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> you want the federal government to be neutral on state policy the correct way is full deductibility. Why wouldn't the states then just collect 100% of income

• dllthomas 8y ago
  The federal government would probably opt to tax that redistribution as income - that's what it is, after all.
• dragonwriter 8y ago
  > Why wouldn't the states then just collect 100% of income in taxes (and nothing left for the federal taxes), and then redistribute that back to citizens (proportionally with how much taxes each paid)? Because if they did, the feds would just not exempt payments from that scheme from federal taxes (such an inverse means test wouldn't be exempt based on the current policy exempting need-based cash aid.) So it would be essentially the equivalent of just not having taxed the amount paid out in benefits, including for federal tax purposes.