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The state income tax deduction is a great illustration of the problems of our tax system
Posted on 12/3/17 at 8:11 am
Posted on 12/3/17 at 8:11 am
i've heard a lot of rambling on tv about repealing this deduction, because it is probably going to legitimately affect structural issues at the state level across the country. this is solely because those states have chosen to take advantage of the policy (or we can use the word "loophole" to sound like a liberal) and are now inflexible in how to deal with changes in that policy
our tax policy should not be used as a laboratory to subsidize and incentivize behavior for this very reason. taxation is a destructive governmental function (because its very nature is negative for the individual) and accordingly, should be applied as evenly as possible. one major reason for this isn't even a meta-political reason: adjusting the policy becomes almost intractable once a large population has adjusted their behaviors to the policy. this rigidity is terrible
in this specific case, it leads to funny argument twisting.
oh, so this is a tax increase on the rich, correct?
nope
this "argument" (which isn't really logical considering we're talking about national policy, so national standards) actually makes MY argument, because it's showing exactly why we shouldn't have these very types of discriminatory laws in something like our tax code
you can also use all sorts of "hot topic" examples in place of the state income tax example. the student loan interest deduction, mortgage interest deduction, alimony deduction, tuition waiver deduction, charitable giving deduction, etc. all these examples show is how incentivizing and subsidizing behavior creates new patterns in behaviors that make any meaningful change difficult (impossible?)
our tax policy should not be used as a laboratory to subsidize and incentivize behavior for this very reason. taxation is a destructive governmental function (because its very nature is negative for the individual) and accordingly, should be applied as evenly as possible. one major reason for this isn't even a meta-political reason: adjusting the policy becomes almost intractable once a large population has adjusted their behaviors to the policy. this rigidity is terrible
in this specific case, it leads to funny argument twisting.
quote:
About 30 percent of all taxpayers claimed the deduction across all income levels, but higher-income households are more likely to claim it.
Taxpayers deducted more than $550 billion in state and local taxes in 2015, according to the Government Finance Officers Association — 75 percent of which was claimed by people with incomes over $100,000.
The Joint Committee on Taxation found that tax expenditures, or lost revenue, for the deduction amounted to $60 billion. Two-thirds of that, or about $40 billion, was accrued by tax returns claiming incomes over $200,000 — roughly the top 20 percent of households. About 3.5 percent, or $2 billion, flowed to the bottom 60 percent of households.
The Tax Policy Center estimates that only 11 percent of taxpayers with incomes under $50,000 claimed the deduction, compared with 82 percent of filers with incomes over $100,000. Repealing the deduction altogether would raise taxes on everyone, but taxpayers with incomes over $100,000 would bear the brunt — over 90 percent — of the tax hike.
oh, so this is a tax increase on the rich, correct?
nope
quote:
It’s worth noting, however, that the definition of “middle class” is relative and can range drastically by geography. In Ms. Pelosi’s district, for example, the median household income was $106,000 last year, which is almost twice as high as the nationwide median. So the households in San Francisco that claimed the deduction and are considered affluent against a national distribution might be considered middle class in their own city.
this "argument" (which isn't really logical considering we're talking about national policy, so national standards) actually makes MY argument, because it's showing exactly why we shouldn't have these very types of discriminatory laws in something like our tax code
you can also use all sorts of "hot topic" examples in place of the state income tax example. the student loan interest deduction, mortgage interest deduction, alimony deduction, tuition waiver deduction, charitable giving deduction, etc. all these examples show is how incentivizing and subsidizing behavior creates new patterns in behaviors that make any meaningful change difficult (impossible?)
Posted on 12/3/17 at 8:14 am to SlowFlowPro
I love how the tax cuts impact people in CA and NY negatively. :Ducklaugh:
Posted on 12/3/17 at 8:18 am to CAD703X
well i mainly impacts the top 25% or so of American households (that's about the level for family incomes over $100k)
that seems like the exact demo the DEMs want to increase taxes on
or are they now so polarized that they've reduced that population to even richer individuals or faceless "corporations"?
that seems like the exact demo the DEMs want to increase taxes on
or are they now so polarized that they've reduced that population to even richer individuals or faceless "corporations"?
Posted on 12/3/17 at 8:18 am to SlowFlowPro
Been saying it for years, taxation is as much a tool for social engineering and vote-buying, as it is for raising revenue for the govt, perhaps moreso.
By far the biggest reason we will never get any kind of fair or flat tax has nothing to do with impact on revenue, and everything to do with Big Government’s refusal to relenquish their ability to control the electorate.
By far the biggest reason we will never get any kind of fair or flat tax has nothing to do with impact on revenue, and everything to do with Big Government’s refusal to relenquish their ability to control the electorate.
Posted on 12/3/17 at 8:19 am to SlowFlowPro
Yes, the tax system is more about social engineering than revenue.
I've always supported the FairTax. It can bring in the same revenue with no social engineering.
I've always supported the FairTax. It can bring in the same revenue with no social engineering.
Posted on 12/3/17 at 8:23 am to CptRusty
quote:
Been saying it for years, taxation is as much a tool for social engineering and vote-buying, as it is for raising revenue for the govt, perhaps moreso.
100%
when i took various tax law classes in law school, our professor was not silent about this
quote:
By far the biggest reason we will never get any kind of fair or flat tax has nothing to do with impact on revenue, and everything to do with Big Government’s refusal to relenquish their ability to control the electorate.
yup
i've been kind of quiet lately but yesterday got into it on FB with some people about this tax plan. a local DEM guy asked for positives and i stayed very bland (simplifying the tax code and making it more equal) and a bunch of people basically argued "why is a simple tax plan better?"
Posted on 12/3/17 at 8:23 am to TrueTiger
quote:
I've always supported the FairTax.
Who wouldn't as compared to what we have now. As Cpt. Rusty alludes, fixing taxes to where they wouldn't be used as campaign fodder will never happen, in my lifetime anyway.
Posted on 12/3/17 at 8:25 am to Homesick Tiger
I'm old enough to remember when Reagan said he wanted to turn the tax form into a 2 page document.
Guess I'm still waiting.
Guess I'm still waiting.
Posted on 12/3/17 at 8:25 am to Homesick Tiger
and let's be clear, it's not just a DEM/liberal issue
THIS time it is because the GOP passed a new tax policy, but the GOP, especially at the state level, LOVES to treat different entities differently (see: tax credits to entice businesses/industries to states)
THIS time it is because the GOP passed a new tax policy, but the GOP, especially at the state level, LOVES to treat different entities differently (see: tax credits to entice businesses/industries to states)
Posted on 12/3/17 at 8:28 am to SlowFlowPro
quote:
"why is a simple tax plan better?"
it comes down to one question
Does government know what is best for you,
or do you know what is best for you?
It's that simple really.
Posted on 12/3/17 at 8:30 am to SlowFlowPro
Although true, personally I don’t blame the dems or repubs for this practice. “Don’t hate the player hate the game”. They have a job to do (attract businesss to their state) and they are using the tools they have.
The larger picture is that these tools should not exist in the first place and it will take an nearly inconceivable mandate from the electorate to ever change this. I don’t think it will ever happen.
ETA: Anecdotal case in point, if the state income tax deduction goes away, I will be giving serious thought to moving to Texas. This move has been on my radar for a few years due to my job, career track, and industry, but this may finally push me over the edge. All of my family is here and I would hate to leave, but Houston isn’t that far and the tax savings would be substantial. Talk about your social engineering
The larger picture is that these tools should not exist in the first place and it will take an nearly inconceivable mandate from the electorate to ever change this. I don’t think it will ever happen.
ETA: Anecdotal case in point, if the state income tax deduction goes away, I will be giving serious thought to moving to Texas. This move has been on my radar for a few years due to my job, career track, and industry, but this may finally push me over the edge. All of my family is here and I would hate to leave, but Houston isn’t that far and the tax savings would be substantial. Talk about your social engineering
This post was edited on 12/3/17 at 8:37 am
Posted on 12/3/17 at 8:37 am to CptRusty
quote:
Although true, personally I don’t blame the dems or repubs for this practice. “Don’t hate the player hate the game”. They have a job to do (attract businesss to their state) and they are using the tools they have.
oh i get it. the system is flawed and the tax policies/deductions are just a symptom of the system's flaws
quote:
The larger picture is that these tools should not exist in the first place and it will take an nearly inconceivable mandate from the electorate to ever change this. I don’t think it will ever happen.
like Kahlesi said, "i want to break the wheel"
but there is reality (what you said) and theoretical discussions (what this is). people who are so blinded by the system to where they can't even discuss policy on a meta level b/c they're so constrained and blinded by the current system, aren't worth having discussions with
Posted on 12/3/17 at 8:37 am to SlowFlowPro
Man, we have a 6% state income tax in Louisiana. Losing that deduction sucks.
Yes it hurts the east and west coast liberals a little more, but we are one of the few red states getting pounded as well.
Yes it hurts the east and west coast liberals a little more, but we are one of the few red states getting pounded as well.
Posted on 12/3/17 at 8:38 am to Aubie Spr96
quote:
Taxation is armed robbery.
Theft is usually by stealth, non violent. Don't pay taxes and armed thugs will drag you away and quite possibly shoot you.
I can remember a few times in the 1970's where the pictures were in the newspapers, the National Guard rolled up in armored vehicles (a tank in one Alaska case) to remove tax evaders (non payers/non filers) from properties.
Posted on 12/3/17 at 8:39 am to AndyJ
quote:
Man, we have a 6% state income tax in Louisiana. Losing that deduction sucks.
i don't think that big of a % of our population deals with personal deductions and they will benefit greatly from the larger standard deduction
Posted on 12/3/17 at 9:03 am to SlowFlowPro
If you want a mandate from the electorate, you must first do away with employers' withholding taxes for employees. Make employees pay their own quarterly taxes, so that they can see exactly how much the government, at all levels, is taking from them. Most are oblivious and solely focused on their paycheck amount.
Posted on 12/3/17 at 9:09 am to AndyJ
I would not be terribly surprised to see a major movement nationwide toward property taxes, not income taxes.
Referring to state laws, not population movement.
Referring to state laws, not population movement.
Posted on 12/3/17 at 9:09 am to RTRinTampa
quote:
If you want a mandate from the electorate
Move elections to the first week in April.
Posted on 12/3/17 at 9:09 am to SlowFlowPro
Their rhetoric hasn’t caught up with their policy yet, but those are the voters the Democrats want these days.
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