8 ms·

>state goverments, by enacting an income tax of their own, could essentially steal part of the federal government's tax revenue Funny that it is the red states

by jrs235 8y ago

>state goverments, by enacting an income tax of their own, could essentially steal part of the federal government's tax revenue Funny that it is the red states that tend to get more federal dollars returned/pumped into their states than they contribute. It's ridiculous to say the the blue states are stealing. >There's really no good reason for this. Republicans typically talking about being for smaller [Federal] government should like that the [blue] states are trying to solve the problems most important and local to them via their own means.

darawk 8y ago
> Funny that it is the red states that tend to get more federal dollars returned/pumped into their states than they contribute. It's ridiculous to say the the blue states are stealing. While I 100% agree that red states are the welfare queens of our current system, I don't think it's legitimate to consider that point in this context. The question we have to ask is what is the technocratically correct structure here. If states want to collect tax, that's great, but it shouldn't come at the cost of federal revenue. > Republicans typically talking about being for smaller [Federal] government should like that the [blue] states are trying to solve the problems most important and local to them via their own means. There is sort of a reasonable case to be made here, but I think it has major incentive problems. If states were using the revenue they raised to replace federal funds, you might be able to make this case. But as a systemic organizational matter, I don't think i'd want the system to work this way. It's just not a very clean architecture - states are incentivized to levy income taxes more than they otherwise would because it imposes a lower cost on their citizens than other forms of taxes, because of this federal revenue issue. I don't think you want an incentive structure like that.
- thegayngler 8y ago
  Actually, I do like this incentive structure when put in this way. I think incentivizing people to take responsibility for themselves with only limited amounts of help from the federal government is the right thing to do.
  - darawk 8y ago
    That's not what this structure does, though. It just incentivizes states to collect more revenue than they otherwise would, at the expense of federal collection.
    - thegayngler 8y ago
      It is not a 1:1 ratio though as it really only lowers your taxable income. I agree that it should be limited but states should be incentivized to not need the federal government for much.
- diggernet 8y ago
  Personally, I think the correct structure would be for states to tax their resident citizens in whatever way they see fit (property, income, sales, etc). And then Federal gov't taxes the states for a percentage of their tax revenue. That would eliminate the need for completely redundant state and Federal income tax collection systems. So (for people in states with income taxes), instead of filing two separate tax returns and sending (say) 10% to your state and 30% to the Feds, you file one return sending 40% to your state and the Feds tax your state for 75% of their revenue (which happens to include 30% of your income).
  - darawk 8y ago
    I completely agree.
  - mixmastamyk 8y ago
    Interesting but some states don't have an income tax. Maybe they'd need to build some infrastructure for it. Not insurmountable.
    - diggernet 8y ago
      Not at all. Those states already collect their tax through other means (property, sales, etc). They would continue to do so. And the Feds would take a cut of that.
kbutler 8y ago
> Funny that it is the red states that tend to get more federal dollars returned/pumped into their states than they contribute. Isn't that just because there are higher incomes in the blue states, and isn't it a democratic policy to tax higher incomes and transfer wealth to those with lower incomes? > Republicans typically talking about being for smaller [Federal] government should like that the [blue] states are trying to solve the problems most important and local to them via their own means. Again democrats say taxes should be higher, and more of the wealthy live in the blue states, so this matches democratic tax proposals. What exactly are you complaining about? Here's a bit more detail: https://www.bloomberg.com/opinion/articles/2018-02-05/think-carefully-before-cutting-off-subsidies-to-red-states https://www.bloomberg.com/opinion/articles/2018-02-05/think-... Do you want a less progressive tax code? To weaken or remove the social safety net, or turn it back over to the states?
- Barrin92 8y ago
  >Isn't that just because there are higher incomes in the blue states, and isn't it a democratic policy to tax higher incomes and transfer wealth to those with lower incomes? I'm not American so correct me if I got the wrong conclusion from the article, but the changes in this case only lead to higher taxation in wealthy areas that also have high state income taxes, so it's not a redistribution from wealthy to less wealthy regions, which I agree sounds like democratic policy, it is a distribution from rich blue state regions to the on average poorer states. This seems like a very important difference, because as the article points out, it means that the well off in those poorer states aren't actually affected (hence the motivation to move). This does not sound like stereotypical democratic policy. It does not seem fair that wealthy people in already high tax environments pay even more taxes for political reasons, than well off people in red states.
  - kbutler 8y ago
    Remember that the federal government doesn't tax states, or give (most of) the transfers to states - they mostly go to individuals. The state aggregates are a convenient number for people trying to make a political point, but it doesn't really support what they are suggesting. This change is a redistribution from people who pay a lot of taxes to people who pay less taxes. Because the US tax system is already progressive (increasing rates with increasing income), this change makes it MORE progressive overall. It could be better targeted at just high-income/high-wealth people, but it generally does pretty well by that measure, because high-income/high wealth people pay most of the taxes. Low-income, low-asset people will actually get a tax reduction, because of the increased standard deduction, even if they live in a high-tax state. That leaves people with a lot of income and/or a lot of assets - people paying over $10,000/year as STATE income, property, or sales taxes (excluding federal income and payroll taxes!). Various measures show that 88% of that deduction goes to people making over $100,000/year, and only 30-40% of filers even in those rich/expensive states take the deduction today (a much smaller/richer percentage would exceed the $10,000 limit). If you're really wealthy in any state, you're going to hit that limit in one or more of those areas. You just hit it faster in high-tax states. Take Wyoming for example: "red state", no income tax, low property tax rate, 4% sales tax. Your 2 Bedroom home in Jackson at just shy of $2 million is going to put you over the property tax exclusion. https://www.jacksonholerr.com/PropertyDetails?mls_num=18-3058 https://www.jacksonholerr.com/PropertyDetails?mls_num=18-305... (there are cheaper 2-br homes in Jackson - and much cheaper homes not far from Jackson) This also illustrates that the people most hurt by the change will be the "house poor" - moderate income, but own a house in an expensive area, so they have high property taxes. They may also get dinged by the reduced mortgage deduction ($1M debt to $750K debt).
defertoreptar 8y ago
> Funny that it is the red states that tend to get more federal dollars returned/pumped into their states than they contribute. It's ridiculous to say the the blue states are stealing. And the reason this is true is because states that receive more than they contribute are ones whose citizens make less money. It's like saying we should tax the poor guy a higher rate than the rich guy since the poor guy uses more public services. > Republicans typically talking about being for smaller [Federal] government should like that the [blue] states are trying to solve the problems most important and local to them via their own means. One could take that to mean that states ought not to need the SALT deduction subsidy to finance their state-level government.
- kevin_thibedeau 8y ago
  It would be nice if certain parties didn't hinge their rhetoric on demonizing the people who financially support their states.
  - ForHackernews 8y ago
    Yeah, you definitely shouldn't bite the hand that feeds you. Apropos of nothing, this might be a good place to mention how much I love innovative adtech that makes it possible to follow me around the internet and continuously provide me with advertising and special offers relevant to my modern life.
    - klodolph 8y ago
      (No sarcasm) I feel you're being sarcastic but I'm not sure what direction you're going with your comment. At the risk of dissecting a frog, could you rephrase that?
      - ForHackernews 8y ago
        Yes, I am being sarcastic. It's entirely possible to hate something and yet still need it for money, and it doesn't always make you a hypocrite.
jdhn 8y ago
>Funny that it is the red states that tend to get more federal dollars returned/pumped into their states than they contribute. Perhaps we should look into what type of federal dollars are flowing to the red states, and then shrink those programs.
- oh_sigh 8y ago
  Ok, so no more medical aid, military bases, or food growing subsidies for red states. Thats surely going to work out well
  - jdhn 8y ago
    I'm fine with shrinking all of those programs.
    - ameister14 8y ago
      You're fine with shrinking medical aid programs? And you're a Democrat?
      - jdhn 8y ago
        No, I consider myself an independent who leans conservative/libertarian.
        ameister14 8y ago
        Ah, gotcha.
    - AngryData 8y ago
      While shrinking agricultural subsidies from a glance looks like a great way to save a lot of money, the reality of it is not so simple. Those agricultural subsidies are THE reason we don't regularly experience large spikes in food prices and have regular and expected small famines, similar to other regular market fluctuations. And if we do experience a famine from say poor rainfall, or bad storms while nor producing any extra, then we will have almost nobody to turn to to import food from since almost all of our major trading partners are importing our food and have little to export. Not to mention the security risk it posses to be low on food, and further the civil uprisings that desperation would inevitably cause. The vast majority of uprisings and civil revolts throughout history have been triggered by food shortages and famine. The reason agricultural subsidies were initially implemented was to prevent civil strife and rebellion; farmers not losing their asses so bad from a badly timed market shift was just a side benefit.
paulddraper 8y ago
> red states that tend to get more federal dollars returned/pumped into their states than they contribute Not that I think you're wrong, but citation? --- I oppose both state/local tax deductions and farm subsidies. There's no good reason except "because life is being unfair to me otherwise".
- ceejayoz 8y ago
  Here's a cite: https://www.apnews.com/2f83c72de1bd440d92cdbc0d3b6bc08c https://www.apnews.com/2f83c72de1bd440d92cdbc0d3b6bc08c
  - paulddraper 8y ago
    Thanks! The cited extremes are California (blue) and Mississippi (red). AP reports that California pays $10,510 per capita in federal taxes and receives $0.96 on the dollar. And Mississippi pays $5,740 per capita in federal taxes and receives $2.13 on the dollar. The figure that's missing is the actual per capita receipt of federal dollars: $10k for CA and $12k for MS. So states are receiving approximately the same number of federal dollars per person. However, they are not paying the same number of federal taxes per person. I don't approve. But on the other hand that's exactly what you'd expect from a progressive tax system, which is widely popular.
    - jtuente 8y ago
      From each according to their ability, to each "equality". I think the more interesting bits that are missing is "average income" and "personal vs corporate vs capital gains tax receipts".
- kingaillas 8y ago
  More citations: https://economistsview.typepad.com/economistsview/2010/03/red-states-blue-states-and-the-distribution-of-federal-spending.html https://economistsview.typepad.com/economistsview/2010/03/re... https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700/ https://wallethub.com/edu/states-most-least-dependent-on-the...
jandrewrogers 8y ago
If you actually attribute the tax dollars going to red states, the assertion that blue states fund red states is highly misleading. The bulk of what determines Federal dollars go outside of DC is: - Where people retire. Social Security, Medicare, etc is a large part of this cash flow. In the US, many people move to the sunbelt States (often from blue States), which are almost all red. We can't prevent people in New York from retiring to Florida. - Where military bases are located, which tend to be in rural red States where the land is cheap and environmental impact will be minimal. There used to be many more blue State military bases but many were closed in the 1990s to save taxpayer money. The greater San Francisco region is littered with former military bases. Military base expenditures and employment are another big chunk of the cash flow to red States. - Where Federal offices are located. Outside of Washington DC, a large percentage of Federal employees are involved in things like agriculture, land management, national forests, national laboratories, border protection, etc which predominantly and often inherently involve red rural States. The Federal government operations are literally tied to geography, the location of these offices are not arbitrary nor charity. Of these, only the first is welfare by any ordinary definition, and while it is a large portion of the net tax flow I don't think most people are suggesting that we eliminate it or prevent retirees from moving. The military to the extent it exists need to be put somewhere, preferably somewhere cheap and uninteresting. The rest of the Federal spending disparity can be largely eliminated overnight by eliminating all Federal employment related to managing geography but I don't think many people would support that either. It isn't the fault of the red States that many of the most popular national parks and natural resources are within their borders.
- taurath 8y ago
  By making your point, its interesting that you point out just how dependent those red state's economies are dependent on the government. I guess that's one reason the golden cows of conservative fiscal policy is military spending and not touching social security (though they sometimes try for the latter in a way that makes it seem like they're not)
- cafard 8y ago
  I would point out that the seniority often enjoyed by southern Democrats before about 1968 meant that a lot of southerners headed important committees, and had a good deal of say in where bases and offices should be located.
rayiner 8y ago
It's not so much red versus blue as it is the New York, Chicago, and Boston metro areas subsidizing everyone else: https://www.bloomberg.com/opinion/articles/2018-02-05/think-carefully-before-cutting-off-subsidies-to-red-states https://www.bloomberg.com/opinion/articles/2018-02-05/think-.... California, in particular, is basically at break-even. Moreover, by and large it's not like New Yorkers are paying to have roads built in Texas. The biggest federal expenditures are Social Security and Medicare--if a New Yorker retires to Georgia, that reflects a net transfer to Georgia (the person pays federal taxes while working in New York, then collects Social Security and Medicare after moving to Georgia). How does that fit into the maker/taker narrative?

by jrs235 8y ago

darawk 8y ago

> Funny that it is the red states that tend to get more federal dollars returned/pumped into their states than they contribute. It's ridiculous to say the the blue states are stealing. While I 100% agree that red states are the welfare queens of our current system, I don't think it's legitimate to consider that point in this context. The question we have to ask is what is the technocratically correct structure here. If states want to collect tax, that's great, but it shouldn't come at the cost of federal revenue. > Republicans typically talking about being for smaller [Federal] government should like that the [blue] states are trying to solve the problems most important and local to them via their own means. There is sort of a reasonable case to be made here, but I think it has major incentive problems. If states were using the revenue they raised to replace federal funds, you might be able to make this case. But as a systemic organizational matter, I don't think i'd want the system to work this way. It's just not a very clean architecture - states are incentivized to levy income taxes more than they otherwise would because it imposes a lower cost on their citizens than other forms of taxes, because of this federal revenue issue. I don't think you want an incentive structure like that.

thegayngler 8y ago
Actually, I do like this incentive structure when put in this way. I think incentivizing people to take responsibility for themselves with only limited amounts of help from the federal government is the right thing to do.
- darawk 8y ago
  That's not what this structure does, though. It just incentivizes states to collect more revenue than they otherwise would, at the expense of federal collection.
  - thegayngler 8y ago
    It is not a 1:1 ratio though as it really only lowers your taxable income. I agree that it should be limited but states should be incentivized to not need the federal government for much.
diggernet 8y ago
Personally, I think the correct structure would be for states to tax their resident citizens in whatever way they see fit (property, income, sales, etc). And then Federal gov't taxes the states for a percentage of their tax revenue. That would eliminate the need for completely redundant state and Federal income tax collection systems. So (for people in states with income taxes), instead of filing two separate tax returns and sending (say) 10% to your state and 30% to the Feds, you file one return sending 40% to your state and the Feds tax your state for 75% of their revenue (which happens to include 30% of your income).
- darawk 8y ago
  I completely agree.
- mixmastamyk 8y ago
  Interesting but some states don't have an income tax. Maybe they'd need to build some infrastructure for it. Not insurmountable.
  - diggernet 8y ago
    Not at all. Those states already collect their tax through other means (property, sales, etc). They would continue to do so. And the Feds would take a cut of that.

kbutler 8y ago

> Funny that it is the red states that tend to get more federal dollars returned/pumped into their states than they contribute. Isn't that just because there are higher incomes in the blue states, and isn't it a democratic policy to tax higher incomes and transfer wealth to those with lower incomes? > Republicans typically talking about being for smaller [Federal] government should like that the [blue] states are trying to solve the problems most important and local to them via their own means. Again democrats say taxes should be higher, and more of the wealthy live in the blue states, so this matches democratic tax proposals. What exactly are you complaining about? Here's a bit more detail: https://www.bloomberg.com/opinion/articles/2018-02-05/think-carefully-before-cutting-off-subsidies-to-red-states https://www.bloomberg.com/opinion/articles/2018-02-05/think-... Do you want a less progressive tax code? To weaken or remove the social safety net, or turn it back over to the states?

Barrin92 8y ago
>Isn't that just because there are higher incomes in the blue states, and isn't it a democratic policy to tax higher incomes and transfer wealth to those with lower incomes? I'm not American so correct me if I got the wrong conclusion from the article, but the changes in this case only lead to higher taxation in wealthy areas that also have high state income taxes, so it's not a redistribution from wealthy to less wealthy regions, which I agree sounds like democratic policy, it is a distribution from rich blue state regions to the on average poorer states. This seems like a very important difference, because as the article points out, it means that the well off in those poorer states aren't actually affected (hence the motivation to move). This does not sound like stereotypical democratic policy. It does not seem fair that wealthy people in already high tax environments pay even more taxes for political reasons, than well off people in red states.
- kbutler 8y ago
  Remember that the federal government doesn't tax states, or give (most of) the transfers to states - they mostly go to individuals. The state aggregates are a convenient number for people trying to make a political point, but it doesn't really support what they are suggesting. This change is a redistribution from people who pay a lot of taxes to people who pay less taxes. Because the US tax system is already progressive (increasing rates with increasing income), this change makes it MORE progressive overall. It could be better targeted at just high-income/high-wealth people, but it generally does pretty well by that measure, because high-income/high wealth people pay most of the taxes. Low-income, low-asset people will actually get a tax reduction, because of the increased standard deduction, even if they live in a high-tax state. That leaves people with a lot of income and/or a lot of assets - people paying over $10,000/year as STATE income, property, or sales taxes (excluding federal income and payroll taxes!). Various measures show that 88% of that deduction goes to people making over $100,000/year, and only 30-40% of filers even in those rich/expensive states take the deduction today (a much smaller/richer percentage would exceed the $10,000 limit). If you're really wealthy in any state, you're going to hit that limit in one or more of those areas. You just hit it faster in high-tax states. Take Wyoming for example: "red state", no income tax, low property tax rate, 4% sales tax. Your 2 Bedroom home in Jackson at just shy of $2 million is going to put you over the property tax exclusion. https://www.jacksonholerr.com/PropertyDetails?mls_num=18-3058 https://www.jacksonholerr.com/PropertyDetails?mls_num=18-305... (there are cheaper 2-br homes in Jackson - and much cheaper homes not far from Jackson) This also illustrates that the people most hurt by the change will be the "house poor" - moderate income, but own a house in an expensive area, so they have high property taxes. They may also get dinged by the reduced mortgage deduction ($1M debt to $750K debt).

defertoreptar 8y ago

> Funny that it is the red states that tend to get more federal dollars returned/pumped into their states than they contribute. It's ridiculous to say the the blue states are stealing. And the reason this is true is because states that receive more than they contribute are ones whose citizens make less money. It's like saying we should tax the poor guy a higher rate than the rich guy since the poor guy uses more public services. > Republicans typically talking about being for smaller [Federal] government should like that the [blue] states are trying to solve the problems most important and local to them via their own means. One could take that to mean that states ought not to need the SALT deduction subsidy to finance their state-level government.

kevin_thibedeau 8y ago
It would be nice if certain parties didn't hinge their rhetoric on demonizing the people who financially support their states.
- ForHackernews 8y ago
  Yeah, you definitely shouldn't bite the hand that feeds you. Apropos of nothing, this might be a good place to mention how much I love innovative adtech that makes it possible to follow me around the internet and continuously provide me with advertising and special offers relevant to my modern life.
  - klodolph 8y ago
    (No sarcasm) I feel you're being sarcastic but I'm not sure what direction you're going with your comment. At the risk of dissecting a frog, could you rephrase that?
    - ForHackernews 8y ago
      Yes, I am being sarcastic. It's entirely possible to hate something and yet still need it for money, and it doesn't always make you a hypocrite.

jdhn 8y ago

>Funny that it is the red states that tend to get more federal dollars returned/pumped into their states than they contribute. Perhaps we should look into what type of federal dollars are flowing to the red states, and then shrink those programs.

oh_sigh 8y ago
Ok, so no more medical aid, military bases, or food growing subsidies for red states. Thats surely going to work out well
- jdhn 8y ago
  I'm fine with shrinking all of those programs.
  - ameister14 8y ago
    You're fine with shrinking medical aid programs? And you're a Democrat?
    - jdhn 8y ago
      No, I consider myself an independent who leans conservative/libertarian.
      - ameister14 8y ago
        Ah, gotcha.
  - AngryData 8y ago
    While shrinking agricultural subsidies from a glance looks like a great way to save a lot of money, the reality of it is not so simple. Those agricultural subsidies are THE reason we don't regularly experience large spikes in food prices and have regular and expected small famines, similar to other regular market fluctuations. And if we do experience a famine from say poor rainfall, or bad storms while nor producing any extra, then we will have almost nobody to turn to to import food from since almost all of our major trading partners are importing our food and have little to export. Not to mention the security risk it posses to be low on food, and further the civil uprisings that desperation would inevitably cause. The vast majority of uprisings and civil revolts throughout history have been triggered by food shortages and famine. The reason agricultural subsidies were initially implemented was to prevent civil strife and rebellion; farmers not losing their asses so bad from a badly timed market shift was just a side benefit.

paulddraper 8y ago

> red states that tend to get more federal dollars returned/pumped into their states than they contribute Not that I think you're wrong, but citation? --- I oppose both state/local tax deductions and farm subsidies. There's no good reason except "because life is being unfair to me otherwise".

ceejayoz 8y ago
Here's a cite: https://www.apnews.com/2f83c72de1bd440d92cdbc0d3b6bc08c https://www.apnews.com/2f83c72de1bd440d92cdbc0d3b6bc08c
- paulddraper 8y ago
  Thanks! The cited extremes are California (blue) and Mississippi (red). AP reports that California pays $10,510 per capita in federal taxes and receives $0.96 on the dollar. And Mississippi pays $5,740 per capita in federal taxes and receives $2.13 on the dollar. The figure that's missing is the actual per capita receipt of federal dollars: $10k for CA and $12k for MS. So states are receiving approximately the same number of federal dollars per person. However, they are not paying the same number of federal taxes per person. I don't approve. But on the other hand that's exactly what you'd expect from a progressive tax system, which is widely popular.
  - jtuente 8y ago
    From each according to their ability, to each "equality". I think the more interesting bits that are missing is "average income" and "personal vs corporate vs capital gains tax receipts".
kingaillas 8y ago
More citations: https://economistsview.typepad.com/economistsview/2010/03/red-states-blue-states-and-the-distribution-of-federal-spending.html https://economistsview.typepad.com/economistsview/2010/03/re... https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700/ https://wallethub.com/edu/states-most-least-dependent-on-the...

jandrewrogers 8y ago

If you actually attribute the tax dollars going to red states, the assertion that blue states fund red states is highly misleading. The bulk of what determines Federal dollars go outside of DC is: - Where people retire. Social Security, Medicare, etc is a large part of this cash flow. In the US, many people move to the sunbelt States (often from blue States), which are almost all red. We can't prevent people in New York from retiring to Florida. - Where military bases are located, which tend to be in rural red States where the land is cheap and environmental impact will be minimal. There used to be many more blue State military bases but many were closed in the 1990s to save taxpayer money. The greater San Francisco region is littered with former military bases. Military base expenditures and employment are another big chunk of the cash flow to red States. - Where Federal offices are located. Outside of Washington DC, a large percentage of Federal employees are involved in things like agriculture, land management, national forests, national laboratories, border protection, etc which predominantly and often inherently involve red rural States. The Federal government operations are literally tied to geography, the location of these offices are not arbitrary nor charity. Of these, only the first is welfare by any ordinary definition, and while it is a large portion of the net tax flow I don't think most people are suggesting that we eliminate it or prevent retirees from moving. The military to the extent it exists need to be put somewhere, preferably somewhere cheap and uninteresting. The rest of the Federal spending disparity can be largely eliminated overnight by eliminating all Federal employment related to managing geography but I don't think many people would support that either. It isn't the fault of the red States that many of the most popular national parks and natural resources are within their borders.

taurath 8y ago
By making your point, its interesting that you point out just how dependent those red state's economies are dependent on the government. I guess that's one reason the golden cows of conservative fiscal policy is military spending and not touching social security (though they sometimes try for the latter in a way that makes it seem like they're not)
cafard 8y ago
I would point out that the seniority often enjoyed by southern Democrats before about 1968 meant that a lot of southerners headed important committees, and had a good deal of say in where bases and offices should be located.

rayiner 8y ago

It's not so much red versus blue as it is the New York, Chicago, and Boston metro areas subsidizing everyone else: https://www.bloomberg.com/opinion/articles/2018-02-05/think-carefully-before-cutting-off-subsidies-to-red-states https://www.bloomberg.com/opinion/articles/2018-02-05/think-.... California, in particular, is basically at break-even. Moreover, by and large it's not like New Yorkers are paying to have roads built in Texas. The biggest federal expenditures are Social Security and Medicare--if a New Yorker retires to Georgia, that reflects a net transfer to Georgia (the person pays federal taxes while working in New York, then collects Social Security and Medicare after moving to Georgia). How does that fit into the maker/taker narrative?