5 ms·

I thought that argument was because they doubled the standard deduction, making it much less attractive to itemize and hence, simpler. What is idiotic about tha

I thought that argument was because they doubled the standard deduction, making it much less attractive to itemize and hence, simpler. What is idiotic about that? For most middle to lower class families it reduced their tax burden and made things simpler. There were a few exceptions, primarily upper middle class families in high cost of living areas, but those were exceptional situations.

arcticbull 7y ago
The net effect of the changes was absolutely tiny for low and middle income folks, and disproportionately rewarded the already well off for whom the marginal utility of money is the lowest. It was a totally regressive change. Just doubling the standard deduction is fine. Capping SLPT was a kick in the nards to liberals on the coasts. It's not just "upper middle class" folks who got hosed, its actually people on the bubble, for whom their SF property tax (1.188%) already eats their entire deduction, and now they're double-taxed on their state taxes. 100K may be upper middle class in Iowa but it won't even get you a studio apartment in SF. That's who gets hosed. And anyone with way too much money got more money. The net of it was dumb.
- burfog 7y ago
  Capping the deduction for state and local taxes is proper. The cap should be $0. If those taxes can be deducted, the nation is subsidizing the more wasteful states. We create a situation where the winning move is to jack up state and local taxes. This diverts more money to the state. The cost of wasteful spending gets spread across the nation, while the benefits stay with those who are wasteful. This encourages a race to see who can be most wasteful, with the federal government being forced to have higher tax rates to make up for funds lost to tax deductions.
  - arcticbull 7y ago
    That’s double taxation. It’s not fair to literally tax me on the taxes I have to pay to another government entity. I don’t even get taxed on the taxes I pay to foreign governments with no cap (?!). The government is “one” from my perspective wrt taxes. No reason for me to pay federal tax on my state tax, period. Your argument just makes it more efficient for the federal government to be wasteful than state governments which do way way less. It’s useless. The federal government has no business keeping states “lean” that’s up to the voters of said states. There’s nothing in the constitution that makes it the federal governments responsibility unless I missed an amendment. Further these high tax states also pay for literally all the other states. California is massive net givers of transfer payments and the flyover states being given a break from this are net takers of transfer payments. It’s just biting the hand that feeds. Of course it’s not politically expeditious to say that. [1] This was done for votes, nothing else. [1] https://www.politifact.com/california/article/2017/feb/14/does-california-give-more-it-gets-dc/ https://www.politifact.com/california/article/2017/feb/14/do...
    - burfog 7y ago
      I was in fact thinking of that idea that "high tax states also pay for literally all the other states", and I pointed out a flaw in that argument. They are underpaying their federal taxes. The voters in those states also happen to be the ones voting for expensive government programs, so it is only fair that they pay. There is no double taxation. You owe tax first to the federal government. The state could let you deduct federal taxes from your state taxes, or not. The federal government has no duty to give you a discount for your choice to live in a place that would divert lots of your income to local purposes. As a thought experiment, consider the ultimate extreme. The local government takes 100% in taxes, then provides you with everything (house, food, clothes, etc.) as government services. Your region thus pays ZERO federal income tax despite having wealth to enjoy (you are fed, etc.) and receiving federal funds for various things. What you have is a partial version of that extreme. Your state isn't being 100% unfair to the other states. It is just modestly unfair. The federal government shouldn't enable that kind of unfairness. BTW, politifact is not credible due to strong partisan bias. I also don't think that "transfer payments" are a proper accounting for differences.
      - arcticbull 7y ago
        How is it fair that my taxes paid to the state of California, a US state, are much less deductible than my taxes paid to foreign governments? No cap on those. The idea is that taxes paid are not really income but rather my cost of doing business, nothing to do with who gets them. It’s like an expense for a business. No matter how high or who they go to they’re not taxed; they’re deducted against income. California takes that tax revenue and reinvests it into the populace which is what generates the income the federal government relies on in the first place. Think of state tax revenue as COGS. The federal government has always been second behind the states and been severely limited in scope and responsibilities. You know what if a state had 100% tax, they could decide between themselves and the federal government how that would be used to service national obligations without involving me. Further it is patently double taxation if I have to pay taxes to two entities based on the same unadjusted income. Fair or unfair (in your opinion or mine) it is what it is: double taxation.
hcknwscommenter 7y ago
And anyone with a lot of kids. No fun to lose multiple personal exemptions.

arcticbull 7y ago

The net effect of the changes was absolutely tiny for low and middle income folks, and disproportionately rewarded the already well off for whom the marginal utility of money is the lowest. It was a totally regressive change. Just doubling the standard deduction is fine. Capping SLPT was a kick in the nards to liberals on the coasts. It's not just "upper middle class" folks who got hosed, its actually people on the bubble, for whom their SF property tax (1.188%) already eats their entire deduction, and now they're double-taxed on their state taxes. 100K may be upper middle class in Iowa but it won't even get you a studio apartment in SF. That's who gets hosed. And anyone with way too much money got more money. The net of it was dumb.

burfog 7y ago
Capping the deduction for state and local taxes is proper. The cap should be $0. If those taxes can be deducted, the nation is subsidizing the more wasteful states. We create a situation where the winning move is to jack up state and local taxes. This diverts more money to the state. The cost of wasteful spending gets spread across the nation, while the benefits stay with those who are wasteful. This encourages a race to see who can be most wasteful, with the federal government being forced to have higher tax rates to make up for funds lost to tax deductions.
- arcticbull 7y ago
  That’s double taxation. It’s not fair to literally tax me on the taxes I have to pay to another government entity. I don’t even get taxed on the taxes I pay to foreign governments with no cap (?!). The government is “one” from my perspective wrt taxes. No reason for me to pay federal tax on my state tax, period. Your argument just makes it more efficient for the federal government to be wasteful than state governments which do way way less. It’s useless. The federal government has no business keeping states “lean” that’s up to the voters of said states. There’s nothing in the constitution that makes it the federal governments responsibility unless I missed an amendment. Further these high tax states also pay for literally all the other states. California is massive net givers of transfer payments and the flyover states being given a break from this are net takers of transfer payments. It’s just biting the hand that feeds. Of course it’s not politically expeditious to say that. [1] This was done for votes, nothing else. [1] https://www.politifact.com/california/article/2017/feb/14/does-california-give-more-it-gets-dc/ https://www.politifact.com/california/article/2017/feb/14/do...
  - burfog 7y ago
    I was in fact thinking of that idea that "high tax states also pay for literally all the other states", and I pointed out a flaw in that argument. They are underpaying their federal taxes. The voters in those states also happen to be the ones voting for expensive government programs, so it is only fair that they pay. There is no double taxation. You owe tax first to the federal government. The state could let you deduct federal taxes from your state taxes, or not. The federal government has no duty to give you a discount for your choice to live in a place that would divert lots of your income to local purposes. As a thought experiment, consider the ultimate extreme. The local government takes 100% in taxes, then provides you with everything (house, food, clothes, etc.) as government services. Your region thus pays ZERO federal income tax despite having wealth to enjoy (you are fed, etc.) and receiving federal funds for various things. What you have is a partial version of that extreme. Your state isn't being 100% unfair to the other states. It is just modestly unfair. The federal government shouldn't enable that kind of unfairness. BTW, politifact is not credible due to strong partisan bias. I also don't think that "transfer payments" are a proper accounting for differences.
    - arcticbull 7y ago
      How is it fair that my taxes paid to the state of California, a US state, are much less deductible than my taxes paid to foreign governments? No cap on those. The idea is that taxes paid are not really income but rather my cost of doing business, nothing to do with who gets them. It’s like an expense for a business. No matter how high or who they go to they’re not taxed; they’re deducted against income. California takes that tax revenue and reinvests it into the populace which is what generates the income the federal government relies on in the first place. Think of state tax revenue as COGS. The federal government has always been second behind the states and been severely limited in scope and responsibilities. You know what if a state had 100% tax, they could decide between themselves and the federal government how that would be used to service national obligations without involving me. Further it is patently double taxation if I have to pay taxes to two entities based on the same unadjusted income. Fair or unfair (in your opinion or mine) it is what it is: double taxation.

hcknwscommenter 7y ago

And anyone with a lot of kids. No fun to lose multiple personal exemptions.