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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

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.
    - Retric 4y ago
      What bitching? My comment was purely descriptive. The winner takes all nature is a result of those high taxes and the services they provide. Arguing for lower state taxes in rich states is arguing to destroy the very thing that enables these subsidies in the first place. NYC for example couldn’t survive without the infrastructure its taxes pay for.
  - prottog 4y ago
    Do you also agree with the assessment that the highest income earners heavily subsidize the poor? Because that's the same reasoning behind the "blue states subsidize red states" trope. The federal balance of payments with the various states is a function of tax receipts from that state against federal spending in that state. States with lots of high income earners will, by progressive taxation, naturally contribute more to the federal pool. States with lots of recipients of federal benefits, on the flip side of the coin, naturally receive more from the federal pool. There are outlier states on either side. Looking at 2019 data as the last "normal" year (since post-Covid, every single state received more in federal spending than they gave in taxes), Connecticut, Massaschusetts, and New Jersey (all blue states) are the clear outliers in per-capita balance of payments, where each resident in net gave north of $2000. Among outliers in the receivers, Kentucky, New Mexico, and Virginia (one red state, two blue states) stand out . KY I'm not sure why, but NM and VA are clear destinations for lots and lots of federal spending, with many federal programs being run in those states. California is touted as "paying" for a lot of stuff, but on a per capita basis it was only about $300. Among the rest, there are a good mix of red states and blue states that receive more than they pay. Alabama? Red state, net recipient. Maryland? Blue state, net recipient. Utah? Red state, net payer. Washington? Blue state, net payer. That having been said, the implicit argument behind your point is that blue states are rich because of their blue policies and red states are poor because of their red policies. I have yet to be convinced of this.
    - Retric 4y ago
      There are many ways to slice and dice these numbers. Work out how much that 300$/year from birth would add to someone’s retirement and say it’s not a lot of money.
- skinnymuch 4y ago
  Why don’t poorer states stop being subsidized by CA and NY? Why are you only suggesting changes to blue states? Do you have underlying motive?
- mindslight 4y ago
  Real estate taxes are a necessary expense to earn income in the first place, and therefore make sense as a deduction. It's the multitude of exceptions that prevent individuals from deducting necessary and customary expenses required to earn their income that are the problem. Glaringly - a W2 employee needs a car to get to work? Or more recently, a W2 employee needs a home office to work remotely? The tax code says fuck em, they can pay for those twice! The disparity is why the plebs get all uppity when some ragebait article highlights some seemingly-ridiculous expense that businesses write off. When the right answer is to make it so that individuals can deduct expenses the same way businesses do.
tacitusarc 4y ago
I think a more honest take was it leveled the playing field by removing a loophole. I think it's hard to argue that the deduction was anything more than pandering to rich people in blue states...
- mattnewton 4y ago
  It always made sense to me as a subsidy to states and local municipalities, who would otherwise might rely on a much more inefficient process of asking for federal funds to make obligations to their citizens like schools and infrastructure a reality. The rich people can (and often do) move for tax reasons, so I don’t see it as a handout to them. I do see it as a subsidy to states who want to run more of their own infrastructure and function as the “laboratories of democracy”

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.
  - Retric 4y ago
    What bitching? My comment was purely descriptive. The winner takes all nature is a result of those high taxes and the services they provide. Arguing for lower state taxes in rich states is arguing to destroy the very thing that enables these subsidies in the first place. NYC for example couldn’t survive without the infrastructure its taxes pay for.
- prottog 4y ago
  Do you also agree with the assessment that the highest income earners heavily subsidize the poor? Because that's the same reasoning behind the "blue states subsidize red states" trope. The federal balance of payments with the various states is a function of tax receipts from that state against federal spending in that state. States with lots of high income earners will, by progressive taxation, naturally contribute more to the federal pool. States with lots of recipients of federal benefits, on the flip side of the coin, naturally receive more from the federal pool. There are outlier states on either side. Looking at 2019 data as the last "normal" year (since post-Covid, every single state received more in federal spending than they gave in taxes), Connecticut, Massaschusetts, and New Jersey (all blue states) are the clear outliers in per-capita balance of payments, where each resident in net gave north of $2000. Among outliers in the receivers, Kentucky, New Mexico, and Virginia (one red state, two blue states) stand out . KY I'm not sure why, but NM and VA are clear destinations for lots and lots of federal spending, with many federal programs being run in those states. California is touted as "paying" for a lot of stuff, but on a per capita basis it was only about $300. Among the rest, there are a good mix of red states and blue states that receive more than they pay. Alabama? Red state, net recipient. Maryland? Blue state, net recipient. Utah? Red state, net payer. Washington? Blue state, net payer. That having been said, the implicit argument behind your point is that blue states are rich because of their blue policies and red states are poor because of their red policies. I have yet to be convinced of this.
  - Retric 4y ago
    There are many ways to slice and dice these numbers. Work out how much that 300$/year from birth would add to someone’s retirement and say it’s not a lot of money.
skinnymuch 4y ago
Why don’t poorer states stop being subsidized by CA and NY? Why are you only suggesting changes to blue states? Do you have underlying motive?
mindslight 4y ago
Real estate taxes are a necessary expense to earn income in the first place, and therefore make sense as a deduction. It's the multitude of exceptions that prevent individuals from deducting necessary and customary expenses required to earn their income that are the problem. Glaringly - a W2 employee needs a car to get to work? Or more recently, a W2 employee needs a home office to work remotely? The tax code says fuck em, they can pay for those twice! The disparity is why the plebs get all uppity when some ragebait article highlights some seemingly-ridiculous expense that businesses write off. When the right answer is to make it so that individuals can deduct expenses the same way businesses do.

tacitusarc 4y ago

I think a more honest take was it leveled the playing field by removing a loophole. I think it's hard to argue that the deduction was anything more than pandering to rich people in blue states...

mattnewton 4y ago
It always made sense to me as a subsidy to states and local municipalities, who would otherwise might rely on a much more inefficient process of asking for federal funds to make obligations to their citizens like schools and infrastructure a reality. The rich people can (and often do) move for tax reasons, so I don’t see it as a handout to them. I do see it as a subsidy to states who want to run more of their own infrastructure and function as the “laboratories of democracy”