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But the two are tied. The assumption was that the local tax increases wouldn't be as burdensome on the tax payer in those states because it would be offset by t

by moate 8y ago

But the two are tied. The assumption was that the local tax increases wouldn't be as burdensome on the tax payer in those states because it would be offset by the SALT deduction at the federal level. The whole picture can be considered. Someone living in NJ could easily be offered a tax increase from a state lawmaker, feel that there is a benefit to them in the service that tax will pay for, do the math and realize that with the SALT deduction, they wouldn't be paying any extra money in taxes for their services. Changing the SALT deduction is what changes the math here. They weren't voting for "higher taxes" they were voting for "more services".

niij 8y ago
They were voting to keep the money for their state and short the federal government. That's how the unlimited SALT deduction worked and it gave states an incentive to raise taxes sky high, because it didn't affect the residents of the state, it just dropped what the federal government took in. If I was in one of those states I would've agreed with it too: keep more money for ourselves at no additional cost! Now the law has changed where, regardless of state, your federal tax burden remains the same. It leveled the playing field and states will have to adapt and lower their taxes, otherwise risk losing residents to states where tax money is better managed.
- moate 8y ago
  >>It leveled the playing field and states will have to adapt and lower their taxes, otherwise risk losing residents to states where tax money is better managed. The assumption that the tax money is poorly managed is a misrepresentation. They aren't just lowering taxes, they're also going to be cutting services (or finding new revenue streams). Assuming the states lower their taxes to bring residents in line with their previous combined tax bill, is it realistic to expect that these states are going to get the same funding for the same types of projects from the Feds? No. So while it's "leveling the playing field" it's also a kick in the dick to states with higher State/Local tax levels and forces them to scramble. But hey, look at all those Florida billionaires flush with cash that they're going to trickle down on us now...

by moate 8y ago

niij 8y ago

They were voting to keep the money for their state and short the federal government. That's how the unlimited SALT deduction worked and it gave states an incentive to raise taxes sky high, because it didn't affect the residents of the state, it just dropped what the federal government took in. If I was in one of those states I would've agreed with it too: keep more money for ourselves at no additional cost! Now the law has changed where, regardless of state, your federal tax burden remains the same. It leveled the playing field and states will have to adapt and lower their taxes, otherwise risk losing residents to states where tax money is better managed.

moate 8y ago
>>It leveled the playing field and states will have to adapt and lower their taxes, otherwise risk losing residents to states where tax money is better managed. The assumption that the tax money is poorly managed is a misrepresentation. They aren't just lowering taxes, they're also going to be cutting services (or finding new revenue streams). Assuming the states lower their taxes to bring residents in line with their previous combined tax bill, is it realistic to expect that these states are going to get the same funding for the same types of projects from the Feds? No. So while it's "leveling the playing field" it's also a kick in the dick to states with higher State/Local tax levels and forces them to scramble. But hey, look at all those Florida billionaires flush with cash that they're going to trickle down on us now...