“Life, uh…finds a way.”
Those words, immortalized by Jeff Goldblum in the 1995 cinematic masterpiece Jurassic Park, were originally intended as foreshadowing for the film’s plot. But there’s a much deeper truth to them than a mere prediction of out-of-control dinosaurs. Indeed, the recent proposals of five left-leaning states clearly demonstrate that Americans possess a level of convoluted ingenuity that puts Michael Crichton’s sex-swapping, amphibious-DNA-having velociraptors to shame.
The root cause of this new round of legislative shenanigans is the GOP’s controversial Tax Cuts and Jobs Act of 2017. Specifically, it’s a provision of the law changing how state and local taxes (SALT) can be claimed on Federal returns. The details are tricky, but in short, the revised tax code caps previously limitless SALT deductions at $10,000. It’s a move that will obviously hit high-tax states the hardest; states that, by coincidence or design, overwhelmingly favor liberal politicians.
Alas, several of those states are not taking the change lying down. As reported by multiple news outlets, five of them—California, New York, New Jersey, Connecticut, and Illinois—have floated various propositions that would effectively defang the new SALT provision of the GOP tax package. Some of the plans call for a straightforward elimination of state income taxes in lieu of an employer payroll tax of equivalent magnitude. Others are more…creative. California, for instance, would allow for Federally-exempt “charitable contributions” to be made to the state government, with these donations in-turn being deductible from state income taxes on a dollar per dollar basis.
So, while the details of the proposals vary from state to state, they share two significant common traits. First, they are all quite nakedly attempts to create a system of legal, state-sanctioned Federal tax evasion. To put it another way, each of these efforts stops just short of raising a collective middle finger to the GOP tax law. It’s charming, really. And as for their second common trait:
They’re all absolutely, unequivocally strokes of political genius.
Seriously, it’s hard to see how these policies will be anything but a win-win-win for the lawmakers floating them. For one thing, though some of the rhetoric on the matter might be hyperbolic, these states will take a hit under this new tax structure. Any policy that offsets these effects is thus a net good at the local level. They also come with the added benefit of tacking an additional $154 billion on to the national debt over the next eight years. Okay, so maybe that’s not a good thing per se, but considering one of the GOP’s key selling points was limiting the fiscal impact of their tax cuts, it’s a savvy bit of political maneuvering. Finally, even if they don’t go through (the legal status of the proposals is murky, to say the least) they’ll provide excellent fodder for left-leaning candidates going into what’s sure to be a contentious 2018 Mid-term.
Win, win, and win.
It should go without saying that progressive politicians are not the only ones to find creative ways to buck unpopular laws. Following the 2010 passage of the highly-polarizing Patient Protection and Affordable Care Act, the governors and legislatures of nearly every red state severely undermined the law by simply not playing along. So effective was their refusal to accept the Medicaid expansion or establish state health insurance exchanges that even the legal status of Obamacare was still up in the air as recently as 2015.
And maybe that’s the key takeaway from all of this. Governing by legislative wrecking ball might seem a good idea in the moment, but rarely does it lead to clear, unambiguous outcomes. That is, there seems to be a tendency among lawmakers to underestimate how imaginative and persistent both the opposition and the citizenry will be in their efforts to circumvent overextended legislation. The U.S. economy would also certainly be better off if laws were promulgated by a true consensus rather than by shoe-string, eleventh hour majorities that create nothing but years of uncertainty and protracted legal battles.
Whether that lesson will be learned over the next two weeks, however—that’s another matter entirely.