EPTMaybe the most interesting/exciting development here isn’t some marginal help for developing nations battling COVID (since as discussed, I’m not sure it’ll help much) but in starting international conversations about when and how and under what circumstances the international community should override normal private company/profit-driven R&D systems and just make something needed happen. A lot of global health problems get virtually zero R&D attention because the populations where they’re prevalent just don’t have much money. If international orgs got in the business of making that research happen (directly paying for research? Offering cash prizes for the most effective treatment against a given condition? Not sure what the mechanism would look like), that could be a very exciting development.
US Politics Mega-thread - Page 3215
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ChristianS
United States3187 Posts
Maybe the most interesting/exciting development here isn’t some marginal help for developing nations battling COVID (since as discussed, I’m not sure it’ll help much) but in starting international conversations about when and how and under what circumstances the international community should override normal private company/profit-driven R&D systems and just make something needed happen. A lot of global health problems get virtually zero R&D attention because the populations where they’re prevalent just don’t have much money. If international orgs got in the business of making that research happen (directly paying for research? Offering cash prizes for the most effective treatment against a given condition? Not sure what the mechanism would look like), that could be a very exciting development. | ||
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JimmiC
Canada22817 Posts
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BlackJack
United States10183 Posts
At the same time, 96 percent of middle-income households, those making between about $52,000 and $93,000 annually, would get no tax reduction at all. The 4 percent that would benefit would receive an average tax cut of about $400. By contrast, 93 percent of those making $1 million or more would get a tax cut, averaging about $48,000. Credit to AOC. Despite being from the high-tax state of NY she has refused to join her colleagues on this issue | ||
micronesia
United States24579 Posts
I also think not everyone affected by the cap is "wealthy." On May 07 2021 10:39 BlackJack wrote: Considering that state/local income taxes are usually in the range of 10%, the only people this repeal would benefit are people that earn more than $100,000 and thus pay more than the cap of $10,000 in state/local taxes. Don't forget the role of property tax in that as well. The cap essentially became an extra federal property tax for people who live in expensive areas. | ||
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RenSC2
United States1041 Posts
Like, if someone is making $200,000 and the state tax is 10%, they'd be forced to pay $20,000 in state taxes and take home $180000. The federal government is still taxing on $190,000, so you're getting taxed by the federal government on money you never had. I'm all for higher tax rates on higher income earners. However, getting taxed on money you never had seems bad. So yes, reverting this part of the tax bill would only help high income earners in higher tax states, but it also makes sense. | ||
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JimmiC
Canada22817 Posts
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BlackJack
United States10183 Posts
On May 07 2021 10:58 micronesia wrote: I don't see a role reversal. The people who want a tax "cut" are probably the same ones who disagreed with the tax change in the first place. Just because it doesn't hurt the lower and lower-middle class doesn't necessarily mean the SALT cap should stay. Perhaps it should be replaced by a blanket increase in tax rate for the higher federal brackets. I also think not everyone affected by the cap is "wealthy." Don't forget the role of property tax in that as well. The cap essentially became an extra federal property tax for people who live in expensive areas. The role reversal being that the Democrats are typically the ones to go after the Republican plans of regressive tax breaks and here we have Democrats supporting a tax law that could cost hundreds of billions of dollars and basically none of it would go to the bottom 80%. Repealing the cap would be regressive and costly. The top 1 percent of households would receive 56 percent of the benefit of repeal, and the top 5 percent of households would receive over 80 percent of the benefit, while the bottom 80 percent of households would receive just 4 percent, according to the Tax Policy Center (TPC).[3] The cost of just the SALT provisions over ten years would be roughly $185 billion, according to Joint Committee on Taxation (JCT) estimates.[4] If repeal were later extended through 2025 (the last year the cap is in effect under current law), we estimate that the total cost would grow to nearly $600 billion.[5] Few middle-income households would benefit. The vast majority of households in the bottom 80 percent are unaffected by the SALT cap and thus would not benefit from its repeal. Fewer than 3 percent of households in the middle income quintile (those between roughly $51,000 and $88,000 in 2018), and fewer than 10 percent of households in the fourth quintile (those between roughly $88,000 and $157,000 in 2018), would receive any tax cut from repeal, according to TPC.[6] edit: I will concede that this doesn't only affect the wealthy. Regressive/progressive are probably better terms to use than wealthy/non-wealthy. | ||
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GreenHorizons
United States22734 Posts
The top 1 percent of households would receive 56 percent of the benefit of repeal, and the top 5 percent of households would receive over 80 percent of the benefit, while the bottom 80 percent of households would receive just 4 percent... The vast majority of households in the bottom 80 percent are unaffected by the SALT cap and thus would not benefit from its repeal. Fewer than 3 percent of households in the middle income quintile (those between roughly $51,000 and $88,000 in 2018), ... would receive any tax cut from repeal That certainly sounds like something from Democratic talking points in opposition to a Republican tax repeal proposal to me. Interesting tidbit I noticed in the Brookings Institute article on it was: When it comes to the distribution of the benefit from repealing the cap, it favors the most wealthy even more disproportionately (though less in absolute terms) than Trump's tax cuts. One obvious point of comparison is the TCJA package [Trump's "Tax Cuts and Jobs Act of 2017"] as a whole, which skewed strongly towards the rich. Sen. Schumer described it as “a cynical one-two gut punch to the middle class.” Certainly, it was a pro-rich bill overall. Most of the benefits of the TCJA went to the top fifth, and 20 percent went to the top 1 percent. But lifting the SALT cap would be much more favorable to the rich—with almost three times as much of the benefit going to the top one percent (57% vs. 21%): www.brookings.edu Democrats claiming they want to repeal the SALT deduction cap to help middle class families are pretty clearly using the same rhetorical playbook Republicans use to fight for a tax cut that is a massively disproportionate benefit to wealthy people by claiming it is to help a handful of people already on the upper boundaries of most reasonable metrics for "middle" class. Hard to disagree with the conclusion they draw that it is the deduction that should be eliminated and the revenue used for public services, not the cap repealed to put massively disproportionate wealth into the already wealthy's pockets like Democrats are fighting for here. | ||
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ChristianS
United States3187 Posts
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BlackJack
United States10183 Posts
On May 07 2021 14:22 ChristianS wrote: I mean, there are more variables in tax policy than how progressive any given policy is. A gas tax is regressive, but probably good policy and you can offset the regressiveness in other ways if you want to. IMO SALT repeal was dumb policy meant to penalize blue states, and reinstating it is an obvious choice. If you want to tax rich people just do it, SALT is not (and never was) the loophole they’re using to pay so little in taxes, and deductions should be considered on their own merits, not as backdoors to making the overall system more progressive or regressive than the nominal rates suggest. I agree with the premise of your post that tax policy should be judge on its own merits instead of just whether or not it is progressive/regressive. But I think if you're proposing reinstating a tax deduction that could cost hundreds of billions, the most of which will go to the top 1%, then you should have some really good arguments. It definitely wouldn't be the "obvious choice" to me. | ||
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EnDeR_
Spain2559 Posts
On May 07 2021 16:05 BlackJack wrote: I agree with the premise of your post that tax policy should be judge on its own merits instead of just whether or not it is progressive/regressive. But I think if you're proposing reinstating a tax deduction that could cost hundreds of billions, the most of which will go to the top 1%, then you should have some really good arguments. It definitely wouldn't be the "obvious choice" to me. I also think that reversing it because Trump did a petty thing to punish blue states is not good enough. Wealthy people do not need another tax cut. Use that money to invest in programmes that we care about instead. | ||
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ChristianS
United States3187 Posts
Think of it this way: eliminating SALT deduction only taxes rich people more in blue states. Raising the marginal rate taxes them more in *all* states. The latter seems obviously preferable to me. | ||
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farvacola
United States18818 Posts
On May 07 2021 22:28 ChristianS wrote: Buy my point is, if you think wealthy people should pay more you’re wanting more progressive taxation. Adjust the marginal rate accordingly. SALT deduction says income you already paid toward another tax isn’t really income, which, well, it isn’t. In the same way that income that was actually reimbursement for business expenses, or income that went to paying exorbitant healthcare costs shouldn’t be treated as income. You know, a deduction. Think of it this way: eliminating SALT deduction only taxes rich people more in blue states. Raising the marginal rate taxes them more in *all* states. The latter seems obviously preferable to me. This makes even more sense given the urgency underlying making the tax code more coherent as a general rule. | ||
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JimmiC
Canada22817 Posts
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GreenHorizons
United States22734 Posts
On May 07 2021 22:28 ChristianS wrote: Buy my point is, if you think wealthy people should pay more you’re wanting more progressive taxation. Adjust the marginal rate accordingly. SALT deduction says income you already paid toward another tax isn’t really income, which, well, it isn’t. In the same way that income that was actually reimbursement for business expenses, or income that went to paying exorbitant healthcare costs shouldn’t be treated as income. You know, a deduction. Think of it this way: eliminating SALT deduction only taxes rich people more in blue states. Raising the marginal rate taxes them more in *all* states. The latter seems obviously preferable to me. Well the former is the law (the cap anyway*) and the latter is a political hope. Not that I'm not supportive of it, but raising the taxes for the richest people in all of the states and then fighting to enrich the wealthiest people that live in Dem states seems like a more obvious prioritization to me. For perspective, the corporate tax hike to 25% Democrats are reportedly settling on doesn't even cover it Eliminating the SALT deduction caps is no small budgetary matter: CBPP estimated a repeal could cost the government $600 billion over nine years. For comparison, that’s roughly equal to the revenue that would be generated over fifteen years from Democrats’ reported plan to raise the corporate tax rate from 21 percent to 25 percent, instead of the 28 percent proposed by Biden. Those revenues were supposed to fund desperately needed roads, bridges, and other public infrastructure, but if the SALT Caucus has its way, they could instead help finance new write-offs for wealthy people’s property taxes. www.jacobinmag.com I agree with the ideas that taxes should be looked at on their own merit and that a progressive tax policy that applies nationally is preferable but I don't think there's any reasonable way to paint lifting the cap as a responsible priority in that context. | ||
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JimmiC
Canada22817 Posts
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ChristianS
United States3187 Posts
Here’s one I’d probably prioritize more than either of the other two: make rent payments (at least partially) deductible the way mortgage payments are (at least partially) deductible. I’ve never understood why owners have this advantage over renters, and I think it’d make a huge difference in a lot of people’s lives. | ||
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GreenHorizons
United States22734 Posts
On May 07 2021 23:21 ChristianS wrote: Oh, idk about priority level. If the Dems could pass a bill raising the marginal rate or pass a bill reinstating SALT I’d certainly prefer raising the marginal rate. But one of the problems I have with tax discussions is everyone reducing every question to making the system more or less progressive, and there’s just a lot more going on than that. Here’s one I’d probably prioritize more than either of the other two: make rent payments (at least partially) deductible the way mortgage payments are (at least partially) deductible. I’ve never understood why owners have this advantage over renters, and I think it’d make a huge difference in a lot of people’s lives. A fair criticism on reductive approaches, and I'm no tax expert, so I'm sure I've been guilty of it to one degree or another more than once. My point is one about the predictably poor outcomes we can expect if people concede the taxes the US does have (even if they target the richest people in Dem states disproportionately) without first securing the preferable alternative. Also that the rhetoric from Democrats that lifting the cap is aimed at helping middle class families is demonstrably absurd. Beyond that I'd just point out the threat from Democrats to stop Biden's infrastructure bill without repealing the cap doesn't even make sense. It's not like the infrastructure bill has something in it they are naming that they oppose so it is a trade, as far as I can tell they are just demanding they get this money for the richest residents in their states or they won't support their own president's/party's infrastructure bill. | ||
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KwarK
United States42004 Posts
That’s the issue here. Restoring the SALT deduction is giving the Californian the ability to deduct an extra $1k on top of the $12k the IRS is already giving him credit for. So he pays $13k in taxes and, if SALT is restored, gets an extra $1k deducted from his income. It’s negligible. Meanwhile the red states are getting a huge gift, the taxman is giving their taxpayers just as much credit as taxpayers in states with income tax but not asking them to do shit. The higher deduction also punishes people who regularly make charitable contributions such as religious tithers because it gives the deduction to everyone regardless of whether they actually donated. The discussion should be on the restoration of exemptions and the lowering of the standard deduction, not on SALT. | ||
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Blitzkrieg0
United States13132 Posts
On May 07 2021 23:21 ChristianS wrote: Here’s one I’d probably prioritize more than either of the other two: make rent payments (at least partially) deductible the way mortgage payments are (at least partially) deductible. I’ve never understood why owners have this advantage over renters, and I think it’d make a huge difference in a lot of people’s lives. Why was interest paid on a mortgage ever deductible? The double taxation talking point doesn't make sense to me in general considering I pay income taxes and then sales tax or property tax. Every dollar you see is taxed a lot more than once. People should be focused on why we have all these special carve outs instead of a simple tax code. On May 08 2021 00:39 KwarK wrote: The discussion should be on the restoration of exemptions and the lowering of the standard deduction, not on SALT. The discussion should be around a simple tax code that is easy to understand and enforce instead of carving out exemptions for special interests, but reality is that will never happen. Tax code is written by the wealthy and powerful to maintain and prosper. | ||
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