Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Tuesday, March 5, 2019

All Levels of Upper Wealth Feeling Acute SALT Cap Pain

SaltTaxpayers in high-tax states such as New York, California, and New Jersey are flinching from the pinch of the $10,000 cap on deductions for state and local taxes, or SALT. Many legislators are attempting to repeal the cap as citizens in those states are now limited on how much they can write off.

The belief for those that are critics of the cap is that it is meant to punish those in high-tax states and the President has stated that he is willing to talk about altering the cap. The likelihood of him actually changing it may be low, however, because the SALT cap pays for much of the tax cuts of [reform], according to Barry Horowitz, partner and team leader of state and local tax in the New York office of accounting firm Withum Smith+Brown.

Even the upper-middle class has felt the pain, both in states with high property taxes such as Texas and high income tax states like New Jersey and California. Susan Carlisle, a CPA in Los Angeles say that the SALT will “will soon impact the real estate markets in those states as people realize that their expensive homes are now a whole lot less affordable than they have been." Conversations dealing with leaving the high-tax states for states with lower-tax states are becoming more and more commonplace.

Critics of repeal claim it would result in reduced federal revenue and benefit the wealthiest income earners; others say that the deduction was a major source of tax fairness for high-taxed states.

See Jeff Stimpson, All Levels of Upper Wealth Feeling Acute SALT Cap Pain, Financial Advisor, February 25, 2019.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.


Current Affairs, Current Events, Estate Planning - Generally, Income Tax, New Legislation | Permalink


[This article] brings up a timely and excellent point! These high tax states are getting to the absurd point. And the Middle Class needs to stop being so passive and start getting their voices heard, in Albany and in Wash. DC. Speaking of caps on tax deductions in high taxation states -- New York and New Jersey, mentioned here with California, should realize they are dealing with a fan in the Beltway only of Billionaires and Mega-Millionaires; intent only on siphoning off cash from the Middle Class and Upper Middle Classes -- while spewing out a long stream of misinformation and lies about proposed intentions -- none of it in the least bit true. Time to drop gullibility, replacing it with a keen eye towards reality. However maybe it's time to do what Mr. Jarvis and pals did in 1978 in California; and get property tax relief measures in place in other high tax states, such as Proposition 13 and Prop 58. Seriously. Taxation in New York is ridiculous -- high State, Federal and City tax? Property taxes through the roof in so many states, especially New York and New Jersey and Texas. Let's discuss this in greater depth, shall we?

Posted by: Geoffrey Sadler | May 20, 2020 3:43:47 PM

Gifting property to adult children is a great thing to do, no matter the tax breaks, And thankfully, you don't need to be mega wealthy with $1,200 per hour tax lawyers to be able to avoid property tax reassessment, or to learn how to use a trust to save on taxes or to buy out siblings' shares in your inherited real estate... with a trust loan. And it doesn’t hurt to live in a state like California, where you get to save tens of thousands in tax breaks every year, compared to other states…. or compared to California the way it was pre-1978 before Proposition 13, and later in 1986 with Proposition 58, when you started to be able to keep parents property taxes when you've inherited property and are able to transfer parents property taxes, inheriting property taxes on a property tax transfer with a simple parent to child transfer or as lawyers call it, parent to child exclusion. Or perhaps lucky to be anywhere, if you can keep that house you’re gifting in your name, and you have a very good accountant! Another point – why trusts aren't just for rich people. There are trust loans to cure issues with beneficiaries who insist on selling inherited property -- when you want to keep it, and no one can agree... in California... EVERY state needs to be able to transfer parents property taxes to beneficiaries, when inheriting property taxes... This saves beneficiaries so much when parents pass away... avoiding property tax reassessment on the transfer costs, plus the low base rate from parents, from CA Proposition 13. Lawmakers in every state should pass property tax relief bills that make sense, like CA Proposition 58 and 193, enabling property tax transfer from parents and grandparents when inheriting a home for example, and likewise inheriting property taxes – with a parent to child transfer or parent to child exclusion... the urgent need to keep parents property taxes, and of course the ability to transfer parents property taxes when inheriting property; avoiding property tax reassessment to keep property tax low. Everyone should go to sites like https://trustandestate.loans/california-proposition-58 to learn more about the genuine 1978 California Proposition 58. And get familiar with CA Prop 13, at https://propertytaxtransfertrusts.com and other sites focused on California Proposition 58 and 193, like https://cloanc.com/category/prop-58 so you can gain knowledge in this subject and contact your lazy lawmaker to help pass property tax relief, so you (not just the millionaires) can live in comfort and security for the rest of your life!

Posted by: Geoffrey Sadler | May 26, 2020 7:01:21 PM

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