A truly big tax break for high-income parents

The single largest exemption from Salt’s taxes applies to alimony from a former spouse. If a person draws $1m a year, that’s just $39k in federal tax. If that person is from a high-income…

A truly big tax break for high-income parents

The single largest exemption from Salt’s taxes applies to alimony from a former spouse. If a person draws $1m a year, that’s just $39k in federal tax. If that person is from a high-income state like Texas or California, the tax savings can be even greater. But for ex-spouses who don’t live in a high-income state, this break still can be massive. Utah is about one-third blue state in red America, but this tax break distorts the market and will probably encourage more families to move there. Salt’s next target, in just a few years, will be get out of the home mortgage tax deduction. Another loophole worth targeting is the child tax credit, which is hard to find in most states. The child credit and other deductions cost federal revenue, but they keep people from moving from high-tax states and disincentivize people to move to a low-tax state.

The Salt (E. J.) Salt Lake Tribune

An early draft

By Tim Kane, December 29, 2015

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