Congressional Republican Tax Deal Changes Key Deduction For Californians

From “horrible” to “slightly less horrible” – that’s how the California Assembly’s budget committee chairman describes the federal tax overhaul deal reached Wednesday by congressional Republicans.

The House-Senate compromise would allow Californians to choose between deducting up to $10,000 in state and local property tax or state income tax on their federal returns.

Each chamber had previously voted to eliminate the income tax deduction. The tax code currently allows both deductions, without the $10,000 limit.

Assembly Budget Chairman Phil Ting says that’s a slight improvement, but the Republican tax bill would still hurt Californians.

 “It’s not really a catastrophe so much for the state, because it doesn’t impact, specifically, our revenue projections. But for people living in California, it’s an absolute catastrophe,” Ting said.  

House Majority Leader Kevin McCarthy of Bakersfield has argued it’s not fair that lower-tax states subsidize high-tax ones. He says Sacramento should be held accountable for choosing to raise taxes.

Also on Wednesday, Ting said Assembly Democrats want to build reserves and make new investments in next year’s state budget. He called for increasing the state’s tax credit for low-income, working people and expanding Medi-Cal to cover immigrants living in California illegally.