5 ms·

FWIW, that law also capped the SALT deduction (a deduction which almost exclusively benefitted the rich), and increased the standard deduction, which was a huge

by timr 4y ago

FWIW, that law also capped the SALT deduction (a deduction which almost exclusively benefitted the rich), and increased the standard deduction, which was a huge benefit to most normal people. Say what you will about the other parts of it, but it didn't fall cleanly on party, plutocrat or ideological lines. The fact that the GOP effectively raised taxes for a big chunk of the moderately wealthy was a weird change of pace.

tedivm 4y ago
The SALT deduction did not mostly benefit the rich. It benefited people who live in states that actually provide services to their constituents.
- timr 4y ago
  ...who mostly happen to be rich. Particularly if they make enough money and/or pay enough in tax to hit the cap.
  - tedivm 4y ago
    It was a middle class tax increase for California and New York.
    - timr 4y ago
      You can say that, but no, it's for certain parts of those states, and middle class for those parts of California and New York is de facto rich for most of the country. I say this as someone who would actually benefit from the deduction. Do I swim in my Scrooge McDuck coin vault every evening? No. But I'm not going to pretend that I'm not well-off.
amluto 4y ago
The standard deduction is IMO a load of crap. With a large standard deduction, only high-income people can make tax-deductible charitable contributions. The right way to do it would be to make the standard and itemized deductions additive.
- lotsofpulp 4y ago
  How is the standard deduction stopping non high income people from making tax free charitable contributions? I thought all charity is deductible from taxable income.
  - cozzyd 4y ago
    Because you're better off taking the standard deduction so you have no tax incentive to make charitable contributions.
    - lotsofpulp 4y ago
      Yes, that I knew. I would not summarize that as > only high-income people can make tax-free charitable contributions
      - amluto 4y ago
        Okay, so you can donate $100 to charity, feel warm and fuzzy because it’s tax-free or however you want to think about it, and pay exactly the same amount of tax as if you didn’t give the gift.
        op00to 4y ago
        Yes, that's how the standard deduction works.
        cduzz 4y ago
        Right. You can also create a charity, which you run, and donate millions of dollars to it, and write that off against your taxes as a charitable donation. Then, because you run that charity, you can still spend the money (mostly) as you please.
        amluto 4y ago
        Exactly. But the point here is this is only available to people who wish to donate more than about $13k per year.
lotsofpulp 4y ago
> The fact that the GOP effectively raised taxes for a big chunk of the moderately wealthy was a weird change of pace. It was a genius political move, because it also mostly only affected rich people in Democrat led states. If Democrats want to get rid of it, they would have to explicitly campaign to lower taxes on the top 20% of income/wealth, which would not be a good look for them.
- swores 4y ago
  > "it also mostly only affected rich people in Democrat led states" Please could you explain why? (Assuming it's not just that Democratic states have more wealthy people?) edit: thanks for the replies!
  - lotsofpulp 4y ago
    Democrat led states have higher state and local taxes. Some of it due to policies that redistribute wealth, some of it due to mismanagement of the state. Edit: also, Democrat led states have higher land prices, so generally, percent based taxes like property tax will be nominally much higher and hit the SALT deduction cap quicker. It disproportionately punishes richer people in states with higher taxes (usually Democrat led) compared to richer people in states with lower taxes (usually Republican led), giving more incentive for richer people in states with higher taxes to either vote for lower taxes in their own state (i.e. vote Republican), or move to a state with lower taxes (a Republican led state).
    - dragonwriter 4y ago
      > Democrat led states have higher state and local taxes. “More concentrated on higher-income earners” is both more accurate, and more relevant to the effect of the SALT limit (though having higher average income is also relevant to the SALT limit, overall tax burden and distribution across the income spectrum aside.) E.g., R-trifecta Iowa has a higher overall tax burden than D-trifecta California, but substantially lower high-end taxes. [0][1] [0] https://wallethub.com/edu/states-with-highest-lowest-tax-burden/20494 https://wallethub.com/edu/states-with-highest-lowest-tax-bur... [1] actual total state & local tax burden by income is hard to find, but top income tax rates are indicative here: https://turbotax.intuit.com/tax-tips/fun-facts/states-with-the-highest-and-lowest-taxes/L6HPAVqSF https://turbotax.intuit.com/tax-tips/fun-facts/states-with-t...
mattnewton 4y ago
I think it’s not a weird change of pace at all, the SALT deduction was mostly enjoyed by people with high state and local taxes, which are mostly blue states. A policy that gives wealthy people in Texas and Kentucky loopholes while raising taxes on residents of California and New York seems fairly partisan to me.
- troad 4y ago
  It didn't raise taxes on people in California and New York - California and New York did that. It's just that until that law passed, those states were able to hide this by cutting into federal tax receipts via the SALT deduction. Why should the federal government subsidise runaway state taxes though? Which colour states does that advantage? And what kind of incentive does that create for states? If the residents of California and New York want lower state taxes, I strongly encourage them to lobby / vote for lower state taxes, rather than demanding to be subsidised by poorer states. Edit: I'm seeing responses to things I'm "suggesting" or "essentially arguing", but which actually appear nowhere in what I wrote. My comment is about the SALT deduction.
  - Retric 4y ago
    That’s a very odd take, California and New York heavily subsidize poor states via federal taxes. So you’re essentially arguing “Poor/Red” states need an even larger handout from “Rich/Blue” states. As to lowering state taxes, high taxes are a major reason rich states are rich. People want the services those taxes provided.
    - yonran 4y ago
      I disagree with this bitching that rich states are “subsidizing” the poor “handout” states through federal progressive taxes. This is how progressive taxation is supposed to work, and it would be clearly insensitive and arguably incorrect for a rich individual in the rich state to complain that he is subsidizing the poor person in a poor state. Rich states collect rents from winner-take-all markets that serve the nation, and it is good pro-equality policy to return some of the wealth back with the rest of the country to reduce inequality and promote opportunity. Edit: to respond to the comment below: I’m not arguing that local taxes should be low; in fact, I think property taxes should be much higher and fairer in California. My point is that the federal government should not provide a federal tax break for local spending e.g. on education. The coasts already do too much opportunity hoarding.
gct 4y ago
Most of those raises on the moderately wealthy will expire December 31, 2025, the ones on the middle class won't
nielsbot 4y ago
Turns out there's a workaround for people who have pass through companies (LLCs and S-Corps). If you pre-pay your state taxes from your company those will be excluded from the new, lower deduction cap. Wild.
asimeqi 4y ago
The SALT deduction cap definitely raised taxes for me and I wouldn't call myself any kind of rich. As a Massachusetts resident I took it for what it is, an attack on people that live in blue states. I am sure it gave D.T. a deep sadistic pleasure to claim "I lowered your taxes" knowing he raised them for millions of people. The cap is fundamentally unjust since I am paying Federal Tax on money that I use to pay taxes to city, state etc.
op00to 4y ago
s/moderately wealthy/already highly taxed/g Fuck that noise about capping the SALT deduction. Seriously. I live in a place that has high property and state taxes because we pay our fair share to give residents of my state a decent life. Property taxes for fixer-upper starter homes in my area exceed the SALT deduction cap. The cap hits people who are "moderately wealthy", but that definition of moderately wealthy cuts into what is decidedly the middle class. You can try to twist it like it was some win for the working class, but it was aimed smack at blue states as a punishment for doing the right thing. Good schools, effective municipal services, and so on. The bullshit federal money sucking states, with their lower property and state taxes, discovered it's easier to just get the federal government to pay for your stuff. Poor people do worse, rich people do better.
- lotsofpulp 4y ago
  > I live in a place that has high property and state taxes because we pay our fair share to give residents of my state a decent life. What if the high taxes are because politicians and union leaders from decades ago promised lavish post retirement benefits to government employees in exchange for low taxes, then underfunded the savings and/or made corrupt investments, and now find themselves taking taxes from taxpayers today to pay for labor performed decades ago? See IL/NJ/CT. Also, in NJ’s case, high taxes because of 500 different governments with redundant police/schools/fire/other government employees.

by timr 4y ago

tedivm 4y ago

The SALT deduction did not mostly benefit the rich. It benefited people who live in states that actually provide services to their constituents.

timr 4y ago
...who mostly happen to be rich. Particularly if they make enough money and/or pay enough in tax to hit the cap.
- tedivm 4y ago
  It was a middle class tax increase for California and New York.
  - timr 4y ago
    You can say that, but no, it's for certain parts of those states, and middle class for those parts of California and New York is de facto rich for most of the country. I say this as someone who would actually benefit from the deduction. Do I swim in my Scrooge McDuck coin vault every evening? No. But I'm not going to pretend that I'm not well-off.

amluto 4y ago

The standard deduction is IMO a load of crap. With a large standard deduction, only high-income people can make tax-deductible charitable contributions. The right way to do it would be to make the standard and itemized deductions additive.

lotsofpulp 4y ago
How is the standard deduction stopping non high income people from making tax free charitable contributions? I thought all charity is deductible from taxable income.
- cozzyd 4y ago
  Because you're better off taking the standard deduction so you have no tax incentive to make charitable contributions.
  - lotsofpulp 4y ago
    Yes, that I knew. I would not summarize that as > only high-income people can make tax-free charitable contributions
    - amluto 4y ago
      Okay, so you can donate $100 to charity, feel warm and fuzzy because it’s tax-free or however you want to think about it, and pay exactly the same amount of tax as if you didn’t give the gift.
      - op00to 4y ago
        Yes, that's how the standard deduction works.
      - cduzz 4y ago
        Right. You can also create a charity, which you run, and donate millions of dollars to it, and write that off against your taxes as a charitable donation. Then, because you run that charity, you can still spend the money (mostly) as you please.
        amluto 4y ago
        Exactly. But the point here is this is only available to people who wish to donate more than about $13k per year.

lotsofpulp 4y ago

> The fact that the GOP effectively raised taxes for a big chunk of the moderately wealthy was a weird change of pace. It was a genius political move, because it also mostly only affected rich people in Democrat led states. If Democrats want to get rid of it, they would have to explicitly campaign to lower taxes on the top 20% of income/wealth, which would not be a good look for them.

swores 4y ago
> "it also mostly only affected rich people in Democrat led states" Please could you explain why? (Assuming it's not just that Democratic states have more wealthy people?) edit: thanks for the replies!
- lotsofpulp 4y ago
  Democrat led states have higher state and local taxes. Some of it due to policies that redistribute wealth, some of it due to mismanagement of the state. Edit: also, Democrat led states have higher land prices, so generally, percent based taxes like property tax will be nominally much higher and hit the SALT deduction cap quicker. It disproportionately punishes richer people in states with higher taxes (usually Democrat led) compared to richer people in states with lower taxes (usually Republican led), giving more incentive for richer people in states with higher taxes to either vote for lower taxes in their own state (i.e. vote Republican), or move to a state with lower taxes (a Republican led state).
  - dragonwriter 4y ago
    > Democrat led states have higher state and local taxes. “More concentrated on higher-income earners” is both more accurate, and more relevant to the effect of the SALT limit (though having higher average income is also relevant to the SALT limit, overall tax burden and distribution across the income spectrum aside.) E.g., R-trifecta Iowa has a higher overall tax burden than D-trifecta California, but substantially lower high-end taxes. [0][1] [0] https://wallethub.com/edu/states-with-highest-lowest-tax-burden/20494 https://wallethub.com/edu/states-with-highest-lowest-tax-bur... [1] actual total state & local tax burden by income is hard to find, but top income tax rates are indicative here: https://turbotax.intuit.com/tax-tips/fun-facts/states-with-the-highest-and-lowest-taxes/L6HPAVqSF https://turbotax.intuit.com/tax-tips/fun-facts/states-with-t...

mattnewton 4y ago

I think it’s not a weird change of pace at all, the SALT deduction was mostly enjoyed by people with high state and local taxes, which are mostly blue states. A policy that gives wealthy people in Texas and Kentucky loopholes while raising taxes on residents of California and New York seems fairly partisan to me.

troad 4y ago
It didn't raise taxes on people in California and New York - California and New York did that. It's just that until that law passed, those states were able to hide this by cutting into federal tax receipts via the SALT deduction. Why should the federal government subsidise runaway state taxes though? Which colour states does that advantage? And what kind of incentive does that create for states? If the residents of California and New York want lower state taxes, I strongly encourage them to lobby / vote for lower state taxes, rather than demanding to be subsidised by poorer states. Edit: I'm seeing responses to things I'm "suggesting" or "essentially arguing", but which actually appear nowhere in what I wrote. My comment is about the SALT deduction.
- Retric 4y ago
  That’s a very odd take, California and New York heavily subsidize poor states via federal taxes. So you’re essentially arguing “Poor/Red” states need an even larger handout from “Rich/Blue” states. As to lowering state taxes, high taxes are a major reason rich states are rich. People want the services those taxes provided.
  - yonran 4y ago
    I disagree with this bitching that rich states are “subsidizing” the poor “handout” states through federal progressive taxes. This is how progressive taxation is supposed to work, and it would be clearly insensitive and arguably incorrect for a rich individual in the rich state to complain that he is subsidizing the poor person in a poor state. Rich states collect rents from winner-take-all markets that serve the nation, and it is good pro-equality policy to return some of the wealth back with the rest of the country to reduce inequality and promote opportunity. Edit: to respond to the comment below: I’m not arguing that local taxes should be low; in fact, I think property taxes should be much higher and fairer in California. My point is that the federal government should not provide a federal tax break for local spending e.g. on education. The coasts already do too much opportunity hoarding.

gct 4y ago

Most of those raises on the moderately wealthy will expire December 31, 2025, the ones on the middle class won't

nielsbot 4y ago

Turns out there's a workaround for people who have pass through companies (LLCs and S-Corps). If you pre-pay your state taxes from your company those will be excluded from the new, lower deduction cap. Wild.

asimeqi 4y ago

The SALT deduction cap definitely raised taxes for me and I wouldn't call myself any kind of rich. As a Massachusetts resident I took it for what it is, an attack on people that live in blue states. I am sure it gave D.T. a deep sadistic pleasure to claim "I lowered your taxes" knowing he raised them for millions of people. The cap is fundamentally unjust since I am paying Federal Tax on money that I use to pay taxes to city, state etc.

op00to 4y ago

s/moderately wealthy/already highly taxed/g Fuck that noise about capping the SALT deduction. Seriously. I live in a place that has high property and state taxes because we pay our fair share to give residents of my state a decent life. Property taxes for fixer-upper starter homes in my area exceed the SALT deduction cap. The cap hits people who are "moderately wealthy", but that definition of moderately wealthy cuts into what is decidedly the middle class. You can try to twist it like it was some win for the working class, but it was aimed smack at blue states as a punishment for doing the right thing. Good schools, effective municipal services, and so on. The bullshit federal money sucking states, with their lower property and state taxes, discovered it's easier to just get the federal government to pay for your stuff. Poor people do worse, rich people do better.

lotsofpulp 4y ago
> I live in a place that has high property and state taxes because we pay our fair share to give residents of my state a decent life. What if the high taxes are because politicians and union leaders from decades ago promised lavish post retirement benefits to government employees in exchange for low taxes, then underfunded the savings and/or made corrupt investments, and now find themselves taking taxes from taxpayers today to pay for labor performed decades ago? See IL/NJ/CT. Also, in NJ’s case, high taxes because of 500 different governments with redundant police/schools/fire/other government employees.