6 ms·

Because they've moved to Miami? Joking aside, I wonder if there is any other nation with as much tax variation between regions as the US? (Excluding special ec

Because they've moved to Miami? Joking aside, I wonder if there is any other nation with as much tax variation between regions as the US? (Excluding special economic zones.)

spikengineer 5y ago
In Most countries, the National legislature can restructure states, impose nationwide simplification of tax policy etc within the limits of the federal structure they have. US is one of the few countries the relationship is the other way around. In most countries, the states get their power from the delegation of powers dictated by the union/federal constitution. In US, The union gets their power from the few matters that were delegated to them from the states. For example, India used to have such disparity in consumption taxes (not income tax) which was recently removed and simplified. The federal govt collects all consumption and income taxes and devolves the receipts to states based on pre-defined formulae enshrined in law. Edit: In an ideal world, instead of filing separate state and federal tax returns US should move to a common system where tax can be collected/enforced by one entity and the receipts devolved to states as per certain rules. This will remove income tax disparity between states and equalise business/opportunity costs (No more Delaware tax havens for companies to skirt taxation). This will simplify a lot of things. Most countries including mine have such a singular system.
- visualradio 5y ago
  The federal government has the authority to appoint federal assessors to local property tax districts, to generate valuations for a national property taxation, and then share these updated valuations with state and local governments, which may then independently decide to use the same valuations for purposes of state and local taxation. It did so in order to collect the 1798 national property tax under John Adams and the three 1813-1816 national property taxes under James Madison. The federal government also has the ability to regulate state and local taxes using the interstate commerce clause. After the provision in the Articles of Confederation limiting the federal government to collecting direct taxes in proportion to state land values was abandoned, the supporters of direct taxation influenced by the French Physiocrats lobbied for the interstate commerce clause in order to ban state and local governments from collecting excise and sales taxes on goods sold across state lines, so that state and local governments would be forced to rely more heavily on property tax.
  - spikengineer 5y ago
    I am neither an expert nor familiar with US constitutional law, but in most other countries the federal power trumps the power of any states/provinces and is not limited by a single clause and helps simplify and remove any disparities in taxation policy. As far as property taxes are concerned, most countries retain the policy to keep the local councils empowered to decide tax rates albeit "within the rate limits and fairness criteria imposed by the states and federal governments". In my country property taxes cannot be made zero/low or made exceptionally high by a showoff city council trying to get reelected for whatever reason as this causes unnecessary migration between cities/towns for no practical reason other than to skirt taxes with no practical systemic benefit to the populace at whole.
    - visualradio 5y ago
      In the U.S. politicians were more concerned with the opposite, that low property taxes would be more likely to cause loss of population and emigration than high property taxes. At the time of the revolution the U.S. colonies were relying on revenue from land tax, property tax, property income tax, and public banking rather than sales tax and were rapidly growing in population due to immigration from European countries where most of the large landholders were exempt from property taxes. Early America had large quantities of land and few workers relative to Europe. In order to industrialize Franklin and founders associated with Democratic-Republican party thought it was first necessary to increase population and maximize rural agricultural productivity, which from reading the French economists they thought would be stimulated by some form of direct tax and hindered by indirect tax.
- ceilingcorner 5y ago
  This would not be ideal because it would go against the very concept of the United States. It’s a union of states, full stop.
- djbebs 5y ago
  The tax and income disparity between states is kind of the point. It's a real live AB testing of the tax code. You just don't like it because it's clear that low tax is a better and more democratically supported policy.
  - pydry 5y ago
    It's a race to the bottom.
    - seibelj 5y ago
      I prefer a race to the bottom rather than a race to the top.
      - pydry 5y ago
        Playing cities and states off against each other for tax breaks and free money is very effective if you have the financial means. The richest man in the world - Jeff Bezos - did exactly this to try and shift the taxation burden away from him and on to the rest of America with his HQ2 stunt. This is indeed better for a limited class of people.
      - specialist 5y ago
        Are there any policy choices between those two extremes?
    - deleted 5y ago
      [deleted]
  - dublinben 5y ago
    The best test of this, the Kansas Experiment, was an unpopular failure. https://en.wikipedia.org/wiki/Kansas_experiment https://en.wikipedia.org/wiki/Kansas_experiment
  - californical 5y ago
    Exactly this! It’s the whole point of the United States. If you don’t like the policies of a state enough, you can move to another one! It’s extremely rare that someone can move between regions with different laws if they don’t like the laws of their state. You get to choose your government by changing where you live, if you think one of the governments is wrong or bad somehow. Sure, there are consequences. And inefficiencies. But if you’re French, you can’t just decide to live somewhere with different laws. It’s challenging to move to another country. Even though the EU has laws that make it easier to move and work in other countries, it’s nowhere near as easy as the USA. Forget it entirely if you live in a less progressive or allied country. This forces the states of the USA to stay appealing - they compete with each other for population. This works because the Union of states allows people to leave if one becomes oppressive, else that state goes to war with the entire rest of the Union. So the states are forced to be accountable to each other and their people. Each state is supposed to be independent for this reason, and it’s why I’m a big fan of limiting Federal government power and instead pushing changes at a state level
gamblor956 5y ago
Yes, Switzerland (cantons), India (states), and Canada (provinces), to name three I am familiar with, though the U.S. has the widest variation of tax burdens (at the local level). Tax variation like this is generally a side effect of federalized systems of government.
- hervature 5y ago
  Not sure why people down vote factual statements if they are wrong and not comment a correction. I can confirm that Canada does have different tax rates across the provinces across all types of taxes: corporate, income, sales, etc. Even at the local level, Canada doesn't have municipality based taxes so to speak but you can certainly find fees charged only in that city which is of course a type of tax. For example, Toronto used to force retailers to charge for plastic bags even though it wasn't collected by the city. This bylaw was removed in 2012.
  - gamblor956 5y ago
    Thanks, not to worried about the downvotes for factually true statements. There are plenty of people on HN who downvote statements that don't comport with their imaginary view of the world. PWC's summary on Swiss tax system includes 2 of the cantonal tax systems: https://taxsummaries.pwc.com/switzerland/individual/taxes-on-personal-income https://taxsummaries.pwc.com/switzerland/individual/taxes-on... India does not have state income taxes, but they had wide variation with respect to state indirect taxes (which was eliminated in 2017 and replaced with a standardized federally-run GST), and the states are still free to impose more than a dozen other taxes, including land-use taxes, including a number of taxes not levied anywhere else in the world, such as agricultural estate taxes. Canada's provinces have their own property tax and income tax rates (for example, compare Alberta, Sasketchewan, Quebec, and British Columbia rates), and generally also set their own PST rates (provincial sales tax, when combined with federal GST it is referred to as HST).
    - spikengineer 5y ago
      Since 2017, India has abolished state VAT by a constitutional amendment. Now there is a single consumption tax system called the GST across all states. A GST council collects all taxes and devolves receipts to states as per law. The income tax is also devolved as per law.
lostlogin 5y ago
When I have visited the US I have been mystified by the way sales taxes work. The prices on labels exclude tax, but the percentage changes depending on where I go (or what I buy?). It surprises me that residents tolerate that. “How much is it?” would seem a simple question.
- visualradio 5y ago
  A move towards making sales taxes less transparent in the United States is unlikely, because many U.S. founders associated with the Democratic-Republican party such as James Madison were influenced by the French Physiocratic school economics, which considered broad-based sales taxes to be a quite harmful method of taxation that should never be relied on as a permanent source of revenue. This opinion is most clearly expressed by Joel Barlow in "Letters Addressed to the Yeomanry of the United States: Showing the Necessity of Confining the Public Revenue to a Fixed Proportion of the Net Produce of the Land; and the Bad Policy and Injustice of Every Species of Indirect Taxation and Commercial Regulation" (1791).
  - lostlogin 5y ago
    > broad-based sales taxes That an interesting history, thanks. The policy sort of misses the point when you are at the till and the item doesn’t cost what you thought it did. There is no way of telling if you have been hit by a broad-based sales tax, a targeted one or both.
  - californical 5y ago
    This is a really interesting point and got me thinking — if taxes were hidden, people wouldn’t directly notice the cost increases associated with raising sales tax. If you pay $1.12 for a $1.00 soda in city one, but $1.07 in city two, you will directly realize the tax impact that the local sales tax has. I wonder if this was originally intentional, to prevent taxes from invisibly rising without the people being aware of the impact of the price. It also makes it much harder for national brands if they like to have nice round numbers as the cost of things (which they seem to) - they can’t charge $1.00 for a soda everywhere, or their margins would be crazy wonky depending on region

Because they've moved to Miami? Joking aside, I wonder if there is any other nation with as much tax variation between regions as the US? (Excluding special economic zones.)

spikengineer 5y ago

In Most countries, the National legislature can restructure states, impose nationwide simplification of tax policy etc within the limits of the federal structure they have. US is one of the few countries the relationship is the other way around. In most countries, the states get their power from the delegation of powers dictated by the union/federal constitution. In US, The union gets their power from the few matters that were delegated to them from the states. For example, India used to have such disparity in consumption taxes (not income tax) which was recently removed and simplified. The federal govt collects all consumption and income taxes and devolves the receipts to states based on pre-defined formulae enshrined in law. Edit: In an ideal world, instead of filing separate state and federal tax returns US should move to a common system where tax can be collected/enforced by one entity and the receipts devolved to states as per certain rules. This will remove income tax disparity between states and equalise business/opportunity costs (No more Delaware tax havens for companies to skirt taxation). This will simplify a lot of things. Most countries including mine have such a singular system.

visualradio 5y ago
The federal government has the authority to appoint federal assessors to local property tax districts, to generate valuations for a national property taxation, and then share these updated valuations with state and local governments, which may then independently decide to use the same valuations for purposes of state and local taxation. It did so in order to collect the 1798 national property tax under John Adams and the three 1813-1816 national property taxes under James Madison. The federal government also has the ability to regulate state and local taxes using the interstate commerce clause. After the provision in the Articles of Confederation limiting the federal government to collecting direct taxes in proportion to state land values was abandoned, the supporters of direct taxation influenced by the French Physiocrats lobbied for the interstate commerce clause in order to ban state and local governments from collecting excise and sales taxes on goods sold across state lines, so that state and local governments would be forced to rely more heavily on property tax.
- spikengineer 5y ago
  I am neither an expert nor familiar with US constitutional law, but in most other countries the federal power trumps the power of any states/provinces and is not limited by a single clause and helps simplify and remove any disparities in taxation policy. As far as property taxes are concerned, most countries retain the policy to keep the local councils empowered to decide tax rates albeit "within the rate limits and fairness criteria imposed by the states and federal governments". In my country property taxes cannot be made zero/low or made exceptionally high by a showoff city council trying to get reelected for whatever reason as this causes unnecessary migration between cities/towns for no practical reason other than to skirt taxes with no practical systemic benefit to the populace at whole.
  - visualradio 5y ago
    In the U.S. politicians were more concerned with the opposite, that low property taxes would be more likely to cause loss of population and emigration than high property taxes. At the time of the revolution the U.S. colonies were relying on revenue from land tax, property tax, property income tax, and public banking rather than sales tax and were rapidly growing in population due to immigration from European countries where most of the large landholders were exempt from property taxes. Early America had large quantities of land and few workers relative to Europe. In order to industrialize Franklin and founders associated with Democratic-Republican party thought it was first necessary to increase population and maximize rural agricultural productivity, which from reading the French economists they thought would be stimulated by some form of direct tax and hindered by indirect tax.
ceilingcorner 5y ago
This would not be ideal because it would go against the very concept of the United States. It’s a union of states, full stop.
djbebs 5y ago
The tax and income disparity between states is kind of the point. It's a real live AB testing of the tax code. You just don't like it because it's clear that low tax is a better and more democratically supported policy.
- pydry 5y ago
  It's a race to the bottom.
  - seibelj 5y ago
    I prefer a race to the bottom rather than a race to the top.
    - pydry 5y ago
      Playing cities and states off against each other for tax breaks and free money is very effective if you have the financial means. The richest man in the world - Jeff Bezos - did exactly this to try and shift the taxation burden away from him and on to the rest of America with his HQ2 stunt. This is indeed better for a limited class of people.
    - specialist 5y ago
      Are there any policy choices between those two extremes?
  - deleted 5y ago
    [deleted]
- dublinben 5y ago
  The best test of this, the Kansas Experiment, was an unpopular failure. https://en.wikipedia.org/wiki/Kansas_experiment https://en.wikipedia.org/wiki/Kansas_experiment
- californical 5y ago
  Exactly this! It’s the whole point of the United States. If you don’t like the policies of a state enough, you can move to another one! It’s extremely rare that someone can move between regions with different laws if they don’t like the laws of their state. You get to choose your government by changing where you live, if you think one of the governments is wrong or bad somehow. Sure, there are consequences. And inefficiencies. But if you’re French, you can’t just decide to live somewhere with different laws. It’s challenging to move to another country. Even though the EU has laws that make it easier to move and work in other countries, it’s nowhere near as easy as the USA. Forget it entirely if you live in a less progressive or allied country. This forces the states of the USA to stay appealing - they compete with each other for population. This works because the Union of states allows people to leave if one becomes oppressive, else that state goes to war with the entire rest of the Union. So the states are forced to be accountable to each other and their people. Each state is supposed to be independent for this reason, and it’s why I’m a big fan of limiting Federal government power and instead pushing changes at a state level

gamblor956 5y ago

Yes, Switzerland (cantons), India (states), and Canada (provinces), to name three I am familiar with, though the U.S. has the widest variation of tax burdens (at the local level). Tax variation like this is generally a side effect of federalized systems of government.

hervature 5y ago
Not sure why people down vote factual statements if they are wrong and not comment a correction. I can confirm that Canada does have different tax rates across the provinces across all types of taxes: corporate, income, sales, etc. Even at the local level, Canada doesn't have municipality based taxes so to speak but you can certainly find fees charged only in that city which is of course a type of tax. For example, Toronto used to force retailers to charge for plastic bags even though it wasn't collected by the city. This bylaw was removed in 2012.
- gamblor956 5y ago
  Thanks, not to worried about the downvotes for factually true statements. There are plenty of people on HN who downvote statements that don't comport with their imaginary view of the world. PWC's summary on Swiss tax system includes 2 of the cantonal tax systems: https://taxsummaries.pwc.com/switzerland/individual/taxes-on-personal-income https://taxsummaries.pwc.com/switzerland/individual/taxes-on... India does not have state income taxes, but they had wide variation with respect to state indirect taxes (which was eliminated in 2017 and replaced with a standardized federally-run GST), and the states are still free to impose more than a dozen other taxes, including land-use taxes, including a number of taxes not levied anywhere else in the world, such as agricultural estate taxes. Canada's provinces have their own property tax and income tax rates (for example, compare Alberta, Sasketchewan, Quebec, and British Columbia rates), and generally also set their own PST rates (provincial sales tax, when combined with federal GST it is referred to as HST).
  - spikengineer 5y ago
    Since 2017, India has abolished state VAT by a constitutional amendment. Now there is a single consumption tax system called the GST across all states. A GST council collects all taxes and devolves receipts to states as per law. The income tax is also devolved as per law.

lostlogin 5y ago

When I have visited the US I have been mystified by the way sales taxes work. The prices on labels exclude tax, but the percentage changes depending on where I go (or what I buy?). It surprises me that residents tolerate that. “How much is it?” would seem a simple question.

visualradio 5y ago
A move towards making sales taxes less transparent in the United States is unlikely, because many U.S. founders associated with the Democratic-Republican party such as James Madison were influenced by the French Physiocratic school economics, which considered broad-based sales taxes to be a quite harmful method of taxation that should never be relied on as a permanent source of revenue. This opinion is most clearly expressed by Joel Barlow in "Letters Addressed to the Yeomanry of the United States: Showing the Necessity of Confining the Public Revenue to a Fixed Proportion of the Net Produce of the Land; and the Bad Policy and Injustice of Every Species of Indirect Taxation and Commercial Regulation" (1791).
- lostlogin 5y ago
  > broad-based sales taxes That an interesting history, thanks. The policy sort of misses the point when you are at the till and the item doesn’t cost what you thought it did. There is no way of telling if you have been hit by a broad-based sales tax, a targeted one or both.
- californical 5y ago
  This is a really interesting point and got me thinking — if taxes were hidden, people wouldn’t directly notice the cost increases associated with raising sales tax. If you pay $1.12 for a $1.00 soda in city one, but $1.07 in city two, you will directly realize the tax impact that the local sales tax has. I wonder if this was originally intentional, to prevent taxes from invisibly rising without the people being aware of the impact of the price. It also makes it much harder for national brands if they like to have nice round numbers as the cost of things (which they seem to) - they can’t charge $1.00 for a soda everywhere, or their margins would be crazy wonky depending on region