6 ms·

I'm not sure I follow your argument. The point i'm making is that, as a way to structure taxation, I don't think it makes sense for state taxes to funge against

by darawk 8y ago

I'm not sure I follow your argument. The point i'm making is that, as a way to structure taxation, I don't think it makes sense for state taxes to funge against federal taxes. It creates incentive problems that distort policy decisions at the state level. If CA/NY/etc would get money back from the fedgov as grants, then they should do that. They shouldn't have this weird backdoor into grabbing part of the federal government's revenue.

joshuamorton 8y ago
>It creates incentive problems that distort policy decisions at the state level. What are the negative outcomes of such policies? I'd argue that the outcomes are more self-sufficient state governments with less reliance on federal grant money. The question then is if that's something the federal government should encourage. I'm pretty sure a fiscal conservative would say yes. As would a states-rights conservative. Most tax policies are ways to encourage or discourage specific behaviors. Your "weird backdoor" is another person's "explicitly encouraged behavior". You've got to justify why the behavior is bad and should not be encouraged, and I don't think you've done that. You've just (I think) claimed its unfair, but every state works under the same federal government. They could all do the same stuff.
- darawk 8y ago
  It's bad because it creates an incentive for the state to tax in a particular way that may not be optimal. Income taxes are cheaper for states to levy than all other forms of tax because of this backdoor. That is bad.
  - joshuamorton 8y ago
    > Income taxes are cheaper for states to levy than all other forms of tax because of this backdoor. What makes this bad? You say its bad. Why? Like...what's wrong with the government encouraging states to levy income tax?
    - darawk 8y ago
      They're encouraging them to use a specific form of taxation. Income tax is not especially optimal for a number of reasons, but that's not the point. The federal government simply shouldn't be pushing the states into preferring one style of taxation over another unless it has a good reason to - which they don't.
      - joshuamorton 8y ago
        This applies equally to anything though. You're arguing against taxation as a form of incentive towards rational actors, which is to say that you're arguing against taxation. > which they don't. I provided at least one: self sufficient state governments that don't need federal aid.
        darawk 8y ago
        > This applies equally to anything though. You're arguing against taxation as a form of incentive towards rational actors, which is to say that you're arguing against taxation. That argument is contingent on certain linear utility curves that are probably not empirically borne out. > I provided at least one: self sufficient state governments that don't need federal aid. And how are those things related to deducting state tax?
        joshuamorton 8y ago
        Giving states the ability to tax more without an additional burden on their population shifts the onus of supporting that population from the federal to the state government. The state can have a higher tax rate without an overwhelmingly high tax rate on its citizens, and can thereby have enough revenue to provide services without federal aid (that the same revenue would have paid for, just indirectly through the federal government first). >That argument is contingent on certain linear utility curves that are probably not empirically borne out. Just because price elasticity isn't linear doesn't mean that price changes have no effect on demand.
      - smileysteve 8y ago
  - smileysteve 8y ago
    > It's bad because it creates an incentive for the state to tax in a particular way that may not be optimal. Income taxes... But SALT isn't limited to income taxes, it includes sales taxes (which you can more easily track with credit card purchases [than you could in the past]), property taxes, car registration taxes, etc.

by darawk 8y ago

joshuamorton 8y ago

>It creates incentive problems that distort policy decisions at the state level. What are the negative outcomes of such policies? I'd argue that the outcomes are more self-sufficient state governments with less reliance on federal grant money. The question then is if that's something the federal government should encourage. I'm pretty sure a fiscal conservative would say yes. As would a states-rights conservative. Most tax policies are ways to encourage or discourage specific behaviors. Your "weird backdoor" is another person's "explicitly encouraged behavior". You've got to justify why the behavior is bad and should not be encouraged, and I don't think you've done that. You've just (I think) claimed its unfair, but every state works under the same federal government. They could all do the same stuff.

darawk 8y ago
It's bad because it creates an incentive for the state to tax in a particular way that may not be optimal. Income taxes are cheaper for states to levy than all other forms of tax because of this backdoor. That is bad.
- joshuamorton 8y ago
  > Income taxes are cheaper for states to levy than all other forms of tax because of this backdoor. What makes this bad? You say its bad. Why? Like...what's wrong with the government encouraging states to levy income tax?
  - darawk 8y ago
    They're encouraging them to use a specific form of taxation. Income tax is not especially optimal for a number of reasons, but that's not the point. The federal government simply shouldn't be pushing the states into preferring one style of taxation over another unless it has a good reason to - which they don't.
    - joshuamorton 8y ago
      This applies equally to anything though. You're arguing against taxation as a form of incentive towards rational actors, which is to say that you're arguing against taxation. > which they don't. I provided at least one: self sufficient state governments that don't need federal aid.
      - darawk 8y ago
        > This applies equally to anything though. You're arguing against taxation as a form of incentive towards rational actors, which is to say that you're arguing against taxation. That argument is contingent on certain linear utility curves that are probably not empirically borne out. > I provided at least one: self sufficient state governments that don't need federal aid. And how are those things related to deducting state tax?
        joshuamorton 8y ago
        Giving states the ability to tax more without an additional burden on their population shifts the onus of supporting that population from the federal to the state government. The state can have a higher tax rate without an overwhelmingly high tax rate on its citizens, and can thereby have enough revenue to provide services without federal aid (that the same revenue would have paid for, just indirectly through the federal government first). >That argument is contingent on certain linear utility curves that are probably not empirically borne out. Just because price elasticity isn't linear doesn't mean that price changes have no effect on demand.
    - smileysteve 8y ago
- smileysteve 8y ago
  > It's bad because it creates an incentive for the state to tax in a particular way that may not be optimal. Income taxes... But SALT isn't limited to income taxes, it includes sales taxes (which you can more easily track with credit card purchases [than you could in the past]), property taxes, car registration taxes, etc.