RUSH: Here’s a tweet from Nancy Pelosi: “I want every single California Republican to understand this. Your ideology doesn’t come first. Your party doesn’t come first. The PEOPLE come first. If you fail to recognize that, you don’t belong here.” She’s talking about the tax bill. Governor Moonbeam, Jerry Brown, “The tax bill is evil in the extreme.” You talk about unhinged and worse.
RUSH: So I checked the email during the break. “Rush, I don’t get it. What is Pelosi talking about here in that tweet that you read? ‘I want every single California Republican to understand this. Your ideology doesn’t come first. Your party doesn’t come first.'” What she’s upset about, folks, is the tax reform proposal that the eliminates the deductibility of state and local taxes. I’ve mentioned this two or three times. But to these people — to the Democrats in California, New York, Illinois, Connecticut — wherever you have exorbitantly high state personal income tax rates…
The Republican tax reform proposal that limits this deductibility has these Democrats unhinged. It is the reason why. It is the one thing in the tax bill that’s gonna cause people of means to flee these states. I played golf Saturday with a guy who’s got two homes in New York, and he’s a New York lifer and his business is in New York, and he heard about this, and he actually said to me, “I’m thinking of moving.” I said, “Please don’t come here.” He said, “Why?” I said “‘Cause all you gonna do is bring your liberalism here and pollute where we already live.”
I was half joking. But people who pay exorbitant state taxes but are allowed to deduct those taxes from their federal taxes? It has allowed these states — California, New York, Illinois, Connecticut — to really overcharge people on the highest marginal rates. They’ve been able to soak people at 9, 10% or more, but they’ve been able to deduct those taxes from their federal returns which means that they’re not really paying all that money to the state. They are, but it’s coming back to them in the form of adjustments on the federal return.
When they can no longer deduct these taxes that they pay, it’s gonna result in a severe amount of money, a severe loss. Some of these people, it’s gonna mean a $2 million-a-year additional tax bill. Others, $500,000. I’m talking about the people at the top of the income scale. Without the deductibility of state and local taxes, they’re gonna be paying taxes they haven’t paid before while everybody else is getting a tax cut. That’s why Pelosi and Jerry Brown and all those people are unhinged over this, because it’s also gonna serve to expose how exorbitantly high the taxes in California are.
I’ve mentioned I have a lot of friends in California. I go out there frequently, and when I do I try to play golf, and every time they say to me, “Why don’t you come here? You’ve got so many friends here. You love coming out here every time. You’re letting the tax code stand in your way of enjoying life.” I say, “You know what? You may have a point, but I am. I do not want to have happen in California what happened to me in New York. I do not want exorbitant taxes, and the minute I move out here, I’m forever a California resident. Even if I move out of there, they’re gonna be chasing me for the rest of my life.”
But beyond that, it’s a matter of principle. I said, “How do you guys put up with it? How do you guys pay it? You guys are paying almost 60%!” I ask ’em, “How in the world does that not bother you?” Well, the answer is they’re not paying 60% because they get to deduct whatever their state taxes are off their federal return. Now they’re not gonna be able to, and you know what’s gonna happen? There are going to be people that leave. This is significant at the upper tier of earners here. There are some people… Look, I’m not making the number up.
It doesn’t apply to a lot, but there are some people that are gonna paying $2 million more in state income taxes because of this. Others are gonna be $50,000, $100,000, $500,000 more. It doesn’t matter. It’s enough that many of them are gonna be so unaccustomed to paying taxes this high that some of them are gonna leave, and this is what some of these governors and state officials know. Where are they gonna go? They’re gonna go to states that have no income tax, and what states are those? Texas. Kentucky. Florida, of course. I don’t know what other states have no income tax. It could end up Virginia-izing everything.
Virginia used to be — not that long ago — a reliable Republican state, but now look. Washington became such an attractive place to move to and work. All these people that work for and around the federal government are there and they’re all leftists, and look what they’ve done to the state of Virginia. The same thing is happening in North Carolin as a bunch of people from the Northeast flee whatever they’re fleeing. Now they’re gonna be fleeing higher taxes for real, and they locate in warmer-weather places that have no state income tax. They love that.
But then they bring their liberalism with ’em.
So there are possible demographic shifts and all this. But the Democrats that run the states losing this tax write-off? They’re not worried about any of that. The only thing that concerns them here is the loss of revenue that they’re gonna get in their states. The deductibility of state and local taxes has allowed these high-tax states to get away with that because people at the high end have been able to deduct a decent enough percentage of it so that the impact has not been as severe as it’s gonna be now.