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I'm not sure how this makes the case that these things should come out of the federal government's pocket. If CA/NY want to levy a tax for mental health...then

by darawk 8y ago

I'm not sure how this makes the case that these things should come out of the federal government's pocket. If CA/NY want to levy a tax for mental health...then they should do that. They shouldn't get to arbitrarily take part of the federal government's revenue to accomplish it. At least, I don't see how you're making the case that they should be able to.

gnicholas 8y ago
The point is that at an aggregate level, your argument makes some sense. The fed govt didn't choose to enact this plan, vis a vis the state govt. However, if you look at the fed govt versus the taxpayer, the calculus shifts. What if every rich person who pays the millionaire's tax voted against it and derives no pleasure from it? Why should they be forbidden a deduction from a tax policy perspective? Companies get unlimited SALT deduction, and until this law, people did too. We can even get tax credits for foreign taxes paid. The general rule is that if some govt took your money, you get to deduct it on your federal return. So if there's going to be an exception to this general rule, there should be a good tax policy reason for it.
- jrs235 8y ago
  >Companies get unlimited SALT deduction, and until this law, people did too. Exactly! Yup! The new limits to SALT don't hurt landlords...
  - zaroth 8y ago
    This is because it would drive up rents, the costs would accrue fully to the [lower-income] people renting the property not to the landlord. It would be great to see renters get to deduct the property tax (up to $10k) that they pay intrinsically as part of their rent, but I doubt it will ever happen. The Fed is already not losing out when renters pay the property tax through their rent, rent is not deductible, so the Fed is getting all the income tax. The rental income is netted against expenses on the landlord side and any excess is taxed again at the landlords marginal rate. A dollar can be taxed again and again every time it changes hands. Usually every other time it changes hands there’s an opportunity to net out expenses before being taxed, otherwise taxes would completely swamp the economy. Company A sells Product A, proceeds of which pays Employee B, who pays rent to Landlord C, who buys Product D from Company D. In just that short sequence what percentage of the money flow went to taxes? Almost certainly well over 50%, perhaps approaching 70%, mostly borne by Employee B through payroll and income taxes, second by the Landlord C paying high marginal taxes on any rental profit, and lastly by the Employee and Landlord in the form of sales taxes. The Companies in this example do hand some dollars to the IRS and their States, but the dollars all actually come from B and C.
klipt 8y ago
Think of it in terms of incentives. Under the new tax law: * Paying state taxes to fund public schools: not deductible. * Paying private school fees: deductible. So the new tax law incentivizes private schools over public. * Paying state taxes to help poor people: not deductible. * Paying church tithes to help poor people: deductible. So the new tax law incentivizes religious aid to the poor over public aid to the poor. It's basically using the tax code to push everyone towards "Republican" values.
- smileysteve 8y ago
  It's interesting that you use "Republican" as this is one of the rare cases where you can actually use conservative.

by darawk 8y ago

gnicholas 8y ago

The point is that at an aggregate level, your argument makes some sense. The fed govt didn't choose to enact this plan, vis a vis the state govt. However, if you look at the fed govt versus the taxpayer, the calculus shifts. What if every rich person who pays the millionaire's tax voted against it and derives no pleasure from it? Why should they be forbidden a deduction from a tax policy perspective? Companies get unlimited SALT deduction, and until this law, people did too. We can even get tax credits for foreign taxes paid. The general rule is that if some govt took your money, you get to deduct it on your federal return. So if there's going to be an exception to this general rule, there should be a good tax policy reason for it.

jrs235 8y ago
>Companies get unlimited SALT deduction, and until this law, people did too. Exactly! Yup! The new limits to SALT don't hurt landlords...
- zaroth 8y ago
  This is because it would drive up rents, the costs would accrue fully to the [lower-income] people renting the property not to the landlord. It would be great to see renters get to deduct the property tax (up to $10k) that they pay intrinsically as part of their rent, but I doubt it will ever happen. The Fed is already not losing out when renters pay the property tax through their rent, rent is not deductible, so the Fed is getting all the income tax. The rental income is netted against expenses on the landlord side and any excess is taxed again at the landlords marginal rate. A dollar can be taxed again and again every time it changes hands. Usually every other time it changes hands there’s an opportunity to net out expenses before being taxed, otherwise taxes would completely swamp the economy. Company A sells Product A, proceeds of which pays Employee B, who pays rent to Landlord C, who buys Product D from Company D. In just that short sequence what percentage of the money flow went to taxes? Almost certainly well over 50%, perhaps approaching 70%, mostly borne by Employee B through payroll and income taxes, second by the Landlord C paying high marginal taxes on any rental profit, and lastly by the Employee and Landlord in the form of sales taxes. The Companies in this example do hand some dollars to the IRS and their States, but the dollars all actually come from B and C.

klipt 8y ago

Think of it in terms of incentives. Under the new tax law: * Paying state taxes to fund public schools: not deductible. * Paying private school fees: deductible. So the new tax law incentivizes private schools over public. * Paying state taxes to help poor people: not deductible. * Paying church tithes to help poor people: deductible. So the new tax law incentivizes religious aid to the poor over public aid to the poor. It's basically using the tax code to push everyone towards "Republican" values.

smileysteve 8y ago
It's interesting that you use "Republican" as this is one of the rare cases where you can actually use conservative.