One of the most interesting stories of the aftermath of the tax legislation is the race to pay property taxes this year in many states so they still qualify for deductions. Clearly this is a big issue for those living in high tax states. The images are amazing when you think about it. When was the last time you saw a line of people to pay their taxes well before the due date?
There are two technical points I want to raise here though. This is going to create some interesting changes to the data. At the state level you are moving revenue collections forward and so analysts will need to adjust accordingly for the likely blip up in the data series. This bump is not a long run uptick in revenues.
The other interesting point to consider is what impact this has on the federal revenue collections under the new tax plan. This likely lowers them over the next year, compared to expectations. I say expectations because there was precious little time for analysis and forecasts given the speed of the legislative process chosen.
I will not say yet whether this will have serious deficit impacts because I expect some of the early payments may be disallowed, that is, they will be subject to the tax. There are also many moving parts and other tax changes may make up more revenue than anticipated too. This is just proof though that as you change taxes you change incentives and people respond accordingly.