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> "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 weal

by 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...
  - notch898a 4y ago
    Do high earners consume progressively more proportion of their income in public resources than the poor? Why would you jack up their tax rate? Also note you picked the literally only one of 11 states in [0] above California that is (R).
    - skinnymuch 4y ago
      Because high earners are rich people but not rich enough to be capitalists. So they get screwed and somehow capital gains isn’t blamed or tax loopholes but poor people. Edit: my context was about taxes in general not specific enough to SALT
      - dragonwriter 4y ago
        > Because high earners are rich people but not rich enough to be capitalists “High earners” includes capitalists; one of the reasons the SALT cap hits hard in California is that California not only has the highest high-end income tax rate, it (unlike many states and the federal government) taxes capital gains as normal income, not at a reduced rate. Both parts of this policy are things that the SALT cap is designed to put pressure against. The SALT cap, not the state and local taxes it targets, is pro-capitalist and anti-worker.
        skinnymuch 4y ago
        Ah thank you. You corrected my misconceptions in a few lines. Welp I hate it now! Thanks for solidifying my view.
eigenvalue 4y ago
Because blue states have both the highest state/city income taxes, property taxes, and home values. The changes reduced the ability to subtract those things when determining federal taxes.
dragonwriter 4y ago
> Please could you explain why? Because instead of eliminating deductibility they capped it, and Democratic states in general have more people with state and local taxes above the cap, because of a combination of higher average income and more progressive state taxes (often characterized as higher, but even when this is true in overall tax burden, its often still lower for same-income taxpayers for low- to moderate-income.)
lazide 4y ago
Cities almost always vote democratic, the bigger they are, the more true it is. Cities have high cost of living, and also tend to have high income earners. So tax burdens (and incomes, and expenses) tend to be much higher. In some cases, 5-10x higher. The largest cities in the US are also in democratically controlled states with high taxes. SALT allowed many of those high earners in those states to offset some of the tax burden by offsetting their federal taxes. Essentially moving tax revenue from the fed to the state. So the GOP managed to screw over the primary fundraisers of their opponents and increase tax transfers to the federal gov’t at the same time by capping SALT. Most of their supporters (and all their key votes) are in rural areas with lower cost of living (and often state taxes) which generally fit well under the cap.
- dragonwriter 4y ago
  > SALT allowed many of those high earners in those states to offset some of the tax burden by offsetting their federal taxes. More accurately, before the limit, SALT excluded all covered state and local for the purposes of federal income tax, keeping federal tax policy neutral on state tax policy. With the limit, there is a cap on the absolute amount of state and local taxes per person that get that treatment, creating a federal tax penalty for both strongly progressive taxes (which concentrate tax burden on a smaller number of rich taxpayers) and state economic success (which, for any tax policy less regressive than a straight capitation, increases the absolute tax liability per individual.)
  - lazide 4y ago
    Eh - that’s what we like to say to ourselves, but the first part isn’t true I think. For instance, for pre-cap SALT to have resulted in a truly neutral federal tax policy, it would have had to not existed at all and have federal taxes be unaffected by state taxes. Since it did exist, assuming a population has some fixed amount of taxes they consider ‘too much’ and all gov’t actors are looking to maximize towards that limit, it incentivizes states to take as much as they can, since the federal taxes ‘give way’. The cap basically says ‘eh, we’ll let you do that, but only so much’. The ‘how much’ just so happens to still benefit their constituents while not helping their opponent’s constituents. Which yes, has those effects you are stating, as their constituents tend to be more rural, which tends to have less economic activity in general, have lower incomes, etc, and hence aren’t hurt in the same way. Though many of their donors tend to have higher incomes, and I imagine it took some convincing that it was worth taking a potential hit to ‘stick it to the libs’.
op00to 4y ago
The states with the highest local tax burden are the most progressive states. A $180,000 fixer-upper in my town already exceeds $10,000 in property taxes. Like 80% of that is school tax. Rather than beg for federal money to educate our children or shortchange them by cheaping out, we pay for it ourselves. Rather than beg for federal money to fix our pipes, we fix them before they utterly fail. The lowest tax burden states have the worst schools, poorest health outcomes, crumbling infrastructure, and expect the federal government to bail them out. Forget that, I'm tired of subsidizing the lazy states.
- lotsofpulp 4y ago
  Where is this? I have never heard of a 5.5% property tax rate in the US. Most I have seen is NJ/IL cities at 2.5%, maybe 3%.

by swores 4y ago

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...
- notch898a 4y ago
  Do high earners consume progressively more proportion of their income in public resources than the poor? Why would you jack up their tax rate? Also note you picked the literally only one of 11 states in [0] above California that is (R).
  - skinnymuch 4y ago
    Because high earners are rich people but not rich enough to be capitalists. So they get screwed and somehow capital gains isn’t blamed or tax loopholes but poor people. Edit: my context was about taxes in general not specific enough to SALT
    - dragonwriter 4y ago
      > Because high earners are rich people but not rich enough to be capitalists “High earners” includes capitalists; one of the reasons the SALT cap hits hard in California is that California not only has the highest high-end income tax rate, it (unlike many states and the federal government) taxes capital gains as normal income, not at a reduced rate. Both parts of this policy are things that the SALT cap is designed to put pressure against. The SALT cap, not the state and local taxes it targets, is pro-capitalist and anti-worker.
      - skinnymuch 4y ago
        Ah thank you. You corrected my misconceptions in a few lines. Welp I hate it now! Thanks for solidifying my view.

eigenvalue 4y ago

Because blue states have both the highest state/city income taxes, property taxes, and home values. The changes reduced the ability to subtract those things when determining federal taxes.

dragonwriter 4y ago

> Please could you explain why? Because instead of eliminating deductibility they capped it, and Democratic states in general have more people with state and local taxes above the cap, because of a combination of higher average income and more progressive state taxes (often characterized as higher, but even when this is true in overall tax burden, its often still lower for same-income taxpayers for low- to moderate-income.)

lazide 4y ago

Cities almost always vote democratic, the bigger they are, the more true it is. Cities have high cost of living, and also tend to have high income earners. So tax burdens (and incomes, and expenses) tend to be much higher. In some cases, 5-10x higher. The largest cities in the US are also in democratically controlled states with high taxes. SALT allowed many of those high earners in those states to offset some of the tax burden by offsetting their federal taxes. Essentially moving tax revenue from the fed to the state. So the GOP managed to screw over the primary fundraisers of their opponents and increase tax transfers to the federal gov’t at the same time by capping SALT. Most of their supporters (and all their key votes) are in rural areas with lower cost of living (and often state taxes) which generally fit well under the cap.

dragonwriter 4y ago
> SALT allowed many of those high earners in those states to offset some of the tax burden by offsetting their federal taxes. More accurately, before the limit, SALT excluded all covered state and local for the purposes of federal income tax, keeping federal tax policy neutral on state tax policy. With the limit, there is a cap on the absolute amount of state and local taxes per person that get that treatment, creating a federal tax penalty for both strongly progressive taxes (which concentrate tax burden on a smaller number of rich taxpayers) and state economic success (which, for any tax policy less regressive than a straight capitation, increases the absolute tax liability per individual.)
- lazide 4y ago
  Eh - that’s what we like to say to ourselves, but the first part isn’t true I think. For instance, for pre-cap SALT to have resulted in a truly neutral federal tax policy, it would have had to not existed at all and have federal taxes be unaffected by state taxes. Since it did exist, assuming a population has some fixed amount of taxes they consider ‘too much’ and all gov’t actors are looking to maximize towards that limit, it incentivizes states to take as much as they can, since the federal taxes ‘give way’. The cap basically says ‘eh, we’ll let you do that, but only so much’. The ‘how much’ just so happens to still benefit their constituents while not helping their opponent’s constituents. Which yes, has those effects you are stating, as their constituents tend to be more rural, which tends to have less economic activity in general, have lower incomes, etc, and hence aren’t hurt in the same way. Though many of their donors tend to have higher incomes, and I imagine it took some convincing that it was worth taking a potential hit to ‘stick it to the libs’.

op00to 4y ago

The states with the highest local tax burden are the most progressive states. A $180,000 fixer-upper in my town already exceeds $10,000 in property taxes. Like 80% of that is school tax. Rather than beg for federal money to educate our children or shortchange them by cheaping out, we pay for it ourselves. Rather than beg for federal money to fix our pipes, we fix them before they utterly fail. The lowest tax burden states have the worst schools, poorest health outcomes, crumbling infrastructure, and expect the federal government to bail them out. Forget that, I'm tired of subsidizing the lazy states.

lotsofpulp 4y ago
Where is this? I have never heard of a 5.5% property tax rate in the US. Most I have seen is NJ/IL cities at 2.5%, maybe 3%.