From the Los Angeles Times
Republicans have said that by slashing business taxes, they will supercharge the American economy, benefiting both C-suite executives and the average American. Economists generally expect a short-term boost to growth, though they doubt the cuts will be a game changer for either the larger economy or the typical worker.
But for California, there are particular challenges buried in the tax bill, and some economists believe that could ultimately prove a drag on growth and harm the state’s competitiveness.
“I am a little bit gloomy,” said Dave Smith, an economist at the Pepperdine University Graziadio School of Business and Management.
The downbeat assessments reflect the various ways Republicans have chosen to help offset the cost of their tax cuts for businesses and individuals. Reducing key deductions is expected to raise the cost of living for many middle- and upper-income households in an already pricey state.
The tax plan includes capping the deduction for state and local taxes as well as reducing it for mortgage interest on new loans. Critics say both changes are weapons aimed at Democratic states with high state taxes and housing costs.
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