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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 i

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.

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.