s small businesses.” [Notice 2020-75])

This approval means investment funds, real estate companies, law firms, retailers (if pass-through) and manufacturers (also pass-throughs) were now able to circumvent the $ 10 K state/local/property tax limitations.

Other states have passed similar laws- Rhode Island, Wisconsin, Maryland, Oklahoma, and Louisiana.  Now, California, Illinois, New York, and Washington have to belly up to the bar.

You hear that, Virginia?  The Commonwealth can use this law, too!

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