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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
by 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 agoKeep 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 agoHow is that a problem? The top 1% (0.1% and 0.01%, really) have an outsize excess income.
- bhupy 6y agoIt’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 agoIt'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.