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Why should federal taxes take priority over state? If the state is able to successfully tax its citizens and keep things closer to home—ultimately needing less

Why should federal taxes take priority over state? If the state is able to successfully tax its citizens and keep things closer to home—ultimately needing less support from the federal government—shouldn’t that be a good thing? In a way it seems like double taxation. In some limited instances you may actually be paying twice for the same thing.

darawk 8y ago
> Why should federal taxes take priority over state? If the state is able to successfully tax its citizens and keep things closer to home—ultimately needing less support from the federal government—shouldn’t that be a good thing? I'm not sure i'd say that they should take priority per se, but they shouldn't funge against each other, and the federal government was there first, in the case of income. Under the old system, if a state introduced an income tax, that would proportionally decrease the federal government's revenue collection from their tax base. That's not a very good system. If a state wants to tax, they should tax, but that shouldn't then reduce the federal government's ability to collect taxes from those same people.
- thaumasiotes 8y ago
  > If a state wants to tax, they should tax, but that shouldn't then reduce the federal government's ability to collect taxes from those same people. I don't understand this. Any tax a state levies on its residents will necessarily reduce the federal government's ability to collect taxes from those same people, because it will make those people poorer.
  - darawk 8y ago
    How so? The current system is income-based, not wealth based. Under the current system, where you cannot deduct state taxes, the federal government's revenue is not reduced by state taxes at all (after the $10,000 limit).
adrianmonk 8y ago
I think it's the other way around. The question should be why state taxes should take priority over federal taxes. And my answer is they shouldn't. If you can deduct state taxes from federal income taxes, then any increase in state tax rates will take some revenue away from the federal government. If your income is X, why not just have the federal government take Y% and the state take Z%, and have those numbers be independent, so that the total tax you pay is (Y+Z)%? If you want to have higher state taxes to provide more services to residents of the state, that's perfectly reasonable, but why should it be the federal government's role to soften the blow of a state-level policy decision?
- themagician 8y ago
  You want money to stay as local as possible.
crooked-v 8y ago
Double taxation happens all the time. What makes this case different?

darawk 8y ago

> Why should federal taxes take priority over state? If the state is able to successfully tax its citizens and keep things closer to home—ultimately needing less support from the federal government—shouldn’t that be a good thing? I'm not sure i'd say that they should take priority per se, but they shouldn't funge against each other, and the federal government was there first, in the case of income. Under the old system, if a state introduced an income tax, that would proportionally decrease the federal government's revenue collection from their tax base. That's not a very good system. If a state wants to tax, they should tax, but that shouldn't then reduce the federal government's ability to collect taxes from those same people.

thaumasiotes 8y ago
> If a state wants to tax, they should tax, but that shouldn't then reduce the federal government's ability to collect taxes from those same people. I don't understand this. Any tax a state levies on its residents will necessarily reduce the federal government's ability to collect taxes from those same people, because it will make those people poorer.
- darawk 8y ago
  How so? The current system is income-based, not wealth based. Under the current system, where you cannot deduct state taxes, the federal government's revenue is not reduced by state taxes at all (after the $10,000 limit).

adrianmonk 8y ago

I think it's the other way around. The question should be why state taxes should take priority over federal taxes. And my answer is they shouldn't. If you can deduct state taxes from federal income taxes, then any increase in state tax rates will take some revenue away from the federal government. If your income is X, why not just have the federal government take Y% and the state take Z%, and have those numbers be independent, so that the total tax you pay is (Y+Z)%? If you want to have higher state taxes to provide more services to residents of the state, that's perfectly reasonable, but why should it be the federal government's role to soften the blow of a state-level policy decision?

themagician 8y ago
You want money to stay as local as possible.

crooked-v 8y ago

Double taxation happens all the time. What makes this case different?