5 ms·

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

by 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.

JediWing 6y ago
What other service providers throw you in jail if you don't pay?
- bhupy 6y ago
  I'm not sure what you're arguing here. If the argument is that taxation is too high, then advocate for cutting taxes. If the argument that taxes are too low, advocate for raising them. Pick a side!
  - JediWing 6y ago
    I'm arguing that having the same income taxed twice due to a quirk in the structure of the US government is unfair, that is all. Edit: it's not really on the income taxed, it's on the money already spent to pay a seperate income tax.
    - bhupy 6y ago
      I mean, that's largely the folly of having high Federal taxes. One of the political parties has made it is mission to reduce those, thereby blunting the supposed unfairness of this quirky structure.
      - JediWing 6y ago
        To my mind, how much (rate) the federal government taxes your income is orthogonal to what (taxable income) the federal government is taxing. (Though obviously good policy need to consider how they interact) Overall I believe the wealthy are not taxed enough, but I think that even though SALT deductions benefit the wealthy, a taxable base should still be calculated rationally and fairly. It's more of a principle-based than result-based argument.
        bhupy 6y ago
        Keep in mind that part of the problem in the US is that the wealthy pay an outsized portion of the taxes (top 1% nearly half the income taxes at both State and Federal levels). Other OECD countries are able to fund more progressive spending by (counterintuitively) taxing more regressively via broad-tax-base middle class taxes and VAT.
        srtjstjsj 6y ago
        How is that a problem? The top 1% (0.1% and 0.01%, really) have an outsize excess income.
        bhupy 6y ago
        It’s a problem because it raises less revenue, since the tax base is narrower. It’s also more precarious, because the tax base happens to be the most mobile. To give you a sense, New York State’s tax brackets are structured similarly to the Federal government’s: the top 1% pay ~50% of the state budget. That means that if just a small handful of highly mobile people leave NY, the State loses half its revenue. In contrast, taxing the middle class raises more money, which allows the government to spend more progressively.
        JediWing 6y ago
        It's a lot easier to move state-to-state than to move out of the country and renounce American citizenship. High federal brackets make sense.
    - lotsofpulp 6y ago
      I don't agree with the characterization of different governments taxing the "same income twice". A city pays for things the federal government and the state government does not. Therefore, the city decides to implement a city income tax to pay for those things. There's nothing contradictory or wrong about this setup. Similarly, a state pays for things the federal government doesn't, and so they implement an income tax. A county (or city) pays for things, and they decide to setup a property tax, taxing some arbitrary "assessed" value of your property. It doesn't mean anything to me to say your same income is being taxed twice, thrice, or 4 times. You're just paying for services to n different organizations, in this case, government agencies. If the taxes are too high, then they simply need to be lowered. But not via deductions or any other game. Let the true prices be easily visible. No one forces a state government to implement a % of income tax, and if it's too high, then voters in that state should demand the the percentage be reduced, or implement a flat amount. Same for federal, same for city.
      - takeda 6y ago
        What SALT does is to ensure that the money that you never get is not being taxed. Because states and cities provide services that federal government doesn't have to, so it benefits the federal government as well. If federal government would provide these services there wouldn't be need for SALT or local government taxes. Anyway without SALT this is basically stealing from citizens. It's taxing money that citizens never see instead of taxing the money that they actually receive.
        srtjstjsj 6y ago
        This is silly. Say my tax rate is 10%. 10 = 5+5. Is that second 5% taxing money I never see? My health insurance premium is deducted from my paycheck. Is that money I'm taxed on but never see? I also get some employer paid health insurance. Is that unfair that I'm NOT taxes on that despite it helping me?
        JediWing 6y ago
        Again, the issue of fairness comes down to what the base is, not what the rate is. What if my rate is 51% + 51% = 102%? (Unrealistic, yes, but gets to the heart of the "fairness" argument) How am I suppposed to pay 102% of my income? Is that sustainable? But if my state taxes me 51% of 100k, and there is SALT deduction, my federal taxable base is 49K instead of 100K, and I am now actually paying 24.9K instead of an impossible 102K. Taxes are NOT service payments, they are a legal obligation, a good portion of which (rightly) pays for things you may not directly benefit from. It's in a completely different category than for-service healthcare, at least in my opinion. Its amount is not also directly tied to how much money you make. If you know your income you could theoretically budget for such expenses. Also, I believe healthcare premiums are in some (most?) cases tax-deductible, though this is somewhat besides the point.
bobthepanda 6y ago
There are actually deductions for the mortgage and pre-tax benefits for transportation.
- bhupy 6y ago
  Correct, and mortgage deductions are highly criticized for being a subsidy for the rich.. Pre-tax benefits for transportation are also not universal, and the State governments can deduct Federal taxes in their calculations if they want to follow that model.
  - JediWing 6y ago
    All of these are also highly variable, and it's impossible to say how much is "needed" as a deduction. That gets into the government having to make value judgements on individual spending. With a deduction for state tax, it's a lot more cut and dried "hey I don't have this money anymore because the state whose laws you officially sanction by virtue of their being part of your union is going to throw me in jail if I don't pay them".
    - bhupy 6y ago
      Rent? variable? It's one of the most predictable expenditures. I'm not sure if that's more or less cut and dried than "hey I don't have this money anymore because I had to pay money to not be literally homeless". Deductions are an approach to reducing tax burden, but ultimately we have to decide if more taxes or less taxes are the way to operate our societies. The federalized tax system allows different states to experiment with different approaches, and these kinds of deductions incentivize behavior in one direction.
      - JediWing 6y ago
        Variable from person-to-person based upon the quality of housing they choose to live in, not variable month-to-month. Should someone living in a luxury penthouse suite at 15K+ a month get to deduct his rent at 100%, as well as closet-sized studio apartment? If not, where is the line drawn? This is what I mean when I talk about value-based judgements based on variable rates. Should I be able to deduct only what is literally the cheapest rent in my city? What if the cheapest apartment is full, and there's no way I could possibly get that rate? Should it be the cheapest AVAILABLE rate? Would this then impact prices knowing that the lowest rate drives tax-deductibility for all citizens? This is the labyrinthine decision tree that opens up when deducting things like rent, food, clothing, etc. Also, if SALT deductions truly incentivized punitive state taxes, why are so many states still charging 0% tax rates?
dragonwriter 6y ago
> Taxation is just the price of the basket of services a government offers to its citizens. No, those are user fees. > We don't deduct prices of other goods & services (food, clothing, rent, transportation) from our salaries before paying taxes on them, do we? Yes, we do, with a choice to take a simplified default amount. But with SALT, I think the better argument is that the absence of the deductions (or limitations on them, which work the same way at some point) causes federal taxation to artificially incentivize low-tax state policy since it can switch policies from net expected positive to net expected negative value before to after consideration of federal taxation, whereas with SALT deeuctibility federal income taxation does not have any effect on the direction, only the magnitude, of expected value of state tax and spending policy.

by bhupy 6y ago

JediWing 6y ago

What other service providers throw you in jail if you don't pay?

bhupy 6y ago
I'm not sure what you're arguing here. If the argument is that taxation is too high, then advocate for cutting taxes. If the argument that taxes are too low, advocate for raising them. Pick a side!
- JediWing 6y ago
  I'm arguing that having the same income taxed twice due to a quirk in the structure of the US government is unfair, that is all. Edit: it's not really on the income taxed, it's on the money already spent to pay a seperate income tax.
  - bhupy 6y ago
    I mean, that's largely the folly of having high Federal taxes. One of the political parties has made it is mission to reduce those, thereby blunting the supposed unfairness of this quirky structure.
    - JediWing 6y ago
      To my mind, how much (rate) the federal government taxes your income is orthogonal to what (taxable income) the federal government is taxing. (Though obviously good policy need to consider how they interact) Overall I believe the wealthy are not taxed enough, but I think that even though SALT deductions benefit the wealthy, a taxable base should still be calculated rationally and fairly. It's more of a principle-based than result-based argument.
      - bhupy 6y ago
        Keep in mind that part of the problem in the US is that the wealthy pay an outsized portion of the taxes (top 1% nearly half the income taxes at both State and Federal levels). Other OECD countries are able to fund more progressive spending by (counterintuitively) taxing more regressively via broad-tax-base middle class taxes and VAT.
        srtjstjsj 6y ago
        How is that a problem? The top 1% (0.1% and 0.01%, really) have an outsize excess income.
        bhupy 6y ago
        It’s a problem because it raises less revenue, since the tax base is narrower. It’s also more precarious, because the tax base happens to be the most mobile. To give you a sense, New York State’s tax brackets are structured similarly to the Federal government’s: the top 1% pay ~50% of the state budget. That means that if just a small handful of highly mobile people leave NY, the State loses half its revenue. In contrast, taxing the middle class raises more money, which allows the government to spend more progressively.
        JediWing 6y ago
        It's a lot easier to move state-to-state than to move out of the country and renounce American citizenship. High federal brackets make sense.
  - lotsofpulp 6y ago
    I don't agree with the characterization of different governments taxing the "same income twice". A city pays for things the federal government and the state government does not. Therefore, the city decides to implement a city income tax to pay for those things. There's nothing contradictory or wrong about this setup. Similarly, a state pays for things the federal government doesn't, and so they implement an income tax. A county (or city) pays for things, and they decide to setup a property tax, taxing some arbitrary "assessed" value of your property. It doesn't mean anything to me to say your same income is being taxed twice, thrice, or 4 times. You're just paying for services to n different organizations, in this case, government agencies. If the taxes are too high, then they simply need to be lowered. But not via deductions or any other game. Let the true prices be easily visible. No one forces a state government to implement a % of income tax, and if it's too high, then voters in that state should demand the the percentage be reduced, or implement a flat amount. Same for federal, same for city.
    - takeda 6y ago
      What SALT does is to ensure that the money that you never get is not being taxed. Because states and cities provide services that federal government doesn't have to, so it benefits the federal government as well. If federal government would provide these services there wouldn't be need for SALT or local government taxes. Anyway without SALT this is basically stealing from citizens. It's taxing money that citizens never see instead of taxing the money that they actually receive.
      - srtjstjsj 6y ago
        This is silly. Say my tax rate is 10%. 10 = 5+5. Is that second 5% taxing money I never see? My health insurance premium is deducted from my paycheck. Is that money I'm taxed on but never see? I also get some employer paid health insurance. Is that unfair that I'm NOT taxes on that despite it helping me?
        JediWing 6y ago
        Again, the issue of fairness comes down to what the base is, not what the rate is. What if my rate is 51% + 51% = 102%? (Unrealistic, yes, but gets to the heart of the "fairness" argument) How am I suppposed to pay 102% of my income? Is that sustainable? But if my state taxes me 51% of 100k, and there is SALT deduction, my federal taxable base is 49K instead of 100K, and I am now actually paying 24.9K instead of an impossible 102K. Taxes are NOT service payments, they are a legal obligation, a good portion of which (rightly) pays for things you may not directly benefit from. It's in a completely different category than for-service healthcare, at least in my opinion. Its amount is not also directly tied to how much money you make. If you know your income you could theoretically budget for such expenses. Also, I believe healthcare premiums are in some (most?) cases tax-deductible, though this is somewhat besides the point.

bobthepanda 6y ago

There are actually deductions for the mortgage and pre-tax benefits for transportation.

bhupy 6y ago
Correct, and mortgage deductions are highly criticized for being a subsidy for the rich.. Pre-tax benefits for transportation are also not universal, and the State governments can deduct Federal taxes in their calculations if they want to follow that model.
- JediWing 6y ago
  All of these are also highly variable, and it's impossible to say how much is "needed" as a deduction. That gets into the government having to make value judgements on individual spending. With a deduction for state tax, it's a lot more cut and dried "hey I don't have this money anymore because the state whose laws you officially sanction by virtue of their being part of your union is going to throw me in jail if I don't pay them".
  - bhupy 6y ago
    Rent? variable? It's one of the most predictable expenditures. I'm not sure if that's more or less cut and dried than "hey I don't have this money anymore because I had to pay money to not be literally homeless". Deductions are an approach to reducing tax burden, but ultimately we have to decide if more taxes or less taxes are the way to operate our societies. The federalized tax system allows different states to experiment with different approaches, and these kinds of deductions incentivize behavior in one direction.
    - JediWing 6y ago
      Variable from person-to-person based upon the quality of housing they choose to live in, not variable month-to-month. Should someone living in a luxury penthouse suite at 15K+ a month get to deduct his rent at 100%, as well as closet-sized studio apartment? If not, where is the line drawn? This is what I mean when I talk about value-based judgements based on variable rates. Should I be able to deduct only what is literally the cheapest rent in my city? What if the cheapest apartment is full, and there's no way I could possibly get that rate? Should it be the cheapest AVAILABLE rate? Would this then impact prices knowing that the lowest rate drives tax-deductibility for all citizens? This is the labyrinthine decision tree that opens up when deducting things like rent, food, clothing, etc. Also, if SALT deductions truly incentivized punitive state taxes, why are so many states still charging 0% tax rates?

dragonwriter 6y ago

> Taxation is just the price of the basket of services a government offers to its citizens. No, those are user fees. > We don't deduct prices of other goods & services (food, clothing, rent, transportation) from our salaries before paying taxes on them, do we? Yes, we do, with a choice to take a simplified default amount. But with SALT, I think the better argument is that the absence of the deductions (or limitations on them, which work the same way at some point) causes federal taxation to artificially incentivize low-tax state policy since it can switch policies from net expected positive to net expected negative value before to after consideration of federal taxation, whereas with SALT deeuctibility federal income taxation does not have any effect on the direction, only the magnitude, of expected value of state tax and spending policy.