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> 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 a

> 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).
citilife 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? That doesn't necessarily need to be true, it just appears to be the case (I have the personal opinion this comes from some sort of religious ideology). A flat percent based tax system does tax the rich more effectively, it's just people seem to think they should take a larger percentage from the rich. This is likely because they have less voting power and thus cannot resist the masses taking their wealth.
- arrosenberg 8y ago
  > This is likely because they have less voting power and thus cannot resist the masses taking their wealth. The last 50 years of tax policy disagrees with the assertion that they "cannot resist".
  - moate 8y ago
    "Less Voting Power" < "More Direct Lobbying Power". Who gets voted into office isn't important if you're able to buy their ear.
- iainmerrick 8y ago
  A flat percent based tax system does tax the rich more effectively Where do you get that idea? Most countries have progressive taxes, i.e. tax bands, because it's an effective way to raise a good amount of government income. With a flat rate, the tax burden on the lowest earners would be very heavy, especially as poor people spend a much higher fraction of their earnings on day-to-day essentials rather than luxuries. Flat income tax looks somewhat uncommon around the world, judging from Wikipedia: https://en.wikipedia.org/wiki/Flat_tax#Around_the_world https://en.wikipedia.org/wiki/Flat_tax#Around_the_world
- Tsubasachan 8y ago
  Funnily enough poor people in the US don't vote much. Socialists believed that democracy would bring the Revolution with peaceful means. In practice it turned out different.
runako 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 think part of the issue is that this situation didn't arise in a vacuum. Some states (generally, "low income" states) pretty explicitly choose to not well-fund communal aspects of society (schools, etc.). Other states (generally, "high income" states) choose to fund communal programs at a higher level. This is where the states are running 50 experiments in the "laboratory of government." It turns out that after a few generations of the experiment, having better schools (for example) leads to higher incomes and vice versa. This aspect of the tax bill basically seeks to undo (or at least make more expensive) the strategy that has been shown to correlate with higher incomes. Some of the architects of this plan would also like to nationalize a healthcare strategy that has been shown in dozens of states to correlate with worse health outcomes.
- kbutler 8y ago
  Correlation vs causation. I'd assert that it's much more the "urban vs rural" difference that accounts for the income disparity, with the network effects of cities providing more economic benefit. This economic advantage existed long before our public school system. You'd have to have provide pretty powerful evidence to demonstrate that the quality of public schools in the cities is responsible for the economic benefits of cities. For example, on this list, New York has only average quality schools, and California is well below average. https://www.forbes.com/sites/reneemorad/2018/07/31/states-with-the-best-public-school-systems/#3c65f50e3897 https://www.forbes.com/sites/reneemorad/2018/07/31/states-wi...
- smileysteve 8y ago
  > It turns out that after a few generations of the experiment, having better schools (for example) leads to higher incomes and vice versa. It's the vice versa, and the vice versa alone. The ranking algorithms have been publicized. Higher incomes lead real estate industry ranking schools better, leads to better education.

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).

citilife 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? That doesn't necessarily need to be true, it just appears to be the case (I have the personal opinion this comes from some sort of religious ideology). A flat percent based tax system does tax the rich more effectively, it's just people seem to think they should take a larger percentage from the rich. This is likely because they have less voting power and thus cannot resist the masses taking their wealth.

arrosenberg 8y ago
> This is likely because they have less voting power and thus cannot resist the masses taking their wealth. The last 50 years of tax policy disagrees with the assertion that they "cannot resist".
- moate 8y ago
  "Less Voting Power" < "More Direct Lobbying Power". Who gets voted into office isn't important if you're able to buy their ear.
iainmerrick 8y ago
A flat percent based tax system does tax the rich more effectively Where do you get that idea? Most countries have progressive taxes, i.e. tax bands, because it's an effective way to raise a good amount of government income. With a flat rate, the tax burden on the lowest earners would be very heavy, especially as poor people spend a much higher fraction of their earnings on day-to-day essentials rather than luxuries. Flat income tax looks somewhat uncommon around the world, judging from Wikipedia: https://en.wikipedia.org/wiki/Flat_tax#Around_the_world https://en.wikipedia.org/wiki/Flat_tax#Around_the_world
Tsubasachan 8y ago
Funnily enough poor people in the US don't vote much. Socialists believed that democracy would bring the Revolution with peaceful means. In practice it turned out different.

runako 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 think part of the issue is that this situation didn't arise in a vacuum. Some states (generally, "low income" states) pretty explicitly choose to not well-fund communal aspects of society (schools, etc.). Other states (generally, "high income" states) choose to fund communal programs at a higher level. This is where the states are running 50 experiments in the "laboratory of government." It turns out that after a few generations of the experiment, having better schools (for example) leads to higher incomes and vice versa. This aspect of the tax bill basically seeks to undo (or at least make more expensive) the strategy that has been shown to correlate with higher incomes. Some of the architects of this plan would also like to nationalize a healthcare strategy that has been shown in dozens of states to correlate with worse health outcomes.

kbutler 8y ago
Correlation vs causation. I'd assert that it's much more the "urban vs rural" difference that accounts for the income disparity, with the network effects of cities providing more economic benefit. This economic advantage existed long before our public school system. You'd have to have provide pretty powerful evidence to demonstrate that the quality of public schools in the cities is responsible for the economic benefits of cities. For example, on this list, New York has only average quality schools, and California is well below average. https://www.forbes.com/sites/reneemorad/2018/07/31/states-with-the-best-public-school-systems/#3c65f50e3897 https://www.forbes.com/sites/reneemorad/2018/07/31/states-wi...
smileysteve 8y ago
> It turns out that after a few generations of the experiment, having better schools (for example) leads to higher incomes and vice versa. It's the vice versa, and the vice versa alone. The ranking algorithms have been publicized. Higher incomes lead real estate industry ranking schools better, leads to better education.