6 ms·

Yeah but nothing stops states from raising their own taxes.

by bhupy 6y ago

bobthepanda 6y ago
Other than, say, capping the SALT deduction.
- bhupy 6y ago
  Capping the SALT deduction doesn't stop states from raising their own taxes — it just makes it harder to hide higher state taxes behind Federal deductions. Keep in mind that State and Federal governments are two independent sovereign state actors, with their own expenditures and services. Both have to be paid for somehow, and SALT tax deductions just hide the true cost at the state and local level. Also, the SALT deduction overwhelmingly benefited the rich, who arguably don't pay enough in taxes.
  - scarface74 6y ago
    Yet the states with high taxes pay more to the government than they receive compared to the states with lower taxes.
    - bhupy 6y ago
      This is: 1. Not true of all low tax states (Nevada, Washington, New Hampshire, South Dakota, etc) 2. More representative of which states have the most senior citizens and military bases, because most of the Federal budget goes into Medicare, Social Security, and the military. 3. Better alleviated by directly targeting net-takers rather than trying to approximate which states are net givers and takers based on the state and local tax rates, which is ham-fisted
      - scarface74 6y ago
        Mississippi, Alabama, Kentucky , etc have more senior citizens? Even many of the military bases are just unneeded make-work facilities for civilians. The military leadership has constantly been blocked from closing bases that it said it didn’t need by Congress. There are many military bases that are really just poorly disguised subsidies. And just so I can’t be accused of quoting sources from the “liberal media” https://www.militarytimes.com/news/pentagon-congress/2019/08/15/plans-for-a-new-base-closing-round-may-be-running-out-of-time https://www.militarytimes.com/news/pentagon-congress/2019/08... Social security and Medicare are also just another form of government subsidizing people. No, what they paid in doesn’t come close to paying for what they received. https://www.politifact.com/article/2013/feb/01/medicare-and-social-security-what-you-paid-what-yo/ https://www.politifact.com/article/2013/feb/01/medicare-and-...
        bhupy 6y ago
        > Mississippi, Alabama, Kentucky , etc have more senior citizens? That...wasn't the argument. On average the pattern of "net-takers" and "net-contributors" is a proxy for where senior citizens live because Social Security and Medicare account for over half of the Federal budget. Yes, there are outliers (like Mississippi, Alabama, Kentucky), but there are outliers in the other direction as I pointed out (Washington, Utah, South Dakota, New Hampshire). I addressed this in the final point, that the disparity is: "3. Better alleviated by directly targeting net-takers rather than trying to approximate which states are net givers and takers based on the state and local tax rates, which is ham-fisted" > No, what they paid in doesn’t come close to paying for what they received. None of your sources actually adjust for Medicare/SS/military expenditure.
        scarface74 6y ago
        Military expenditure is often a disguised expenditure to redistribute taxes to states. The military wants to close bases and the civilian leadership won’t allow them because of job loss. Social Security especially is a method to redistribute taxes. The amount most senior citizens get from SS is much less they put in - even if you account for inflation.
        bhupy 6y ago
        This is factually untrue: https://www.marketwatch.com/story/these-7-social-security-myths-just-arent-true-no-matter-how-often-you-hear-them-2019-08-27 https://www.marketwatch.com/story/these-7-social-security-my... In fact, research shows that accounting for Social Security essentially cancels out the recent increase in inequality: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3546668 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3546668
        scarface74 6y ago
        Your article didn’t contradict that most people get more than they put in. https://www.politifact.com/article/2013/feb/01/medicare-and-social-security-what-you-paid-what-yo/ https://www.politifact.com/article/2013/feb/01/medicare-and-... According to the institute’s data, a two-earner couple receiving an average wage — $44,600 per spouse in 2012 dollars — and turning 65 in 2010 would have paid $722,000 into Social Security and Medicare and can be expected to take out $966,000 in benefits. So, this couple will be paid about one-third more in benefits than they paid in taxes. > In fact, research shows that accounting for Social Security essentially cancels out the recent increase in inequality Doesn’t that support my point that the higher tax states actually subsidize poorer states? I’m a bleeding heart capitalist. I believe in the social safety net. But, the entire point of my post was arguing against the idea that states with high taxes and limiting SALT was unfair to states that pay less in taxes.
  - lotsofpulp 6y ago
    Yes, all deductions hide the true costs. I don't see why people would be for SALT deductions. The only purpose (which deductions accomplish poorly) of a deduction is to reward the activity that qualifies for the deduction. I don't see why paying taxes should qualify for a deduction. Then again, I'm in favor of removing all deductions. If government wants to incentivize some activity, then they should just pay for it. That way it can be properly accounted for. Edit: I typo'd and wrote "I don't see why people would be against SALT deductions" instead of "I don't see why people would be for SALT deductions".
    - JediWing 6y ago
      SALT deductions (at least on Income Tax) are essentially meant to prevent double-taxation. Why can the federal government tax money that can only possibly be in my pocket if I've committed tax fraud against my state? If I make 100K and my state takes 5%, I now only have 95K. There's no option for me not to pay 5K to my state. (and no, for most people uprooting yourself for tax purposes isn't a tenable option) Now, I have to pay the federal government. Why should I be on the hook to pay taxes on 100K in income, when I truly only earned 95K? With sales tax, you could theoretically not buy things subject to sales tax. With real estate tax, you could in theory just rent. Yes, in practice it's not like taxes are so punitive that > 100% of my income will be demanded, but it seems unfair to levy such taxes. This assumes, of course, that the state has the first dibs on a person's income. I'd be just as happy if the federal government amended the constitution saying that all states levying income tax must deduct federal taxes paid from taxable income amounts.
      - bhupy 6y ago
        Taxation is just the price of the basket of services a government offers to its citizens. We don't deduct prices of other goods & services (food, clothing, rent, transportation) from our salaries before paying taxes on them, do we? It's no more double taxation to pay all of the different governments for their different basket of services as it is "double payment" to pay different service providers the price of their goods & services independent of one another.
  - takeda 6y ago
    SALT deduction was there so you weren't taxed on money that you never got (because it went to pay taxes).
    - bhupy 6y ago
      That's not how taxes work though. I pay for a ton of other things besides State taxes, like my Spotify subscription, my rent, my food, my transportation — why not deduct all of that before paying taxes as well? The State and Local governments provide a basket of services, and taxation is the price of those services. It's no more double taxation to pay all of the different governments for their different basket of services as it is "double payment" to pay different service providers the price of their goods & services independent of one another.
      - takeda 6y ago
        Because the state tax is not a Spotify subscription?
        bhupy 6y ago
        The State tax is a (variable) price we pay for the benefit of living in the State and enjoying the services it offers (policing, fire departments, libraries, schools, utilities, roads, property rights, etc) A Spotify subscription is a price we pay for the benefit of unlimited music streaming. Both represent an exchange of money for services.
mindslight 6y ago
First, the high federal taxes preclude it. The federal government has set itself up as the collector of most taxes, which it would then dole back out to the states with various strings attached. Second, a significant source of federal funds is newly printed money, which the states do not (currently) have the ability to do.
- bhupy 6y ago
  > First, the high federal taxes preclude it. The federal government has set itself up as the collector of most taxes, which it would then dole back out to the states with various strings attached. This is half-true, and to the extent that this is the case, the major political party that GP is attacking here has essentially made it its mission to reduce those high federal taxes. But on the other side of the coin, itt's also worth mentioning that the US Federal taxes are some of the lowest among the OECD. Germany’s second-highest marginal income-tax rate of 42% kicks in for married households earning around €112,000 ($124,000). An American couple with that income pays a marginal rate of only 22% and would need to earn $612,350 before paying the top marginal rate of 37%[1]. If there's a state that wants this kind of a couple to pay taxes that are comparable to Germany's, they have a LOT of room to work with. > Second, a significant source of federal funds is newly printed money, which the states do not (currently) have the ability to do. 1. This is true of the EU as well. Each member state has to get approval from the ECB to print new money. 2. the numbers I've cited are the spending numbers, that's downstream of taxes and money printing. [1] https://www.wsj.com/articles/the-middle-class-always-pays-11574967052 https://www.wsj.com/articles/the-middle-class-always-pays-11...
  - mindslight 6y ago
    Many people have done the argument more justice than I can do, especially off the cuff, but US services are strikingly low for US federal taxes. This creates a general anti-tax sentiment, fueled by a focus on individual states' taxes rather than the bulk tax of the federal government. Talking about EU/ECB is a red herring as the system hasn't been in existence long enough to collapse under its own incentives. But sure, another answer to your question is "nothing". As in, various states might be raising taxes after this is all said and done. The Covid crisis and this orchestrated destruction of the federal government could usher in a return to more localism. It's hard to say what's around the corner from this point.
takeda 6y ago
In terms of California it actually needs to be voted on by people first.
- bhupy 6y ago
  And California is run by that other political party.
  - takeda 6y ago
    And your point is? California is paying federal taxes so in exchange can get help from federal government when it needs it. And the federal government doesn't help it. If California would hold the money that it is sending to subsidize red states it would be doing perfectly fine.
    - bhupy 6y ago
      My point is that political party A criticizes tax cuts at the Federal level at the hands of political party B, but nothing is stopping California from raising its taxes to make up for those cuts, especially because it is largely governed by political party A.
      - takeda 6y ago
        The "party A" is criticizing that it was not a tax cut, but a wealth transfer from already poor people to rich ones. The tax cuts on middle class were made so they gradually are expiring. While the corporate tax cuts (which BTW: didn't improve economy, and that was already apparent long before COVID-19). BTW in 2025 the tax cuts on middle class will expire completely, and unless you make $200k or more you will be affected. Meantime Bezos is now worth $200 billion thanks to the wonderful tax cuts. Oh and one interesting thing, the 2018 tax cuts also made it even more beneficial to outsource jobs to other countries, I suspect that was the primarily reason trump started trade war to mask it.
        bhupy 6y ago

Yeah but nothing stops states from raising their own taxes.

by bhupy 6y ago

Yeah but nothing stops states from raising their own taxes.

bobthepanda 6y ago

Other than, say, capping the SALT deduction.

bhupy 6y ago
Capping the SALT deduction doesn't stop states from raising their own taxes — it just makes it harder to hide higher state taxes behind Federal deductions. Keep in mind that State and Federal governments are two independent sovereign state actors, with their own expenditures and services. Both have to be paid for somehow, and SALT tax deductions just hide the true cost at the state and local level. Also, the SALT deduction overwhelmingly benefited the rich, who arguably don't pay enough in taxes.
- scarface74 6y ago
  Yet the states with high taxes pay more to the government than they receive compared to the states with lower taxes.
  - bhupy 6y ago
    This is: 1. Not true of all low tax states (Nevada, Washington, New Hampshire, South Dakota, etc) 2. More representative of which states have the most senior citizens and military bases, because most of the Federal budget goes into Medicare, Social Security, and the military. 3. Better alleviated by directly targeting net-takers rather than trying to approximate which states are net givers and takers based on the state and local tax rates, which is ham-fisted
    - scarface74 6y ago
      Mississippi, Alabama, Kentucky , etc have more senior citizens? Even many of the military bases are just unneeded make-work facilities for civilians. The military leadership has constantly been blocked from closing bases that it said it didn’t need by Congress. There are many military bases that are really just poorly disguised subsidies. And just so I can’t be accused of quoting sources from the “liberal media” https://www.militarytimes.com/news/pentagon-congress/2019/08/15/plans-for-a-new-base-closing-round-may-be-running-out-of-time https://www.militarytimes.com/news/pentagon-congress/2019/08... Social security and Medicare are also just another form of government subsidizing people. No, what they paid in doesn’t come close to paying for what they received. https://www.politifact.com/article/2013/feb/01/medicare-and-social-security-what-you-paid-what-yo/ https://www.politifact.com/article/2013/feb/01/medicare-and-...
      - bhupy 6y ago
        > Mississippi, Alabama, Kentucky , etc have more senior citizens? That...wasn't the argument. On average the pattern of "net-takers" and "net-contributors" is a proxy for where senior citizens live because Social Security and Medicare account for over half of the Federal budget. Yes, there are outliers (like Mississippi, Alabama, Kentucky), but there are outliers in the other direction as I pointed out (Washington, Utah, South Dakota, New Hampshire). I addressed this in the final point, that the disparity is: "3. Better alleviated by directly targeting net-takers rather than trying to approximate which states are net givers and takers based on the state and local tax rates, which is ham-fisted" > No, what they paid in doesn’t come close to paying for what they received. None of your sources actually adjust for Medicare/SS/military expenditure.
        scarface74 6y ago
        Military expenditure is often a disguised expenditure to redistribute taxes to states. The military wants to close bases and the civilian leadership won’t allow them because of job loss. Social Security especially is a method to redistribute taxes. The amount most senior citizens get from SS is much less they put in - even if you account for inflation.
        bhupy 6y ago
        This is factually untrue: https://www.marketwatch.com/story/these-7-social-security-myths-just-arent-true-no-matter-how-often-you-hear-them-2019-08-27 https://www.marketwatch.com/story/these-7-social-security-my... In fact, research shows that accounting for Social Security essentially cancels out the recent increase in inequality: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3546668 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3546668
        scarface74 6y ago
        Your article didn’t contradict that most people get more than they put in. https://www.politifact.com/article/2013/feb/01/medicare-and-social-security-what-you-paid-what-yo/ https://www.politifact.com/article/2013/feb/01/medicare-and-... According to the institute’s data, a two-earner couple receiving an average wage — $44,600 per spouse in 2012 dollars — and turning 65 in 2010 would have paid $722,000 into Social Security and Medicare and can be expected to take out $966,000 in benefits. So, this couple will be paid about one-third more in benefits than they paid in taxes. > In fact, research shows that accounting for Social Security essentially cancels out the recent increase in inequality Doesn’t that support my point that the higher tax states actually subsidize poorer states? I’m a bleeding heart capitalist. I believe in the social safety net. But, the entire point of my post was arguing against the idea that states with high taxes and limiting SALT was unfair to states that pay less in taxes.
- lotsofpulp 6y ago
  Yes, all deductions hide the true costs. I don't see why people would be for SALT deductions. The only purpose (which deductions accomplish poorly) of a deduction is to reward the activity that qualifies for the deduction. I don't see why paying taxes should qualify for a deduction. Then again, I'm in favor of removing all deductions. If government wants to incentivize some activity, then they should just pay for it. That way it can be properly accounted for. Edit: I typo'd and wrote "I don't see why people would be against SALT deductions" instead of "I don't see why people would be for SALT deductions".
  - JediWing 6y ago
    SALT deductions (at least on Income Tax) are essentially meant to prevent double-taxation. Why can the federal government tax money that can only possibly be in my pocket if I've committed tax fraud against my state? If I make 100K and my state takes 5%, I now only have 95K. There's no option for me not to pay 5K to my state. (and no, for most people uprooting yourself for tax purposes isn't a tenable option) Now, I have to pay the federal government. Why should I be on the hook to pay taxes on 100K in income, when I truly only earned 95K? With sales tax, you could theoretically not buy things subject to sales tax. With real estate tax, you could in theory just rent. Yes, in practice it's not like taxes are so punitive that > 100% of my income will be demanded, but it seems unfair to levy such taxes. This assumes, of course, that the state has the first dibs on a person's income. I'd be just as happy if the federal government amended the constitution saying that all states levying income tax must deduct federal taxes paid from taxable income amounts.
    - bhupy 6y ago
      Taxation is just the price of the basket of services a government offers to its citizens. We don't deduct prices of other goods & services (food, clothing, rent, transportation) from our salaries before paying taxes on them, do we? It's no more double taxation to pay all of the different governments for their different basket of services as it is "double payment" to pay different service providers the price of their goods & services independent of one another.
- takeda 6y ago
  SALT deduction was there so you weren't taxed on money that you never got (because it went to pay taxes).
  - bhupy 6y ago
    That's not how taxes work though. I pay for a ton of other things besides State taxes, like my Spotify subscription, my rent, my food, my transportation — why not deduct all of that before paying taxes as well? The State and Local governments provide a basket of services, and taxation is the price of those services. It's no more double taxation to pay all of the different governments for their different basket of services as it is "double payment" to pay different service providers the price of their goods & services independent of one another.
    - takeda 6y ago
      Because the state tax is not a Spotify subscription?
      - bhupy 6y ago
        The State tax is a (variable) price we pay for the benefit of living in the State and enjoying the services it offers (policing, fire departments, libraries, schools, utilities, roads, property rights, etc) A Spotify subscription is a price we pay for the benefit of unlimited music streaming. Both represent an exchange of money for services.

mindslight 6y ago

First, the high federal taxes preclude it. The federal government has set itself up as the collector of most taxes, which it would then dole back out to the states with various strings attached. Second, a significant source of federal funds is newly printed money, which the states do not (currently) have the ability to do.

bhupy 6y ago
> First, the high federal taxes preclude it. The federal government has set itself up as the collector of most taxes, which it would then dole back out to the states with various strings attached. This is half-true, and to the extent that this is the case, the major political party that GP is attacking here has essentially made it its mission to reduce those high federal taxes. But on the other side of the coin, itt's also worth mentioning that the US Federal taxes are some of the lowest among the OECD. Germany’s second-highest marginal income-tax rate of 42% kicks in for married households earning around €112,000 ($124,000). An American couple with that income pays a marginal rate of only 22% and would need to earn $612,350 before paying the top marginal rate of 37%[1]. If there's a state that wants this kind of a couple to pay taxes that are comparable to Germany's, they have a LOT of room to work with. > Second, a significant source of federal funds is newly printed money, which the states do not (currently) have the ability to do. 1. This is true of the EU as well. Each member state has to get approval from the ECB to print new money. 2. the numbers I've cited are the spending numbers, that's downstream of taxes and money printing. [1] https://www.wsj.com/articles/the-middle-class-always-pays-11574967052 https://www.wsj.com/articles/the-middle-class-always-pays-11...
- mindslight 6y ago
  Many people have done the argument more justice than I can do, especially off the cuff, but US services are strikingly low for US federal taxes. This creates a general anti-tax sentiment, fueled by a focus on individual states' taxes rather than the bulk tax of the federal government. Talking about EU/ECB is a red herring as the system hasn't been in existence long enough to collapse under its own incentives. But sure, another answer to your question is "nothing". As in, various states might be raising taxes after this is all said and done. The Covid crisis and this orchestrated destruction of the federal government could usher in a return to more localism. It's hard to say what's around the corner from this point.

takeda 6y ago

In terms of California it actually needs to be voted on by people first.

bhupy 6y ago
And California is run by that other political party.
- takeda 6y ago
  And your point is? California is paying federal taxes so in exchange can get help from federal government when it needs it. And the federal government doesn't help it. If California would hold the money that it is sending to subsidize red states it would be doing perfectly fine.
  - bhupy 6y ago
    My point is that political party A criticizes tax cuts at the Federal level at the hands of political party B, but nothing is stopping California from raising its taxes to make up for those cuts, especially because it is largely governed by political party A.
    - takeda 6y ago
      The "party A" is criticizing that it was not a tax cut, but a wealth transfer from already poor people to rich ones. The tax cuts on middle class were made so they gradually are expiring. While the corporate tax cuts (which BTW: didn't improve economy, and that was already apparent long before COVID-19). BTW in 2025 the tax cuts on middle class will expire completely, and unless you make $200k or more you will be affected. Meantime Bezos is now worth $200 billion thanks to the wonderful tax cuts. Oh and one interesting thing, the 2018 tax cuts also made it even more beneficial to outsource jobs to other countries, I suspect that was the primarily reason trump started trade war to mask it.
      - bhupy 6y ago