• Monthly
  • $25
  • $50
  • $100
  • $other
  • use PayPal

CounterPunch needs you. piggybank-icon You need us. The cost of keeping the site alive and running is growing fast, as more and more readers visit. We want you to stick around, but it eats up bandwidth and costs us a bundle. Help us reach our modest goal (we are half way there!) so we can keep CounterPunch going. Donate today!
FacebookTwitterRedditEmail

Congress Made It Harder to Give Teachers Raises

In just a few months, we’ve seen teachers in five states walk out of the classroom to protest their abysmal pay.

Stingy state budgets are mostly to blame for low teacher pay and poor school conditions, but there’s a federal tax connection, too. Unfortunately, last year’s Republican tax plan could make keeping good teachers in the classroom more difficult than ever.

Raising teacher pay requires money, which at some point requires new state tax revenue.

Now, most state taxpayers will tolerate tax increases when they know those taxes will fund education. But in many places, state lawmakers have only so much room to raise taxes before voters express their displeasure come election time.

The jam state governments may find themselves in is that Trump and his Republican friends in Congress effectively just increased state income and property taxes. A lot. Which means voters won’t be too keen to see another increase so soon.

How can Congress increase state taxes? By increasing the real cost of state taxes people already pay, that’s how.

From the enactment of the federal income tax in 1913 until last year, most higher-income state taxpayers could deduct their state income and property taxes on their federal returns.

In recent years, an affluent taxpayer would receive about $1 back, in the form of a federal income tax reduction, for every $3 of state income or property tax paid. So a $3,000 state income or property tax bill felt like a $2,000 expense.

The Trump-Republican tax plan changed all that.

The deduction hasn’t been eliminated entirely, but it’s now capped at only $10,000 in state income and property taxes. For the majority of Americans, who no longer claim itemized deductions, the itemized deduction for state income and property tax is now meaningless.

Which means that $3,000 state income or property tax bill now feels like a $3,000 expense. That’s the same as a 50 percent state tax increase — which will feel even worse if states pass modest tax increases to cover long overdue raises for teachers.

Was there a good reason Republicans put state lawmakers in such a bind? No — only a very bad one.

Congressional Republicans and Trump officials claimed that the deduction for state and local taxes was a subsidy to high tax states that burdened low tax states.

But they had it backwards. It’s the absence of a deduction that creates a subsidy, which burdens high tax states and benefits low tax states.

Suppose I pay an additional $300 in state income tax to pay teachers. The teachers who receive that $300 will pay federal income tax on it, plus federal employment tax. And the state or county paying those teachers will pay federal employment tax as well.

When you do the math, the $300 going from my pocket, to the state treasury, to teachers would nearly break even for the IRS.

Which means the folks subsidizing deductions of state taxes are the teachers and other workers who pay federal taxes on their wages. But thanks to congressional Republicans, the state taxpayers no longer see a federal tax reduction.

Which means that the states that pay their teachers a decent wage are now subsidizing the states that pay their teachers poorly.

That’s probably what Trump and his Republican friends wanted all along. But it’s not what the people who educate our kids deserve.

More articles by:

Bob Lord is a veteran tax lawyer who practices and blogs in Phoenix, Arizona. He’s an associate fellow of the Institute for Policy Studies. 

bernie-the-sandernistas-cover-344x550

May 22, 2019
T.J. Coles
Vicious Cycle: The Pentagon Creates Tech Giants and Then Buys their Services
Thomas Knapp
A US War on Iran Would be Evil, Stupid, and Self-Damaging
Johnny Hazard
Down in Juárez
Mark Ashwill
Albright & Powell to Speak at Major International Education Conference: What Were They Thinking?
Binoy Kampmark
The Victory of Small Visions: Morrison Retains Power in Australia
Laura Flanders
Can It Happen Here?
Dean Baker
The Money in the Trump/Kushner Middle East Peace Plan
Manuel Perez-Rocha – Jen Moore
How Mining Companies Use Excessive Legal Powers to Gamble with Latin American Lives
George Ochenski
Playing Politics With Coal Plants
Ted Rall
Why Joe Biden is the Least Electable Democrat
May 21, 2019
Jeremy Kuzmarov
Locked in a Cold War Time Warp
Roger Harris
Venezuela: Amnesty International in Service of Empire
Patrick Cockburn
Trump is Making the Same Mistakes in the Middle East the US Always Makes
Robert Hunziker
Custer’s Last Stand Meets Global Warming
Lance Olsen
Renewable Energy: the Switch From Drill, Baby, Drill to Mine, Baby, Mine
Dean Baker
Ady Barkan, the Fed and the Liberal Funder Industry
Manuel E. Yepe
Maduro Gives Trump a Lesson in Ethics and Morality
Jan Oberg
Trump’s Iran Trap
David D’Amato
What is Anarchism?
Nicky Reid
Trump’s War In Venezuela Could Be Che’s Revenge
Elliot Sperber
Springtime in New York
May 20, 2019
Richard Greeman
The Yellow Vests of France: Six Months of Struggle
Manuel García, Jr.
Abortion: White Panic Over Demographic Dilution?
Robert Fisk
From the Middle East to Northern Ireland, Western States are All Too Happy to Avoid Culpability for War Crimes
Tom Clifford
From the Gulf of Tonkin to the Persian Gulf
Chandra Muzaffar
Targeting Iran
Valerie Reynoso
The Violent History of the Venezuelan Opposition
Howard Lisnoff
They’re Just About Ready to Destroy Roe v. Wade
Eileen Appelbaum
Private Equity is a Driving Force Behind Devious Surprise Billings
Binoy Kampmark
Bob Hawke: Misunderstood in Memoriam
J.P. Linstroth
End of an era for ETA?: May Basque Peace Continue
Weekend Edition
May 17, 2019
Friday - Sunday
Melvin Goodman
Trump and the Middle East: a Long Record of Personal Failure
Joan Roelofs
“Get Your Endangered Species Off My Bombing Range!”
Jeffrey St. Clair
Roaming Charges: Slouching Towards Tehran
Paul Street
It’s Even More Terrible Than You Thought
Rob Urie
Grabby Joe and the Problem of Environmental Decline
Ajamu Baraka
2020 Elections: It’s Militarism and the Military Budget Stupid!
Andrew Levine
Springtime for Biden and Democrats
Richard Moser
The Interlocking Crises: War and Climate Chaos
Ron Jacobs
Uncle Sam Needs Our Help Again?
Eric Draitser
Elizabeth Warren Was Smart to Tell FOX to Go to Hell
Peter Bolton
The Washington Post’s “Cartel of the Suns” Theory is the Latest Desperate Excuse for Why the Coup Attempt in Venezuela has Failed
Doug Johnson Hatlem
Analysis of Undecideds Suggests Biden’s Support May be Exaggerated
Peter Lackowski
Eyewitness in Venezuela: a 14-year Perspective
Karl Grossman
Can Jerry Nadler Take Down Trump?
FacebookTwitterRedditEmail