The new federal tax reforms give Delaware an opportunity to show true leadership in reforming its own tax laws. I suggest an approach that takes into account the new federal law and helps us compete against high-tax jurisdictions such as New York, Connecticut and New Jersey.
We should set a maximum Delaware income tax obligation at $9,000 per person. The new federal deduction cap for state and local taxes is $10,000. The $9,000 State Max-Tax gives room for $1,000 in local property tax deductions.
This arrangement will help convince high-earning folks from north of here to move to the First State. We could certainly use both their talents and their treasure. It's unlikely that New York, New Jersey or Connecticut will be able to reduce their current reliance on a small group of very high-income taxpayers in any effective way. Delaware has always been more nimble when it needed to be. The new migrants would also lower the revenue impact of reducing the personal income tax burden on higher-income Delaware natives.
We've been told for years that Delaware relies too much on its personal income tax to support its ever-growing budget. The Max-Tax undoubtedly helps correct that problem, and addresses the challenge Congress just set before high-tax states. If the budget and tax folks think the potential revenue loss from this Max-Tax proposal would be too big, the General Assembly can surely find ways to make up the difference.
Frederick H. Schranck
Rehoboth Beach
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