The Effort by California to dodge The New Tax Reform Face Practical and Political Challenges

Tax Reform

A sophisticated proposal to assist the residents of California evades taxes by dodging a provision that is provided for by the recent GOP tax reform bill signed by the White House into law last December faces numerous hurdles. Even as the authors of the proposal are working round the clock to have it passed into law, there is the emergence of critical questions regarding its practicability and legitimacy. For instance, it is not certain whether the trump administration and the federal government will allow the legislation to be enacted. Moreover, there also questions on whether the proposal will ease the residents of the new federal tax burdens proposed by the GOP bill.

The state lawmaking branch would provide for the existence of a nonprofit that is run by state authorities known as the California Excellence Fund. This nonprofit will be accepting donations repair rods, fund education in public schools and any other provision that is found in the state budget. The contributions would, in turn, reduce payments made by residents for state income taxes and also give a provision for a charitable deduction from federal taxes. The author of the bill who also serves as the President Pro tem for the California Senate, Kevin de León from Los Angeles, had the proposal introduced to the state Senate this month.

This proposal was introduced just days after President Trump signed the GOP tax bill into law before Christmas. The federal tax overhaul is the most comprehensive tax reform legislation in three decades since the Reagan administration. The new legislation caps local and state tax deductions from federal taxes at $10,000. This is a significant blow to the residents of California as the state happens to be among the high tax jurisdictions. The State Senate President Pro Tem hopes that the proposal will stabilize the review table in California and preserve the federal tax deductions for the residents. De Leone said that he had a duty to protect all the residents of California.

De Leone is set to run for the US Senate in the coming elections and noted that he was protecting his state citizenry by drafting the tax protection proposal. The Senate Bill 227 addresses the concerns for federal taxes that are faced by residents from high tax states such as California. Over 15% of the population in the state which makes up 2.5 million Californians claimed more than $10,000 in local and state tax deductions by the end of the 2015 financial year.


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