Tax Breaks Could Pressure Some Philly Suburbs to Cut Taxes Too
Delaware County, which includes part of Philadelphia’s wealthy Main Line suburbs, and several other counties in PA are among 117 U.S. counties that are most “at risk” from financial pressure and high-income taxpayer rebellion — or flight — due to changes in U.S. tax policy, according to a new report from S&P Global Ratings.
The Tax Cuts and Jobs Act reduced federal tax rates, but also reduced tax deductions for people who pay a lot of state and local taxes. S&P, which rates debt for borrowers based on how likely analysts think they are to pay money back to investors and bondholders, reviewed IRS tax return data and the U.S. Census community survey to generate multiple lists, including: the top 10 percent of U.S. counties for the proportion of taxpayers who itemized their federal tax benefits; where peoples’ state and local tax deductions tended to be more than $10,000 a year, the new limit for the federal tax deduction; and where state and local tax rates are highest. By effectively increasing the state and local tax burden in those counties, “the tax act may dampen incentives to buy higher-priced homes, or at least decrease demand for houses where the combination of state and local taxes paid by a taxpayer” is more than $10,000 a year, S&P writes.
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