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Among the Tax Bill’s Biggest Losers: High-Income, Blue State Taxpayers

79 points by gdubs 9y ago

enraged_camel 9y ago
Let's just hope this doesn't get flagged off the front page either. It needs to be talked about, as it directly affects most people's livelihoods.
- ghouse 9y ago
  And just like that... it's gone.
lettergram 9y ago
This doesn't really make sense to me. So it appears that the tax bill generally is reducing the tax code and closing loop-holes (which typically is considered "good" to the left, and the right). In this case, it looks like the tax reductions are reduced in states that have higher taxes. Well that makes sense, because the states with lower taxes have less to write off (as they have 0% in some cases). Of course Texas would be impacted less, because they have no state income tax. New York and California have a state income tax, so the amount that loop holes help people in those states is much higher. So they effectively will be paying higher taxes. Complain to the state governments, who have crazy high taxes (part of the reason I left California)! This article honestly just seems to be trying to draw a correlation where there really isn't one. They are simplifying the tax code, that means reductions go away. Perhaps, we should lower taxes? I'd be in favor of that, but I'm also in favor of making it simpler to do my taxes.
- davexunit 9y ago
  This is possibly the worst interpretation of the tax bill I have seen yet, maybe excluding Mitch McConnell's ludicrous statement that the bill is either deficit neutral or reduces the deficit.
  - whitehouse3 9y ago
    Maybe elaborate? Disparagement without correction doesn’t help other readers.
    - davexunit 9y ago
      It's well-established that the bill gives a tax break to the very wealthiest people and adds over 1 trillion to the deficit, not to mention that the bill manages to squeeze in allowing for oil drilling in protected arctic areas and anti-abortion legislation. After the the bill passes, the increase in the deficit will be offset by cutting social services like Medicare. This is a very, very, very bad bill, drafted in secret, and being rushed through without hearings or debate. The people in support of this bill should be ashamed of themselves.
  - BeetleB 9y ago
    Maybe you can point out flaws with the comment?
- ghouse 9y ago
  I'm not aware of any person who lives in the US who has 0% (of state and local taxes which include income, payroll, property, and sales) Can you provide examples?
- jacob019 9y ago
  Yes, any change will have winners and losers. The winners will be happy, and the losers will be mad. We all support the idea of simpler tax code, but the devil is in the details. I'm not sure that eliminating the state tax deduction really simplifies anything though. It seems like a transfer of power from the states to the federal government.
  - hcknwscommenter 9y ago
    "It seems like a transfer of power from the states to the federal government." Bingo, remember that the next time some politician tells you they are in favor of state's rights.
- hcknwscommenter 9y ago
  I agree with davexunit. Your analysis is flawed. First, you characterize state and local income and property tax deductions as "loop-holes." That's an interesting bit of logical acrobatics. In reality, the Senate bill hardly closes any loop-holes, and creates a myriad of new ones. For example, the whole pass-through craziness.
- BeetleB 9y ago
  There are legitimate criticisms of the bill (e.g. allowing corporations to deduct state taxes, but not individuals, or individual tax cuts expiring but the business ones are permanent). But putting those aside, I agree with you in principle. Of course the bill hurts people the most who are in high tax states. They want the high taxes, and they got it. Why should the rest of the country subsidize their federal taxes because they are paying more state income taxes? (Actually, there are some good reasons for this, but they should be debated rather than merely dismissing it as a bias against people in those states). And while I'm not 100% sure, the majority of the population is getting a tax cut - most people could not itemize with a $12000 deduction, and now they're getting another $3-4K ($12K - minus the personal exemptions they're losing).
  - jonathankoren 9y ago
    The high tax states are generally the rich donor states. No one in Mississippi is subsidizing California. It’s actua quite the opposite.
sremani 9y ago
If a person in TX or FL, where there in no income tax lives in a Mansion, they also will have increase in Tax, are they worst hit? no but, they did not have State tax deductions to begin with. It could be argued, the rich people in blue states were paying less federal tax because of the SALT discounts, and now they have to pay the feds whole irrespective of the case at State.
mmanfrin 9y ago
I'm a highish earning single homeowner in Alameda County (Bay Area) -- between the Mortgage Interest deduction, the Property Tax deduction, and the State Income Tax deduction being slated for removal, my taxable income is about to go up something like $60k, which is a large chunk of my actual income. This tax bill utterly fucks me, to the point I'm considering selling my house to get ahead of the inevitable housing crash. I cannot see this bill as anything short of theft. Why do I have to pay double-digit percentage more on my taxes to give the ultra rich a tax cut? In what fucking world does that make any economic sense.
- vkou 9y ago
  > I cannot see this bill as anything short of theft. Why do I have to pay double-digit percentage more on my taxes to give the ultra rich a tax cut? In what fucking world does that make any economic sense. My rent isn't tax deductible. Why is yours blessed with such a status (In the form of a mortgage, and property tax deduction)? All that mortgage tax deductions do, economically, is increase the overall price of homes, and have non-homeowners subsidize home-owners.
  - mattchristen 9y ago
    Because the person that owns the property you rent is receiving those benefits.
  - mmanfrin 9y ago
    Mortgage interest and property taxes are costs on top of the actual cost of the house. My mortgage itself isn't tax deductible.
    - refurb 9y ago
      It's still a concession to homeowners that renters don't get. We want taxes to be fair, no?
      - rootusrootus 9y ago
influx 9y ago
So people making over 200K a year will pay more taxes, cry me a river.
- irrational 9y ago
  That was my feeling too. I read it and kept looking for the downside, but people making over 200k(!) having to pay more taxes doesn't seem to have a downside.
  - deadmetheny 9y ago
    It doesn't, the tax bill is generally good for lower income people who take the standard deduction. Everyone's screeching about it because of the people in the top income brackets are saving the most, which is a total "no shit" moment given how much more they pay in overall.
  - deleted 9y ago
    [deleted]
- notconservative 9y ago
  This is what a lot of commenters aren't getting. Complaints about raising my taxes to lower corporate taxes is kinda ironic because 200K+ is rich as far as most of America is concerned.
  - closeparen 9y ago
    People don’t live in “most of America,” they live in their specific real estate and job markets. The bill punishes expensive areas indiscriminately, not people who are rich in context.
    - notconservative 9y ago
      I'm just saying that that's not how a lot of people see it. Living in an expensive market is not a right.
notconservative 9y ago
This article is more descriptive, not mentioning why the bill is setup like this. But, it's worth saying that this is working as intended from a GOP perspective. This hits mostly democrats. And even if it didn't, high state taxes are seen as propping up big (state) government.
sergiotapia 9y ago
Florida here, I'm going be paying $4000 ish less in taxes. I hope the tax bill lands and is put to practice quick! People who make over $200k aren't getting as big a tax break? I don't feel bad about that.
- hcknwscommenter 9y ago
  "People who make over $200k aren't getting as big a tax break? I don't feel bad about that." According to the CBO, people who make less than $75k get a tax increase by 2027 (on average). People who make between 75K and 500K get a very small tax deduction on average. Blue state residents get a tax increase almost across the board at >200K<1M. Almost anyone who makes more than a million a year gets a sizeable tax deduction.
  - creaghpatr 9y ago
    >According to the CBO, people who make less than $75k get a tax increase by 2027 Because that's when the cuts expire. Incredibly dishonest framing here.
    - jonheller 9y ago
      "By 2019, Americans earning less than $30,000 a year would be worse off under the Senate bill, CBO found. By 2021, Americans earning $40,000 or less would be net losers"
nostromo 9y ago
I don't see why state taxes should be federally deductible to begin with. Two families both make $250,000 a year. One is in New York and one is in Texas. The family in Texas is carrying more of the federal tax burden than the family in New York. Why? Both are (in theory) receiving the same benefits from the Federal Government and should pay the same in taxes. If you're a progressive this should make even less sense: rich states are currently keeping additional funds for themselves local, in their rich states, via high taxes, that are then shielded from the federal government via deductions.
- eli 9y ago
  Taxes aren't based on how much you benefit from government. Progressive tax rates make sense because the wealthy can afford to pay a larger share of their paycheck to support shared society. Not because they necessarily derive more benefits than the middle class. If we taxed people based on the benefits they receive from the government, then the homeless would pay a fortune.
  - AlexandrB 9y ago
    > If we taxes people based on the benefits they receive from the government, then the homeless would pay a fortune. This is a comical simplification. The public and legal infrastructure in America overwhelmingly helps companies and investors make money. Where would UPS be without public roads? Where would Warren Buffet be without a stable legal framework for investment? That's not to mention the military spending that secures all of these fortunes against foreign aggression. To claim that the poor disproportionately benefit from government spending is missing the forest for the trees.
    - eli 9y ago
      I think I phrased that poorly. My point is that how much the government spends "on you" is not relevant to what your income tax rate should be.
  - cannonedhamster 9y ago
    > If we taxes people based on the benefits they receive from the government, then the homeless would pay a fortune. This is provably and patently false. Homeless people don't have their good protected by the police, don't get fire protection, don't drive, don't get deductions for businesses, don't get inheritance from their wealthy, millionaire parents, don't get lobbying influence. The entire system is set up to the benefit the rich with a few social stability benefits for the poor, which in turn keep them from uprising and storming the gates of the wealthy.
seibelj 9y ago
Coastal liberals are very happy for tax increases except when they have to pay it themselves! This makes the situation more fair - eliminate market warping changes such as the property tax deduction and stop letting states get a free ride when increasing taxes by reducing the federal burden. Seems fair to me.
- davexunit 9y ago
  This is a tax break for the very wealthiest at the expense of everyone else, but sure, keep on that "coastal liberals" nonsense.
- ghouse 9y ago
  Two issues here: 1) I thought the GOP was in favor of strong local governance and believed money is more efficiently allocated at the state level. This action flies in the face of that. 2) _Generally_ the states who are penalized by this change in tax policy already pay more in federal taxes than they receive in benefits.[1] [1] https://www.theatlantic.com/business/archive/2014/05/which-states-are-givers-and-which-are-takers/361668/ https://www.theatlantic.com/business/archive/2014/05/which-s...
  - alexanderstears 9y ago
    Hardly flies in the face of strong local governance, if anything, it makes local governance more important because the funding of local governments is more dear under this plan.
jartelt 9y ago
Overall this bill seems really, really bad and poorly implemented (and costly). But as a renter in the bay area, I do like that increasing the standard deduction and reducing some of the other popular deductions will decrease the large tax break homeowners have been receiving. In my opinion we have been treating renters unfairly by letting homeowners deduct so much mortgage interest, property taxes, etc. We already incentivize home ownership by offering government backed 30-year mortgages. We don't need to use the tax code as well.
- matt_wulfeck 9y ago
  It sounds like you actually don’t think the bill is bad.
  - jartelt 9y ago
    Actually, I do think the bill is bad and would not vote to pass it if I was in the position to do so. I think the benefits are skewed way too far in favor of wealthy individuals and corporations and the cuts will not be paid for by growth. However, if the tax bill only got rid of the mortgage interest deduction and property tax deductions, I would happily support it (unfortunately this is not the case). You are allowed to point out some positive things about an overall crappy bill.
- davidjnelson 9y ago
  If the cost of housing in the bay area goes down due to this, that could be a good outcome depending on your situation.
- hcknwscommenter 9y ago
  If owning real estate becomes more expensive, there is a very high likelihood that rents will increase rather than decrease.
  - jartelt 9y ago
    I do not believe anyone knows conclusively whether getting rid of those deductions will increase or decrease real estate prices. If the benefit of the deductions was already built in to the price of real estate, prices should come down if you remove the deductions. If removing the deductions limits the supply of homes for sale, prices could go up. My rent is going up every year as it is, so either way I would rather have a more level playing field between renters/owners.
refurb 9y ago
I love how the articles make it look like Democrats are more likely to be hit by higher taxes. Yes, those states where taxes are going up are majority democrat, but the split isn't that far off from 50/50. Plenty of wealthy Republicans will be paying more tax too.
- akhilcacharya 9y ago
  That's correct, and they're mad as hell too http://www.washingtonexaminer.com/gop-donors-in-new-york-sour-on-partys-tax-plan/article/2642249 http://www.washingtonexaminer.com/gop-donors-in-new-york-sou...
cbhl 9y ago
This seems win-win to me. Techies and bankers pay more in taxes. People in fly-over states get a small tax cut, and maybe can buy a few extra weeks' groceries for their kids.
- sergiotapia 9y ago
  It truly is a win-win. Take a good hard look at the kind of people complaining or trying to paint this tax bill as "bad" or "dangerous". Consider the source!
  - hcknwscommenter 9y ago
    You are forgetting this is all paid for by a 1.5 trillion dollar increase in the deficit.
    - akhilcacharya 9y ago
      Deficits only matter if the other party is in power, obviously. I'm old enough to remember when we couldn't afford the stimulus and auto-bailouts when we were in recession, even though the economy is currently chugging along well at near full employment.
- deleted 9y ago
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- hcknwscommenter 9y ago
  "People in fly-over states get a small tax cut, and maybe can buy a few extra weeks' groceries for their kids." And where are you getting this? It is demonstrably untrue by 2027. Read the CBO report.
deleted 9y ago
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freditup 9y ago
First, this article would've been much better off using medians instead of means. High earner outliers tend to skew stats like these. Second, it's interesting to see people who were in favor of tax increases suddenly change their mind when it hits them. While I agree that tax cuts for the rich seem unnecessary, some tax hikes for the upper middle-class aren't out of line compared with a Democrat led tax plan. I wonder how much our own personal interests in our money affects how we view tax plans? Most people, no matter how rich they are, seem to want those just richer than them to be taxed more. Finally, although the removal of the SALT deduction will cost me significantly, I'm not sure I understand how the deduction makes sense. Why should a state raising their taxes mean you have less of a federal obligation? It only makes sense to me if states with higher taxes use less federal resources.
- hcknwscommenter 9y ago
  A tax rise to ensure that the poor do not go hungry or that social security and medicare are funded is one thing. A tax rise designed solely to fund a lowering of the corporate tax rate and targeted at blue states? An entirely different thing. "It only makes sense to me of states with higher taxes use less federal resources." Which is entirely the case.
- SmellTheGlove 9y ago
  > Second, it's interesting to see people who were in favor of tax increases suddenly change their mind when it hits them. I'm very much in favor of increasing taxes, if that tax increase went to taking care of some societal problem (I don't care what it is, so for the sake of argument, let's just stipulate that it's a problem we both agree needs funding to solve). In this case, anyone paying more in taxes is just subsidizing those who are seeing a cut. It's more of a shift, given that it's projected to increase the federal debt by quite a bit. I'd be okay with that if we were actually putting more spending money in the pockets of the lower and middle classes, but I'm not sure that's the case. If this is really about cutting taxes across the board, I'm okay with that too, but we need to cut spending and I'd like us to take a look at the defense budget before going after social programs. > Finally, although the removal of the SALT deduction will cost me significantly, I'm not sure I understand how the deduction makes sense. Why should a state raising their taxes mean you have less of a federal obligation? It only makes sense to me if states with higher taxes use less federal resources. Deducting SALT makes sense in order to avoid double taxation. To me, it makes sense to pay the local govt first, then the state, then the fed, in that order. In theory, they will provide services to us in that order. Mortgage interest and property tax deductions don't make sense to me, though. I don't really see why I should be able to deduct these, but my hypothetical tenant can't deduct their rent. None of this should have been deductible in the first place.
vladgur 9y ago
Just to be clear, the article is talking about HOUSEHOLDS making more than 200k, not individuals. With a National average salary for software developers of $109k(per Glassdoor), a family of 2 tech professionals across the nation will see their tax liabilities significantly increase
jonathankoren 9y ago
The tax bill has multiple ploys, most central of which is a giant corporate tax reduction. (Note how that tax cut is permanent, while personal tax cuts are temporary.), along with long standing GOP wish list items like elimination of the estate tax and pass through income. That said, there is also an animous towards the rich Democratic states, which this disproportionately hurts. The short game is to stick it to the libs. The long game is to try to eliminate state income taxes.
relics443 9y ago
Idk. I'm a high income tax payer in a blue state. According to my calculations, I'll be paying less taxes next year. In fact, according to my calculations, almost every one will be paying less, except a miniscule population that will have their taxes raised by a couple of hundred per year. And even that might get legislated away in the conference.
api 9y ago
I have very mixed feelings about this part of the tax plan. For years I've been concerned about the increasing geographic gap between rich and poor in America. All talent, capital, and entrepreneurship is increasingly concentrated in coastal cities. This is impoverishing the interior and at the same time driving real estate hyperinflation on the coasts. The middle class and the young get caught in a vice here. You either live somewhere with affordable real estate but no career opportunities or you live somewhere where you can advance your career but can never afford a decent home and can never escape ever-increasing rent. Either way you are screwed. Rot in a backwater or spend everything on real estate and never accumulate savings. I'm tempted to support anything with the potential to reverse this horrible trend. At the same time I also see this as unfair. Coastal blue states already collectively pay more in taxes than they receive from the Fed. I'm a bit torn on this. I'm also torn on the corporate income tax cut. The rest of the tax bill seems mostly bad, so on balance I am not supporting it.
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pianom4n 9y ago
Here's a visualization of the changes with some settings. https://jsfiddle.net/381rkrsq/ https://jsfiddle.net/381rkrsq/ The AMT changes are a huge tax benefit, even to those in California. Especially if you're married

79 points by gdubs 9y ago

Let's just hope this doesn't get flagged off the front page either. It needs to be talked about, as it directly affects most people's livelihoods.

ghouse 9y ago
And just like that... it's gone.

lettergram 9y ago

This doesn't really make sense to me. So it appears that the tax bill generally is reducing the tax code and closing loop-holes (which typically is considered "good" to the left, and the right). In this case, it looks like the tax reductions are reduced in states that have higher taxes. Well that makes sense, because the states with lower taxes have less to write off (as they have 0% in some cases). Of course Texas would be impacted less, because they have no state income tax. New York and California have a state income tax, so the amount that loop holes help people in those states is much higher. So they effectively will be paying higher taxes. Complain to the state governments, who have crazy high taxes (part of the reason I left California)! This article honestly just seems to be trying to draw a correlation where there really isn't one. They are simplifying the tax code, that means reductions go away. Perhaps, we should lower taxes? I'd be in favor of that, but I'm also in favor of making it simpler to do my taxes.

davexunit 9y ago
This is possibly the worst interpretation of the tax bill I have seen yet, maybe excluding Mitch McConnell's ludicrous statement that the bill is either deficit neutral or reduces the deficit.
- whitehouse3 9y ago
  Maybe elaborate? Disparagement without correction doesn’t help other readers.
  - davexunit 9y ago
    It's well-established that the bill gives a tax break to the very wealthiest people and adds over 1 trillion to the deficit, not to mention that the bill manages to squeeze in allowing for oil drilling in protected arctic areas and anti-abortion legislation. After the the bill passes, the increase in the deficit will be offset by cutting social services like Medicare. This is a very, very, very bad bill, drafted in secret, and being rushed through without hearings or debate. The people in support of this bill should be ashamed of themselves.
- BeetleB 9y ago
  Maybe you can point out flaws with the comment?
ghouse 9y ago
I'm not aware of any person who lives in the US who has 0% (of state and local taxes which include income, payroll, property, and sales) Can you provide examples?
jacob019 9y ago
Yes, any change will have winners and losers. The winners will be happy, and the losers will be mad. We all support the idea of simpler tax code, but the devil is in the details. I'm not sure that eliminating the state tax deduction really simplifies anything though. It seems like a transfer of power from the states to the federal government.
- hcknwscommenter 9y ago
  "It seems like a transfer of power from the states to the federal government." Bingo, remember that the next time some politician tells you they are in favor of state's rights.
hcknwscommenter 9y ago
I agree with davexunit. Your analysis is flawed. First, you characterize state and local income and property tax deductions as "loop-holes." That's an interesting bit of logical acrobatics. In reality, the Senate bill hardly closes any loop-holes, and creates a myriad of new ones. For example, the whole pass-through craziness.
BeetleB 9y ago
There are legitimate criticisms of the bill (e.g. allowing corporations to deduct state taxes, but not individuals, or individual tax cuts expiring but the business ones are permanent). But putting those aside, I agree with you in principle. Of course the bill hurts people the most who are in high tax states. They want the high taxes, and they got it. Why should the rest of the country subsidize their federal taxes because they are paying more state income taxes? (Actually, there are some good reasons for this, but they should be debated rather than merely dismissing it as a bias against people in those states). And while I'm not 100% sure, the majority of the population is getting a tax cut - most people could not itemize with a $12000 deduction, and now they're getting another $3-4K ($12K - minus the personal exemptions they're losing).
- jonathankoren 9y ago
  The high tax states are generally the rich donor states. No one in Mississippi is subsidizing California. It’s actua quite the opposite.

sremani 9y ago

If a person in TX or FL, where there in no income tax lives in a Mansion, they also will have increase in Tax, are they worst hit? no but, they did not have State tax deductions to begin with. It could be argued, the rich people in blue states were paying less federal tax because of the SALT discounts, and now they have to pay the feds whole irrespective of the case at State.

mmanfrin 9y ago

I'm a highish earning single homeowner in Alameda County (Bay Area) -- between the Mortgage Interest deduction, the Property Tax deduction, and the State Income Tax deduction being slated for removal, my taxable income is about to go up something like $60k, which is a large chunk of my actual income. This tax bill utterly fucks me, to the point I'm considering selling my house to get ahead of the inevitable housing crash. I cannot see this bill as anything short of theft. Why do I have to pay double-digit percentage more on my taxes to give the ultra rich a tax cut? In what fucking world does that make any economic sense.

vkou 9y ago
> I cannot see this bill as anything short of theft. Why do I have to pay double-digit percentage more on my taxes to give the ultra rich a tax cut? In what fucking world does that make any economic sense. My rent isn't tax deductible. Why is yours blessed with such a status (In the form of a mortgage, and property tax deduction)? All that mortgage tax deductions do, economically, is increase the overall price of homes, and have non-homeowners subsidize home-owners.
- mattchristen 9y ago
  Because the person that owns the property you rent is receiving those benefits.
- mmanfrin 9y ago
  Mortgage interest and property taxes are costs on top of the actual cost of the house. My mortgage itself isn't tax deductible.
  - refurb 9y ago
    It's still a concession to homeowners that renters don't get. We want taxes to be fair, no?
    - rootusrootus 9y ago

influx 9y ago

So people making over 200K a year will pay more taxes, cry me a river.

irrational 9y ago
That was my feeling too. I read it and kept looking for the downside, but people making over 200k(!) having to pay more taxes doesn't seem to have a downside.
- deadmetheny 9y ago
  It doesn't, the tax bill is generally good for lower income people who take the standard deduction. Everyone's screeching about it because of the people in the top income brackets are saving the most, which is a total "no shit" moment given how much more they pay in overall.
- deleted 9y ago
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notconservative 9y ago
This is what a lot of commenters aren't getting. Complaints about raising my taxes to lower corporate taxes is kinda ironic because 200K+ is rich as far as most of America is concerned.
- closeparen 9y ago
  People don’t live in “most of America,” they live in their specific real estate and job markets. The bill punishes expensive areas indiscriminately, not people who are rich in context.
  - notconservative 9y ago
    I'm just saying that that's not how a lot of people see it. Living in an expensive market is not a right.

notconservative 9y ago

This article is more descriptive, not mentioning why the bill is setup like this. But, it's worth saying that this is working as intended from a GOP perspective. This hits mostly democrats. And even if it didn't, high state taxes are seen as propping up big (state) government.

sergiotapia 9y ago

Florida here, I'm going be paying $4000 ish less in taxes. I hope the tax bill lands and is put to practice quick! People who make over $200k aren't getting as big a tax break? I don't feel bad about that.

hcknwscommenter 9y ago
"People who make over $200k aren't getting as big a tax break? I don't feel bad about that." According to the CBO, people who make less than $75k get a tax increase by 2027 (on average). People who make between 75K and 500K get a very small tax deduction on average. Blue state residents get a tax increase almost across the board at >200K<1M. Almost anyone who makes more than a million a year gets a sizeable tax deduction.
- creaghpatr 9y ago
  >According to the CBO, people who make less than $75k get a tax increase by 2027 Because that's when the cuts expire. Incredibly dishonest framing here.
  - jonheller 9y ago
    "By 2019, Americans earning less than $30,000 a year would be worse off under the Senate bill, CBO found. By 2021, Americans earning $40,000 or less would be net losers"

nostromo 9y ago

I don't see why state taxes should be federally deductible to begin with. Two families both make $250,000 a year. One is in New York and one is in Texas. The family in Texas is carrying more of the federal tax burden than the family in New York. Why? Both are (in theory) receiving the same benefits from the Federal Government and should pay the same in taxes. If you're a progressive this should make even less sense: rich states are currently keeping additional funds for themselves local, in their rich states, via high taxes, that are then shielded from the federal government via deductions.

eli 9y ago
Taxes aren't based on how much you benefit from government. Progressive tax rates make sense because the wealthy can afford to pay a larger share of their paycheck to support shared society. Not because they necessarily derive more benefits than the middle class. If we taxed people based on the benefits they receive from the government, then the homeless would pay a fortune.
- AlexandrB 9y ago
  > If we taxes people based on the benefits they receive from the government, then the homeless would pay a fortune. This is a comical simplification. The public and legal infrastructure in America overwhelmingly helps companies and investors make money. Where would UPS be without public roads? Where would Warren Buffet be without a stable legal framework for investment? That's not to mention the military spending that secures all of these fortunes against foreign aggression. To claim that the poor disproportionately benefit from government spending is missing the forest for the trees.
  - eli 9y ago
    I think I phrased that poorly. My point is that how much the government spends "on you" is not relevant to what your income tax rate should be.
- cannonedhamster 9y ago
  > If we taxes people based on the benefits they receive from the government, then the homeless would pay a fortune. This is provably and patently false. Homeless people don't have their good protected by the police, don't get fire protection, don't drive, don't get deductions for businesses, don't get inheritance from their wealthy, millionaire parents, don't get lobbying influence. The entire system is set up to the benefit the rich with a few social stability benefits for the poor, which in turn keep them from uprising and storming the gates of the wealthy.

seibelj 9y ago

Coastal liberals are very happy for tax increases except when they have to pay it themselves! This makes the situation more fair - eliminate market warping changes such as the property tax deduction and stop letting states get a free ride when increasing taxes by reducing the federal burden. Seems fair to me.

davexunit 9y ago
This is a tax break for the very wealthiest at the expense of everyone else, but sure, keep on that "coastal liberals" nonsense.
ghouse 9y ago
Two issues here: 1) I thought the GOP was in favor of strong local governance and believed money is more efficiently allocated at the state level. This action flies in the face of that. 2) _Generally_ the states who are penalized by this change in tax policy already pay more in federal taxes than they receive in benefits.[1] [1] https://www.theatlantic.com/business/archive/2014/05/which-states-are-givers-and-which-are-takers/361668/ https://www.theatlantic.com/business/archive/2014/05/which-s...
- alexanderstears 9y ago
  Hardly flies in the face of strong local governance, if anything, it makes local governance more important because the funding of local governments is more dear under this plan.

jartelt 9y ago

Overall this bill seems really, really bad and poorly implemented (and costly). But as a renter in the bay area, I do like that increasing the standard deduction and reducing some of the other popular deductions will decrease the large tax break homeowners have been receiving. In my opinion we have been treating renters unfairly by letting homeowners deduct so much mortgage interest, property taxes, etc. We already incentivize home ownership by offering government backed 30-year mortgages. We don't need to use the tax code as well.

matt_wulfeck 9y ago
It sounds like you actually don’t think the bill is bad.
- jartelt 9y ago
  Actually, I do think the bill is bad and would not vote to pass it if I was in the position to do so. I think the benefits are skewed way too far in favor of wealthy individuals and corporations and the cuts will not be paid for by growth. However, if the tax bill only got rid of the mortgage interest deduction and property tax deductions, I would happily support it (unfortunately this is not the case). You are allowed to point out some positive things about an overall crappy bill.
davidjnelson 9y ago
If the cost of housing in the bay area goes down due to this, that could be a good outcome depending on your situation.
hcknwscommenter 9y ago
If owning real estate becomes more expensive, there is a very high likelihood that rents will increase rather than decrease.
- jartelt 9y ago
  I do not believe anyone knows conclusively whether getting rid of those deductions will increase or decrease real estate prices. If the benefit of the deductions was already built in to the price of real estate, prices should come down if you remove the deductions. If removing the deductions limits the supply of homes for sale, prices could go up. My rent is going up every year as it is, so either way I would rather have a more level playing field between renters/owners.

refurb 9y ago

I love how the articles make it look like Democrats are more likely to be hit by higher taxes. Yes, those states where taxes are going up are majority democrat, but the split isn't that far off from 50/50. Plenty of wealthy Republicans will be paying more tax too.

akhilcacharya 9y ago
That's correct, and they're mad as hell too http://www.washingtonexaminer.com/gop-donors-in-new-york-sour-on-partys-tax-plan/article/2642249 http://www.washingtonexaminer.com/gop-donors-in-new-york-sou...

cbhl 9y ago

This seems win-win to me. Techies and bankers pay more in taxes. People in fly-over states get a small tax cut, and maybe can buy a few extra weeks' groceries for their kids.

sergiotapia 9y ago
It truly is a win-win. Take a good hard look at the kind of people complaining or trying to paint this tax bill as "bad" or "dangerous". Consider the source!
- hcknwscommenter 9y ago
  You are forgetting this is all paid for by a 1.5 trillion dollar increase in the deficit.
  - akhilcacharya 9y ago
    Deficits only matter if the other party is in power, obviously. I'm old enough to remember when we couldn't afford the stimulus and auto-bailouts when we were in recession, even though the economy is currently chugging along well at near full employment.
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hcknwscommenter 9y ago
"People in fly-over states get a small tax cut, and maybe can buy a few extra weeks' groceries for their kids." And where are you getting this? It is demonstrably untrue by 2027. Read the CBO report.

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freditup 9y ago

First, this article would've been much better off using medians instead of means. High earner outliers tend to skew stats like these. Second, it's interesting to see people who were in favor of tax increases suddenly change their mind when it hits them. While I agree that tax cuts for the rich seem unnecessary, some tax hikes for the upper middle-class aren't out of line compared with a Democrat led tax plan. I wonder how much our own personal interests in our money affects how we view tax plans? Most people, no matter how rich they are, seem to want those just richer than them to be taxed more. Finally, although the removal of the SALT deduction will cost me significantly, I'm not sure I understand how the deduction makes sense. Why should a state raising their taxes mean you have less of a federal obligation? It only makes sense to me if states with higher taxes use less federal resources.

hcknwscommenter 9y ago
A tax rise to ensure that the poor do not go hungry or that social security and medicare are funded is one thing. A tax rise designed solely to fund a lowering of the corporate tax rate and targeted at blue states? An entirely different thing. "It only makes sense to me of states with higher taxes use less federal resources." Which is entirely the case.
SmellTheGlove 9y ago
> Second, it's interesting to see people who were in favor of tax increases suddenly change their mind when it hits them. I'm very much in favor of increasing taxes, if that tax increase went to taking care of some societal problem (I don't care what it is, so for the sake of argument, let's just stipulate that it's a problem we both agree needs funding to solve). In this case, anyone paying more in taxes is just subsidizing those who are seeing a cut. It's more of a shift, given that it's projected to increase the federal debt by quite a bit. I'd be okay with that if we were actually putting more spending money in the pockets of the lower and middle classes, but I'm not sure that's the case. If this is really about cutting taxes across the board, I'm okay with that too, but we need to cut spending and I'd like us to take a look at the defense budget before going after social programs. > Finally, although the removal of the SALT deduction will cost me significantly, I'm not sure I understand how the deduction makes sense. Why should a state raising their taxes mean you have less of a federal obligation? It only makes sense to me if states with higher taxes use less federal resources. Deducting SALT makes sense in order to avoid double taxation. To me, it makes sense to pay the local govt first, then the state, then the fed, in that order. In theory, they will provide services to us in that order. Mortgage interest and property tax deductions don't make sense to me, though. I don't really see why I should be able to deduct these, but my hypothetical tenant can't deduct their rent. None of this should have been deductible in the first place.

vladgur 9y ago

Just to be clear, the article is talking about HOUSEHOLDS making more than 200k, not individuals. With a National average salary for software developers of $109k(per Glassdoor), a family of 2 tech professionals across the nation will see their tax liabilities significantly increase

jonathankoren 9y ago

The tax bill has multiple ploys, most central of which is a giant corporate tax reduction. (Note how that tax cut is permanent, while personal tax cuts are temporary.), along with long standing GOP wish list items like elimination of the estate tax and pass through income. That said, there is also an animous towards the rich Democratic states, which this disproportionately hurts. The short game is to stick it to the libs. The long game is to try to eliminate state income taxes.

relics443 9y ago

Idk. I'm a high income tax payer in a blue state. According to my calculations, I'll be paying less taxes next year. In fact, according to my calculations, almost every one will be paying less, except a miniscule population that will have their taxes raised by a couple of hundred per year. And even that might get legislated away in the conference.

api 9y ago

I have very mixed feelings about this part of the tax plan. For years I've been concerned about the increasing geographic gap between rich and poor in America. All talent, capital, and entrepreneurship is increasingly concentrated in coastal cities. This is impoverishing the interior and at the same time driving real estate hyperinflation on the coasts. The middle class and the young get caught in a vice here. You either live somewhere with affordable real estate but no career opportunities or you live somewhere where you can advance your career but can never afford a decent home and can never escape ever-increasing rent. Either way you are screwed. Rot in a backwater or spend everything on real estate and never accumulate savings. I'm tempted to support anything with the potential to reverse this horrible trend. At the same time I also see this as unfair. Coastal blue states already collectively pay more in taxes than they receive from the Fed. I'm a bit torn on this. I'm also torn on the corporate income tax cut. The rest of the tax bill seems mostly bad, so on balance I am not supporting it.

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pianom4n 9y ago

Here's a visualization of the changes with some settings. https://jsfiddle.net/381rkrsq/ https://jsfiddle.net/381rkrsq/ The AMT changes are a huge tax benefit, even to those in California. Especially if you're married