4 ms·

> "Under the old system, state goverments, by enacting an income tax of their own, could essentially steal part of the federal government's tax revenue." this

> "Under the old system, state goverments, by enacting an income tax of their own, could essentially steal part of the federal government's tax revenue." this is such an odd statement. federal and state governments have no entitlement to any type or class of tax, so stealing is an inappropriate description. the federal government can collect taxes in any way congress decides (with implicit citizen support). with that said, the federal government should really be focused primarily on international relations/defense and mediating inter-state disputes (and certainly not on punitive politics like this). federal taxation should be commensurately limited, with states being the primary taxing authority and facilitator of governmental programs of the citizens' choosing (through state legislators).

roenxi 8y ago
[not from the US, this argument is from first principles] There is an argument that SALT deductions distribute the burden of supporting Federal spending - mainly health & welfare [0] - away from high taxing states towards low-taxing states. Stereotypically, one might believe that this means fiscally conservative Republicans are subsidising fiscally extravagant Democratic states. That would be unfair because the Republicans should enjoy greater personal wealth due to their frugal choices. The obvious counterargument is that states like California, Illinois and New York are net contributors to the federal budget [1, 2, 3]. Personally, the SALT deduction is clearly a bad idea and the cap is completely appropriate, paying local taxes shouldn't remove a persons responsibility to the Federal system. However (since the overall system may well be biased against wealthy states) the removal of the deduction should have been paired with a commensurate reduction in the tax take so the net tax payed by individuals didn't change. [0] https://en.wikipedia.org/wiki/United_States_federal_budget https://en.wikipedia.org/wiki/United_States_federal_budget [1] https://en.wikipedia.org/wiki/Federal_tax_revenue_by_state https://en.wikipedia.org/wiki/Federal_tax_revenue_by_state [2] https://en.wikipedia.org/wiki/Federal_taxation_and_spending_by_state https://en.wikipedia.org/wiki/Federal_taxation_and_spending_... [3] https://en.wikipedia.org/wiki/Cook_Partisan_Voting_Index https://en.wikipedia.org/wiki/Cook_Partisan_Voting_Index
- deleted 8y ago
  [deleted]
- clairity 8y ago
  yes, i agree that the SALT deduction is a bad idea, should be abolished, and fed taxes appropriately adjusted. this discussion did make me think about whether the fed should tax citizens directly rather than via states, since the federal government should be in service of the states, not vice versa, but that also has other incentive/accountability problems.
darawk 8y ago
> this is such an odd statement. federal and state governments have no entitlement to any type or class of tax, so stealing is an inappropriate description. the federal government can collect taxes in any way congress decides (with implicit citizen support). Don't get lost in semantics. The point is that deductible state income tax incentivizes states to prefer income taxes to other forms of taxation. There is no explicit reason to encourage this, therefore it should not be encouraged.
- clairity 8y ago
  agreed. it's frustrating that deductions are wielded as political tools rather than to promote a just and fair society.
- smileysteve 8y ago
  > deductible state income tax incentivizes states to prefer income taxes to other forms of taxation This deduction also applies to sales taxes, some people do the math... Technology and apps make it easier to do the math. This deduction also applies to property taxes...
- brewdad 8y ago
  Except taxpayers can deduct the greater of sales tax or income tax. Property taxes (paid by homeowners) are deductible in the same way as income tax. States have no incentive to prefer one type over the other. Texas, with no state income tax, is also paying dearly for this new federal tax policy.
  - mixmastamyk 8y ago
    How does Texas get hurt more?
- dv_dt 8y ago
  There is a reason to encourage this, it encourages taxes and their results to be levied and spent closer to the same place. Across states, it allows for experimentation in our government with different programs and balances.

roenxi 8y ago

[not from the US, this argument is from first principles] There is an argument that SALT deductions distribute the burden of supporting Federal spending - mainly health & welfare [0] - away from high taxing states towards low-taxing states. Stereotypically, one might believe that this means fiscally conservative Republicans are subsidising fiscally extravagant Democratic states. That would be unfair because the Republicans should enjoy greater personal wealth due to their frugal choices. The obvious counterargument is that states like California, Illinois and New York are net contributors to the federal budget [1, 2, 3]. Personally, the SALT deduction is clearly a bad idea and the cap is completely appropriate, paying local taxes shouldn't remove a persons responsibility to the Federal system. However (since the overall system may well be biased against wealthy states) the removal of the deduction should have been paired with a commensurate reduction in the tax take so the net tax payed by individuals didn't change. [0] https://en.wikipedia.org/wiki/United_States_federal_budget https://en.wikipedia.org/wiki/United_States_federal_budget [1] https://en.wikipedia.org/wiki/Federal_tax_revenue_by_state https://en.wikipedia.org/wiki/Federal_tax_revenue_by_state [2] https://en.wikipedia.org/wiki/Federal_taxation_and_spending_by_state https://en.wikipedia.org/wiki/Federal_taxation_and_spending_... [3] https://en.wikipedia.org/wiki/Cook_Partisan_Voting_Index https://en.wikipedia.org/wiki/Cook_Partisan_Voting_Index

deleted 8y ago
[deleted]
clairity 8y ago
yes, i agree that the SALT deduction is a bad idea, should be abolished, and fed taxes appropriately adjusted. this discussion did make me think about whether the fed should tax citizens directly rather than via states, since the federal government should be in service of the states, not vice versa, but that also has other incentive/accountability problems.

darawk 8y ago

> this is such an odd statement. federal and state governments have no entitlement to any type or class of tax, so stealing is an inappropriate description. the federal government can collect taxes in any way congress decides (with implicit citizen support). Don't get lost in semantics. The point is that deductible state income tax incentivizes states to prefer income taxes to other forms of taxation. There is no explicit reason to encourage this, therefore it should not be encouraged.

clairity 8y ago
agreed. it's frustrating that deductions are wielded as political tools rather than to promote a just and fair society.
smileysteve 8y ago
> deductible state income tax incentivizes states to prefer income taxes to other forms of taxation This deduction also applies to sales taxes, some people do the math... Technology and apps make it easier to do the math. This deduction also applies to property taxes...
brewdad 8y ago
Except taxpayers can deduct the greater of sales tax or income tax. Property taxes (paid by homeowners) are deductible in the same way as income tax. States have no incentive to prefer one type over the other. Texas, with no state income tax, is also paying dearly for this new federal tax policy.
- mixmastamyk 8y ago
  How does Texas get hurt more?
dv_dt 8y ago
There is a reason to encourage this, it encourages taxes and their results to be levied and spent closer to the same place. Across states, it allows for experimentation in our government with different programs and balances.