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On May 08 2021 05:42 KwarK wrote:Show nested quote +On May 08 2021 04:26 Blitzkrieg0 wrote:On May 08 2021 03:55 KwarK wrote:On May 08 2021 01:35 Blitzkrieg0 wrote: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. I don’t think you understood what I meant by exemptions. There’s a literal thing that existed before TCJA called exemptions. I guess where I get lost is the difference between the personal exemption and the standard deduction. To me the TCJA just merged the personal exemption and standard deduction into the standard deduction for everyone, but my view is definitely skewed by not having children for child tax credits. If you could provide an example on why it matters to have both I think that would be helpful. At the most basic level, a person who itemizes would get the personal exemption so they're missing out on that, but does this actually matter for most people? Exemptions create a variable size 0% bracket under the tax bands that is linked to family size so you’re not taxed on the basic money you need to eat. In the UK we have a 0% tax bracket as the lowest bracket, in the US they had a 0% tax bracket but instead of it being $0-$10,000 or whatever it was $4,000 per household member which to me makes a lot of sense. Regular deductions work the opposite way round. They’re not a 0% tax bracket on the bottom, they’re giving you tax relief for socially beneficial spending by reducing your tax liability at your marginal rate. Functionally to a layman they look similar so I absolutely see why the Republicans were able to sell it as a simplification but it’s not. Exemptions are good policy, it’s good to have a 0% tax bracket and it’s good for that bracket to be linked to household size. Super high standard deductions are bad policy, they act to disincentivize doing the socially good acts they’re trying to give you credit for. Unless you’re giving five figure amounts to charity annually you get zero credit for it. It’s not even a good simplification either. That’s not a complex part of the tax code and dependent counting still happens, the only line they took out is the “dependent # * $4,000” line which wasn’t tripping anyone up. It also fucks over people in nonstandard households who previously would have gotten credit for having grandma live with them or families with lots of kids. It’s just a bad change.
Thank you for the explanation. I think when they functionally work out to the same number at the end it is harder to see other effects like dis-incentivizing social goods.
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On May 08 2021 05:57 farvacola wrote:Show nested quote +On May 08 2021 05:55 BlackJack wrote:
Myself and others have already posted in this thread that reinstating SALT deductions would reduce federal revenues somewhere in the neighborhood of $600 billion over 10 years. If you and farvacola consider this a "negligible" amount then I probably won't be able to convince you otherwise. This post is hilarious for reasons I wish you could recognize, but big numbers are difficult to deal with in relation to one another, particularly as a matter of priority, so it’s ok.
I sure do wish someone could take the time to help me recognize what's so "hilarious" about my post there.
On May 08 2021 06:46 farvacola wrote:Show nested quote +On May 08 2021 06:38 BlackJack wrote:On May 08 2021 06:03 ChristianS wrote:On May 08 2021 05:35 BlackJack wrote: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. It's not binary. If you raise the top marginal tax rate it still seems like an odd choice to use some of the money you raise to give a massive tax deduction that primarily goes to the 1% in blue states. But you’re not actually “giving” them anything. Decide how much you want the wealthy to pay, and set the rate at that. Then don’t tax them for “income” they already paid at the state and local levels, because it’s not really income. If at the end of that you think they’re not paying enough, raise the marginal rate more. I’m not exactly worried about the blue state rich people, rich people are usually fine whatever changes you make. But the point of deductions is not as a back door to changing effective rates. Should the inverse be true as well? That we should be able to deduct the full amount of federal taxes paid from our state tax bill since those taxes aren't really "income" either? That’s up to the states themselves (and their citizens).
Correct. I am asking for his opinion on the matter. Everything we discuss here is not up to us.
Maybe you could try being a little more productive with your posts instead of just directing these argumentative nothingburger posts my way
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On May 08 2021 06:38 BlackJack wrote:Show nested quote +On May 08 2021 06:03 ChristianS wrote:On May 08 2021 05:35 BlackJack wrote: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. It's not binary. If you raise the top marginal tax rate it still seems like an odd choice to use some of the money you raise to give a massive tax deduction that primarily goes to the 1% in blue states. But you’re not actually “giving” them anything. Decide how much you want the wealthy to pay, and set the rate at that. Then don’t tax them for “income” they already paid at the state and local levels, because it’s not really income. If at the end of that you think they’re not paying enough, raise the marginal rate more. I’m not exactly worried about the blue state rich people, rich people are usually fine whatever changes you make. But the point of deductions is not as a back door to changing effective rates. Should the inverse be true as well? That we should be able to deduct the full amount of federal taxes paid from our state tax bill since those taxes aren't really "income" either?
I don’t really care? If you think you should pay federal tax on the full amount and then state tax less the federal tax amount I’m fine with that. They can’t both subtract each other, though, unless I’m misunderstanding something. Kind of a useless aside anyway.
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On May 08 2021 07:23 ChristianS wrote:Show nested quote +On May 08 2021 06:38 BlackJack wrote:On May 08 2021 06:03 ChristianS wrote:On May 08 2021 05:35 BlackJack wrote: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. It's not binary. If you raise the top marginal tax rate it still seems like an odd choice to use some of the money you raise to give a massive tax deduction that primarily goes to the 1% in blue states. But you’re not actually “giving” them anything. Decide how much you want the wealthy to pay, and set the rate at that. Then don’t tax them for “income” they already paid at the state and local levels, because it’s not really income. If at the end of that you think they’re not paying enough, raise the marginal rate more. I’m not exactly worried about the blue state rich people, rich people are usually fine whatever changes you make. But the point of deductions is not as a back door to changing effective rates. Should the inverse be true as well? That we should be able to deduct the full amount of federal taxes paid from our state tax bill since those taxes aren't really "income" either? I don’t really care? If you think you should pay federal tax on the full amount and then state tax less the federal tax amount I’m fine with that. They can’t both subtract each other, though, unless I’m misunderstanding something. Kind of a useless aside anyway.
Then what's the argument against GreenHorizon's proposal to do away with the deductions altogether? If it's about the unfairness of having to pay taxes on "income" that isn't really "income" then it doesn't really hold up if you acknowledge that this unfairness is going to exist either way.
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United States42004 Posts
On May 08 2021 06:30 BlackJack wrote:Show nested quote +On May 08 2021 05:52 KwarK wrote:On May 08 2021 05:35 BlackJack wrote: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. It's not binary. If you raise the top marginal tax rate it still seems like an odd choice to use some of the money you raise to give a massive tax deduction that primarily goes to the 1% in blue states. More Republicans live in California than in any other state so this blue state rhetoric isn’t super relevant when discussing the impact on taxpayers. Higher standard deductions helped people in states without state income taxes while SALT deductions helps people in states with state income taxes but this isn’t impacting the partisan governments of those states, it’s impacting taxpayers who are basically purple in every state. Yes, everything you said is true. What exactly is your proposal though?
Mostly just for you guys to stop saying silly things about the tax code, that’s why I chimed in here. Because I know more about taxes than most. I’m not especially attached to SALT. Regarding tax policy, standard deduction should be dramatically lowered and exemptions restored and set at a poverty cost of living and indexed to a cost of living metric.
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On May 08 2021 07:12 BlackJack wrote:Show nested quote +On May 08 2021 05:57 farvacola wrote:On May 08 2021 05:55 BlackJack wrote:
Myself and others have already posted in this thread that reinstating SALT deductions would reduce federal revenues somewhere in the neighborhood of $600 billion over 10 years. If you and farvacola consider this a "negligible" amount then I probably won't be able to convince you otherwise. This post is hilarious for reasons I wish you could recognize, but big numbers are difficult to deal with in relation to one another, particularly as a matter of priority, so it’s ok. I sure do wish someone could take the time to help me recognize what's so "hilarious" about my post there. Show nested quote +On May 08 2021 06:46 farvacola wrote:On May 08 2021 06:38 BlackJack wrote:On May 08 2021 06:03 ChristianS wrote:On May 08 2021 05:35 BlackJack wrote: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. It's not binary. If you raise the top marginal tax rate it still seems like an odd choice to use some of the money you raise to give a massive tax deduction that primarily goes to the 1% in blue states. But you’re not actually “giving” them anything. Decide how much you want the wealthy to pay, and set the rate at that. Then don’t tax them for “income” they already paid at the state and local levels, because it’s not really income. If at the end of that you think they’re not paying enough, raise the marginal rate more. I’m not exactly worried about the blue state rich people, rich people are usually fine whatever changes you make. But the point of deductions is not as a back door to changing effective rates. Should the inverse be true as well? That we should be able to deduct the full amount of federal taxes paid from our state tax bill since those taxes aren't really "income" either? That’s up to the states themselves (and their citizens). Correct. I am asking for his opinion on the matter. Everything we discuss here is not up to us. Maybe you could try being a little more productive with your posts instead of just directing these argumentative nothingburger posts my way
it’s because you’re talking about six cents on the dollar every year over ten years, if i’m following along. six cents of lost revenue compared to the 94 cents of existing, uncollected revenue. comparing just the two, of course.
if i’m a business and i got awarded a grant of $100, it’s like me crying over them taking $6 back even though i dropped the other $94 in the wallet of jeff bezos. but i’m too afraid to ask jeff to give it back.
every year for ten years.
as to why it’s funny, i’d wager it’s because it was seemingly in response to a post by farvacola in which he specifically stated
On May 08 2021 05:34 farvacola wrote:Show nested quote +On May 08 2021 05:31 BlackJack wrote:On May 08 2021 00:39 KwarK wrote:
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. What do you mean by "it's negligible"? You mean in the hypothetical example where you decided the California guy just barely qualifies to use SALT over the standard deduction the difference is negligible? By contrast, 93 percent of those making $1 million or more would get a tax cut, averaging about $48,000. That's not negligible. Explain how it's not negligible using other tax figures related to high income taxpayers. Keep in mind that around 1 trillion dollars in taxes from taxable, but uncollected sources is the going figure right now.
hope i got that right. i’m no expert myself. familiar with large numbers though.
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On May 08 2021 07:56 BlackJack wrote:Show nested quote +On May 08 2021 07:23 ChristianS wrote:On May 08 2021 06:38 BlackJack wrote:On May 08 2021 06:03 ChristianS wrote:On May 08 2021 05:35 BlackJack wrote: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. It's not binary. If you raise the top marginal tax rate it still seems like an odd choice to use some of the money you raise to give a massive tax deduction that primarily goes to the 1% in blue states. But you’re not actually “giving” them anything. Decide how much you want the wealthy to pay, and set the rate at that. Then don’t tax them for “income” they already paid at the state and local levels, because it’s not really income. If at the end of that you think they’re not paying enough, raise the marginal rate more. I’m not exactly worried about the blue state rich people, rich people are usually fine whatever changes you make. But the point of deductions is not as a back door to changing effective rates. Should the inverse be true as well? That we should be able to deduct the full amount of federal taxes paid from our state tax bill since those taxes aren't really "income" either? I don’t really care? If you think you should pay federal tax on the full amount and then state tax less the federal tax amount I’m fine with that. They can’t both subtract each other, though, unless I’m misunderstanding something. Kind of a useless aside anyway. Then what's the argument against GreenHorizon's proposal to do away with the deductions altogether? If it's about the unfairness of having to pay taxes on "income" that isn't really "income" then it doesn't really hold up if you acknowledge that this unfairness is going to exist either way.
Not my proposal, just my interpretation of the conclusion drawn from the Brookings Institute paper that's hard to argue against (I don 't think anyone here did?).
The problem I was emphasizing is Democrats aren't threatening (it feels empty, they couldn't actually kill the infrastructure bill for this?) Biden's proposal for any of the better tax ideas people have proposed, they are threatening Biden's/Democrat's desperately needed (even if insufficient) infrastructure plan for an unpopular handout to the richest people in the country
Interesting to consider the difference in public/media reaction if it were progressive Dems threatening the bill for something people desperately need like a $15 minimum wage instead of moderate/conservative Democrats threatening it for a handout to the richest people.
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On May 08 2021 08:34 brian wrote:Show nested quote +On May 08 2021 07:12 BlackJack wrote:On May 08 2021 05:57 farvacola wrote:On May 08 2021 05:55 BlackJack wrote:
Myself and others have already posted in this thread that reinstating SALT deductions would reduce federal revenues somewhere in the neighborhood of $600 billion over 10 years. If you and farvacola consider this a "negligible" amount then I probably won't be able to convince you otherwise. This post is hilarious for reasons I wish you could recognize, but big numbers are difficult to deal with in relation to one another, particularly as a matter of priority, so it’s ok. I sure do wish someone could take the time to help me recognize what's so "hilarious" about my post there. On May 08 2021 06:46 farvacola wrote:On May 08 2021 06:38 BlackJack wrote:On May 08 2021 06:03 ChristianS wrote:On May 08 2021 05:35 BlackJack wrote: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. It's not binary. If you raise the top marginal tax rate it still seems like an odd choice to use some of the money you raise to give a massive tax deduction that primarily goes to the 1% in blue states. But you’re not actually “giving” them anything. Decide how much you want the wealthy to pay, and set the rate at that. Then don’t tax them for “income” they already paid at the state and local levels, because it’s not really income. If at the end of that you think they’re not paying enough, raise the marginal rate more. I’m not exactly worried about the blue state rich people, rich people are usually fine whatever changes you make. But the point of deductions is not as a back door to changing effective rates. Should the inverse be true as well? That we should be able to deduct the full amount of federal taxes paid from our state tax bill since those taxes aren't really "income" either? That’s up to the states themselves (and their citizens). Correct. I am asking for his opinion on the matter. Everything we discuss here is not up to us. Maybe you could try being a little more productive with your posts instead of just directing these argumentative nothingburger posts my way it’s because you’re talking about six cents on the dollar every year over ten years, if i’m following along. six cents of lost revenue compared to the 94 cents of existing, uncollected revenue. comparing just the two, of course. if i’m a business and i got awarded a grant of $100, it’s like me crying over them taking $6 back even though i dropped the other $94 in the wallet of jeff bezos. but i’m too afraid to ask jeff to give it back. every year for ten years. as to why it’s funny, i’d wager it’s because it was seemingly in response to a post by farvacola in which he specifically stated Show nested quote +On May 08 2021 05:34 farvacola wrote:On May 08 2021 05:31 BlackJack wrote:On May 08 2021 00:39 KwarK wrote:
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. What do you mean by "it's negligible"? You mean in the hypothetical example where you decided the California guy just barely qualifies to use SALT over the standard deduction the difference is negligible? By contrast, 93 percent of those making $1 million or more would get a tax cut, averaging about $48,000. That's not negligible. Explain how it's not negligible using other tax figures related to high income taxpayers. Keep in mind that around 1 trillion dollars in taxes from taxable, but uncollected sources is the going figure right now. hope i got that right. i’m no expert myself. familiar with large numbers though.
6 cents on the dollar is a negligible difference to you? Find me a financial advisor that thinks a 6% return is a negligible difference from putting your money under the mattress. Find me someone with a million dollars that thinks $60,000 is a negligible amount of money. It's basically the entire cost of the SNAP food stamp program. It's 2-3 times NASA's entire budget. Even if you want to double-down on the ridiculous notion that this is a negligible amount of money, the idea that it's hilarious for anyone to disagree is just plain dumb.
Also I don't understand what's going on with your analogy. In reality both the $6 and the $94 are going into Jeff Bezo's pocket. Both this tax deduction ($6) and the uncollected taxes ($94) primarily benefit the wealthy. The idea is that we really shouldn't care if some politicians are trying to give the 1% a tax break because they already get a lot of other tax breaks so what's the difference? It's something I'd expect to hear from Tucker Carlsen, not here.
Not to mention the fact that the trillion dollars of uncollected taxes isn't even an official figure.
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On May 08 2021 18:32 BlackJack wrote:Show nested quote +On May 08 2021 08:34 brian wrote:On May 08 2021 07:12 BlackJack wrote:On May 08 2021 05:57 farvacola wrote:On May 08 2021 05:55 BlackJack wrote:
Myself and others have already posted in this thread that reinstating SALT deductions would reduce federal revenues somewhere in the neighborhood of $600 billion over 10 years. If you and farvacola consider this a "negligible" amount then I probably won't be able to convince you otherwise. This post is hilarious for reasons I wish you could recognize, but big numbers are difficult to deal with in relation to one another, particularly as a matter of priority, so it’s ok. I sure do wish someone could take the time to help me recognize what's so "hilarious" about my post there. On May 08 2021 06:46 farvacola wrote:On May 08 2021 06:38 BlackJack wrote:On May 08 2021 06:03 ChristianS wrote:On May 08 2021 05:35 BlackJack wrote: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. It's not binary. If you raise the top marginal tax rate it still seems like an odd choice to use some of the money you raise to give a massive tax deduction that primarily goes to the 1% in blue states. But you’re not actually “giving” them anything. Decide how much you want the wealthy to pay, and set the rate at that. Then don’t tax them for “income” they already paid at the state and local levels, because it’s not really income. If at the end of that you think they’re not paying enough, raise the marginal rate more. I’m not exactly worried about the blue state rich people, rich people are usually fine whatever changes you make. But the point of deductions is not as a back door to changing effective rates. Should the inverse be true as well? That we should be able to deduct the full amount of federal taxes paid from our state tax bill since those taxes aren't really "income" either? That’s up to the states themselves (and their citizens). Correct. I am asking for his opinion on the matter. Everything we discuss here is not up to us. Maybe you could try being a little more productive with your posts instead of just directing these argumentative nothingburger posts my way it’s because you’re talking about six cents on the dollar every year over ten years, if i’m following along. six cents of lost revenue compared to the 94 cents of existing, uncollected revenue. comparing just the two, of course. if i’m a business and i got awarded a grant of $100, it’s like me crying over them taking $6 back even though i dropped the other $94 in the wallet of jeff bezos. but i’m too afraid to ask jeff to give it back. every year for ten years. as to why it’s funny, i’d wager it’s because it was seemingly in response to a post by farvacola in which he specifically stated On May 08 2021 05:34 farvacola wrote:On May 08 2021 05:31 BlackJack wrote:On May 08 2021 00:39 KwarK wrote:
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. What do you mean by "it's negligible"? You mean in the hypothetical example where you decided the California guy just barely qualifies to use SALT over the standard deduction the difference is negligible? By contrast, 93 percent of those making $1 million or more would get a tax cut, averaging about $48,000. That's not negligible. Explain how it's not negligible using other tax figures related to high income taxpayers. Keep in mind that around 1 trillion dollars in taxes from taxable, but uncollected sources is the going figure right now. hope i got that right. i’m no expert myself. familiar with large numbers though. 6 cents on the dollar is a negligible difference to you? Find me a financial advisor that thinks a 6% return is a negligible difference from putting your money under the mattress. Find me someone with a million dollars that thinks $60,000 is a negligible amount of money. It's basically the entire cost of the SNAP food stamp program. It's 2-3 times NASA's entire budget. Even if you want to double-down on the ridiculous notion that this is a negligible amount of money, the idea that it's hilarious for anyone to disagree is just plain dumb. Also I don't understand what's going on with your analogy. In reality both the $6 and the $94 are going into Jeff Bezo's pocket. Both this tax deduction ($6) and the uncollected taxes ($94) primarily benefit the wealthy. The idea is that we really shouldn't care if some politicians are trying to give the 1% a tax break because they already get a lot of other tax breaks so what's the difference? It's something I'd expect to hear from Tucker Carlsen, not here. Not to mention the fact that the trillion dollars of uncollected taxes isn't even an official figure.
6percent/annum is indeed quite a return.
but to the trillion dollar "question". it indeed is not an official figure, it is rather a conservative estimation.
NY Times estimates wealthy Americans are refusing to pay $1.4T in uncollected taxes
the article above was something that caught my eye recently.
there are indeed no (easy too look at) "official" numbers for how much money is not taxed properly. that there are not up to this day, in the age of big data (and generally the information age) should make people highly skeptical of why.
and looking at how the US budget, deficit and overall debt load has developed since the '80s ought to make it a clear priority.
as this is intrinsically linked to core economic parameters like productivity gain, dividing up fruits of said productivity gain... and a hot button issue for quite a while now - inequality.
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On May 09 2021 02:42 Doublemint wrote:Show nested quote +On May 08 2021 18:32 BlackJack wrote:On May 08 2021 08:34 brian wrote:On May 08 2021 07:12 BlackJack wrote:On May 08 2021 05:57 farvacola wrote:On May 08 2021 05:55 BlackJack wrote:
Myself and others have already posted in this thread that reinstating SALT deductions would reduce federal revenues somewhere in the neighborhood of $600 billion over 10 years. If you and farvacola consider this a "negligible" amount then I probably won't be able to convince you otherwise. This post is hilarious for reasons I wish you could recognize, but big numbers are difficult to deal with in relation to one another, particularly as a matter of priority, so it’s ok. I sure do wish someone could take the time to help me recognize what's so "hilarious" about my post there. On May 08 2021 06:46 farvacola wrote:On May 08 2021 06:38 BlackJack wrote:On May 08 2021 06:03 ChristianS wrote:On May 08 2021 05:35 BlackJack wrote: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. It's not binary. If you raise the top marginal tax rate it still seems like an odd choice to use some of the money you raise to give a massive tax deduction that primarily goes to the 1% in blue states. But you’re not actually “giving” them anything. Decide how much you want the wealthy to pay, and set the rate at that. Then don’t tax them for “income” they already paid at the state and local levels, because it’s not really income. If at the end of that you think they’re not paying enough, raise the marginal rate more. I’m not exactly worried about the blue state rich people, rich people are usually fine whatever changes you make. But the point of deductions is not as a back door to changing effective rates. Should the inverse be true as well? That we should be able to deduct the full amount of federal taxes paid from our state tax bill since those taxes aren't really "income" either? That’s up to the states themselves (and their citizens). Correct. I am asking for his opinion on the matter. Everything we discuss here is not up to us. Maybe you could try being a little more productive with your posts instead of just directing these argumentative nothingburger posts my way it’s because you’re talking about six cents on the dollar every year over ten years, if i’m following along. six cents of lost revenue compared to the 94 cents of existing, uncollected revenue. comparing just the two, of course. if i’m a business and i got awarded a grant of $100, it’s like me crying over them taking $6 back even though i dropped the other $94 in the wallet of jeff bezos. but i’m too afraid to ask jeff to give it back. every year for ten years. as to why it’s funny, i’d wager it’s because it was seemingly in response to a post by farvacola in which he specifically stated On May 08 2021 05:34 farvacola wrote:On May 08 2021 05:31 BlackJack wrote:On May 08 2021 00:39 KwarK wrote:
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. What do you mean by "it's negligible"? You mean in the hypothetical example where you decided the California guy just barely qualifies to use SALT over the standard deduction the difference is negligible? By contrast, 93 percent of those making $1 million or more would get a tax cut, averaging about $48,000. That's not negligible. Explain how it's not negligible using other tax figures related to high income taxpayers. Keep in mind that around 1 trillion dollars in taxes from taxable, but uncollected sources is the going figure right now. hope i got that right. i’m no expert myself. familiar with large numbers though. 6 cents on the dollar is a negligible difference to you? Find me a financial advisor that thinks a 6% return is a negligible difference from putting your money under the mattress. Find me someone with a million dollars that thinks $60,000 is a negligible amount of money. It's basically the entire cost of the SNAP food stamp program. It's 2-3 times NASA's entire budget. Even if you want to double-down on the ridiculous notion that this is a negligible amount of money, the idea that it's hilarious for anyone to disagree is just plain dumb. Also I don't understand what's going on with your analogy. In reality both the $6 and the $94 are going into Jeff Bezo's pocket. Both this tax deduction ($6) and the uncollected taxes ($94) primarily benefit the wealthy. The idea is that we really shouldn't care if some politicians are trying to give the 1% a tax break because they already get a lot of other tax breaks so what's the difference? It's something I'd expect to hear from Tucker Carlsen, not here. Not to mention the fact that the trillion dollars of uncollected taxes isn't even an official figure. 6percent/annum is indeed quite a return. but to the trillion dollar "question". it indeed is not an official figure, it is rather a conservative estimation. NY Times estimates wealthy Americans are refusing to pay $1.4T in uncollected taxesthe article above was something that caught my eye recently. there are indeed no (easy too look at) "official" numbers for how much money is not taxed properly. that there are not up to this day, in the age of big data (and generally the information age) should make people highly skeptical of why. and looking at how the US budget, deficit and overall debt load has developed since the '80s ought to make it a clear priority. as this is intrinsically linked to core economic parameters like productivity gain, dividing up fruits of said productivity gain... and a hot button issue for quite a while now - inequality.
I fear you have misread the data you are offering. The $1 trillion figure is not a conservative estimate compared to the source you are offering. Your source estimates the actual figure at $600 billion for this year and roughly $7.5 trillion over the next 10 years. The $1.4 trillion number you are citing is the amount they estimate we can recover over the next 10 years if we invest into the IRS.
Unpaid federal income taxes could amount to more than $600 billion this year and more than $7.5 trillion over the next 10 years.
The piece cites an analysis done by Rossotti, Harvard economist Lawrence Summers and University of Pennsylvania law professor Natasha Sarin published in November that argues investing $100 billion in the IRS to shore up technology, personnel and other resources over the next 10 years, coupled with increased transparency on business income, would result in the collection of $1.4 trillion in taxes that would have otherwise gone uncollected.
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yes you are right of course. my bad, I had a different source in mind at first that also mentioned the 1.4 trn but only found the link I posted. should not just have glanced over it.
will try to rectify that mistake, but tomorrow 
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On May 08 2021 07:56 BlackJack wrote:Show nested quote +On May 08 2021 07:23 ChristianS wrote:On May 08 2021 06:38 BlackJack wrote:On May 08 2021 06:03 ChristianS wrote:On May 08 2021 05:35 BlackJack wrote: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. It's not binary. If you raise the top marginal tax rate it still seems like an odd choice to use some of the money you raise to give a massive tax deduction that primarily goes to the 1% in blue states. But you’re not actually “giving” them anything. Decide how much you want the wealthy to pay, and set the rate at that. Then don’t tax them for “income” they already paid at the state and local levels, because it’s not really income. If at the end of that you think they’re not paying enough, raise the marginal rate more. I’m not exactly worried about the blue state rich people, rich people are usually fine whatever changes you make. But the point of deductions is not as a back door to changing effective rates. Should the inverse be true as well? That we should be able to deduct the full amount of federal taxes paid from our state tax bill since those taxes aren't really "income" either? I don’t really care? If you think you should pay federal tax on the full amount and then state tax less the federal tax amount I’m fine with that. They can’t both subtract each other, though, unless I’m misunderstanding something. Kind of a useless aside anyway. Then what's the argument against GreenHorizon's proposal to do away with the deductions altogether? If it's about the unfairness of having to pay taxes on "income" that isn't really "income" then it doesn't really hold up if you acknowledge that this unfairness is going to exist either way.
You’re sort of Zeno’s paradoxing this to convolute the math. If you’re reducing 100 by 10% twice in succession, you should get 81. If you got 80 one reduction didn’t account for the other. If you wound up doing some goofy successive approximation that ends at 81 and some weird decimal, you’re trying to have both account for each other, which is complicated to calculate and useless because is actually a 10% reduction in any meaningful sense.
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On May 09 2021 06:33 ChristianS wrote:Show nested quote +On May 08 2021 07:56 BlackJack wrote:On May 08 2021 07:23 ChristianS wrote:On May 08 2021 06:38 BlackJack wrote:On May 08 2021 06:03 ChristianS wrote:On May 08 2021 05:35 BlackJack wrote: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. It's not binary. If you raise the top marginal tax rate it still seems like an odd choice to use some of the money you raise to give a massive tax deduction that primarily goes to the 1% in blue states. But you’re not actually “giving” them anything. Decide how much you want the wealthy to pay, and set the rate at that. Then don’t tax them for “income” they already paid at the state and local levels, because it’s not really income. If at the end of that you think they’re not paying enough, raise the marginal rate more. I’m not exactly worried about the blue state rich people, rich people are usually fine whatever changes you make. But the point of deductions is not as a back door to changing effective rates. Should the inverse be true as well? That we should be able to deduct the full amount of federal taxes paid from our state tax bill since those taxes aren't really "income" either? I don’t really care? If you think you should pay federal tax on the full amount and then state tax less the federal tax amount I’m fine with that. They can’t both subtract each other, though, unless I’m misunderstanding something. Kind of a useless aside anyway. Then what's the argument against GreenHorizon's proposal to do away with the deductions altogether? If it's about the unfairness of having to pay taxes on "income" that isn't really "income" then it doesn't really hold up if you acknowledge that this unfairness is going to exist either way. You’re sort of Zeno’s paradoxing this to convolute the math. If you’re reducing 100 by 10% twice in succession, you should get 81. If you got 80 one reduction didn’t account for the other. If you wound up doing some goofy successive approximation that ends at 81 and some weird decimal, you’re trying to have both account for each other, which is complicated to calculate and useless because is actually a 10% reduction in any meaningful sense.
The brookings institution conclusion that GH agreed with was to do away with the deduction altogether. Then the math could not be any less convoluted. $100k income with 40% federal tax rate and 10% state tax rate. 40k to the feds, 10k to the state, and you keep $50k. Easy. It gets convoluted because you have to ask whether you should pay 10% on 60k to the state or 40% on 90k to the feds.
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On May 09 2021 08:29 BlackJack wrote:Show nested quote +On May 09 2021 06:33 ChristianS wrote:On May 08 2021 07:56 BlackJack wrote:On May 08 2021 07:23 ChristianS wrote:On May 08 2021 06:38 BlackJack wrote:On May 08 2021 06:03 ChristianS wrote:On May 08 2021 05:35 BlackJack wrote: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. It's not binary. If you raise the top marginal tax rate it still seems like an odd choice to use some of the money you raise to give a massive tax deduction that primarily goes to the 1% in blue states. But you’re not actually “giving” them anything. Decide how much you want the wealthy to pay, and set the rate at that. Then don’t tax them for “income” they already paid at the state and local levels, because it’s not really income. If at the end of that you think they’re not paying enough, raise the marginal rate more. I’m not exactly worried about the blue state rich people, rich people are usually fine whatever changes you make. But the point of deductions is not as a back door to changing effective rates. Should the inverse be true as well? That we should be able to deduct the full amount of federal taxes paid from our state tax bill since those taxes aren't really "income" either? I don’t really care? If you think you should pay federal tax on the full amount and then state tax less the federal tax amount I’m fine with that. They can’t both subtract each other, though, unless I’m misunderstanding something. Kind of a useless aside anyway. Then what's the argument against GreenHorizon's proposal to do away with the deductions altogether? If it's about the unfairness of having to pay taxes on "income" that isn't really "income" then it doesn't really hold up if you acknowledge that this unfairness is going to exist either way. You’re sort of Zeno’s paradoxing this to convolute the math. If you’re reducing 100 by 10% twice in succession, you should get 81. If you got 80 one reduction didn’t account for the other. If you wound up doing some goofy successive approximation that ends at 81 and some weird decimal, you’re trying to have both account for each other, which is complicated to calculate and useless because is actually a 10% reduction in any meaningful sense. The brookings institution conclusion that GH agreed with was to do away with the deduction altogether. Then the math could not be any less convoluted. $100k income with 40% federal tax rate and 10% state tax rate. 40k to the feds, 10k to the state, and you keep $50k. Easy. It gets convoluted because you have to ask whether you should pay 10% on 60k to the state or 40% on 90k to the feds.
To the taxpayer both of the final situations are identical and superior to taking the tax amounts simultaneously: you have 54k. The only difference is how the 46k tax is split between the state and federal government. For the first event, the feds take 40k and the state takes 6k. For the second, the state takes 10k and the feds take 36k. Either way you are taxed 46k.
Edit: Cleaned up the formatting a bit.
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On May 09 2021 08:29 BlackJack wrote:Show nested quote +On May 09 2021 06:33 ChristianS wrote:On May 08 2021 07:56 BlackJack wrote:On May 08 2021 07:23 ChristianS wrote:On May 08 2021 06:38 BlackJack wrote:On May 08 2021 06:03 ChristianS wrote:On May 08 2021 05:35 BlackJack wrote: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. It's not binary. If you raise the top marginal tax rate it still seems like an odd choice to use some of the money you raise to give a massive tax deduction that primarily goes to the 1% in blue states. But you’re not actually “giving” them anything. Decide how much you want the wealthy to pay, and set the rate at that. Then don’t tax them for “income” they already paid at the state and local levels, because it’s not really income. If at the end of that you think they’re not paying enough, raise the marginal rate more. I’m not exactly worried about the blue state rich people, rich people are usually fine whatever changes you make. But the point of deductions is not as a back door to changing effective rates. Should the inverse be true as well? That we should be able to deduct the full amount of federal taxes paid from our state tax bill since those taxes aren't really "income" either? I don’t really care? If you think you should pay federal tax on the full amount and then state tax less the federal tax amount I’m fine with that. They can’t both subtract each other, though, unless I’m misunderstanding something. Kind of a useless aside anyway. Then what's the argument against GreenHorizon's proposal to do away with the deductions altogether? If it's about the unfairness of having to pay taxes on "income" that isn't really "income" then it doesn't really hold up if you acknowledge that this unfairness is going to exist either way. You’re sort of Zeno’s paradoxing this to convolute the math. If you’re reducing 100 by 10% twice in succession, you should get 81. If you got 80 one reduction didn’t account for the other. If you wound up doing some goofy successive approximation that ends at 81 and some weird decimal, you’re trying to have both account for each other, which is complicated to calculate and useless because is actually a 10% reduction in any meaningful sense. The brookings institution conclusion that GH agreed with was to do away with the deduction altogether. Then the math could not be any less convoluted. $100k income with 40% federal tax rate and 10% state tax rate. 40k to the feds, 10k to the state, and you keep $50k. Easy. It gets convoluted because you have to ask whether you should pay 10% on 60k to the state or 40% on 90k to the feds.
I think the tax code needs a complete overhaul so the removing the SALT deduction would only be a small part of that.
I'm more focused on the political ridiculousness of Democrats threatening their own infrastructure bill for a handout to the richest people in their states.
I think the logical thing to do is for Democrats with integrity to say they won't pass an infrastructure bill that lifts/repeals the cap and gives a big windfall to the richest people in the country.
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On May 09 2021 21:43 JimmiC wrote:Show nested quote +On May 09 2021 13:15 GreenHorizons wrote:On May 09 2021 08:29 BlackJack wrote:On May 09 2021 06:33 ChristianS wrote:On May 08 2021 07:56 BlackJack wrote:On May 08 2021 07:23 ChristianS wrote:On May 08 2021 06:38 BlackJack wrote:On May 08 2021 06:03 ChristianS wrote:On May 08 2021 05:35 BlackJack wrote: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. It's not binary. If you raise the top marginal tax rate it still seems like an odd choice to use some of the money you raise to give a massive tax deduction that primarily goes to the 1% in blue states. But you’re not actually “giving” them anything. Decide how much you want the wealthy to pay, and set the rate at that. Then don’t tax them for “income” they already paid at the state and local levels, because it’s not really income. If at the end of that you think they’re not paying enough, raise the marginal rate more. I’m not exactly worried about the blue state rich people, rich people are usually fine whatever changes you make. But the point of deductions is not as a back door to changing effective rates. Should the inverse be true as well? That we should be able to deduct the full amount of federal taxes paid from our state tax bill since those taxes aren't really "income" either? I don’t really care? If you think you should pay federal tax on the full amount and then state tax less the federal tax amount I’m fine with that. They can’t both subtract each other, though, unless I’m misunderstanding something. Kind of a useless aside anyway. Then what's the argument against GreenHorizon's proposal to do away with the deductions altogether? If it's about the unfairness of having to pay taxes on "income" that isn't really "income" then it doesn't really hold up if you acknowledge that this unfairness is going to exist either way. You’re sort of Zeno’s paradoxing this to convolute the math. If you’re reducing 100 by 10% twice in succession, you should get 81. If you got 80 one reduction didn’t account for the other. If you wound up doing some goofy successive approximation that ends at 81 and some weird decimal, you’re trying to have both account for each other, which is complicated to calculate and useless because is actually a 10% reduction in any meaningful sense. The brookings institution conclusion that GH agreed with was to do away with the deduction altogether. Then the math could not be any less convoluted. $100k income with 40% federal tax rate and 10% state tax rate. 40k to the feds, 10k to the state, and you keep $50k. Easy. It gets convoluted because you have to ask whether you should pay 10% on 60k to the state or 40% on 90k to the feds. I think the tax code needs a complete overhaul so the removing the SALT deduction would only be a small part of that. I'm more focused on the political ridiculousness of Democrats threatening their own infrastructure bill for a handout to the richest people in their states. I think the logical thing to do is for Democrats with integrity to say they won't pass an infrastructure bill that lifts/repeals the cap and gives a big windfall to the richest people in the country. Why is it ridiculous for a centrist to be against a tax that impacts their constituents unfairly? Not all dems are progressives, nor is the party. Because of the two party system and American politics it is a who spectrum. Also your framing makes no sense, it is a small percentage (under 10) trying to effect the bill for their people, this is how a republic/democracy is meant to operate.
It's not a "tax that impacts their constituents unfairly." It's a tax deduction that overwhelmingly favors their constituents that they are upset they can no longer use. You're trying to frame a tax deduction that primarily benefits blue states into a tax that primarily penalizes blue states.
Even this argument of "fairness" doesn't necessarily ring true. Why should a Californian pay less federal taxes than a Floridian with similar incomes just because the Californian paid more in state and local taxes? The Californian should get something for his state tax dollars. It's not "fake income." It's income that is going to support his state. He is surely getting a lot more for his state tax dollars than the Floridian is getting for them. Maybe we should all have to contribute to the federal government equally regardless if you also contribute to your state. If you go out to dinner with a group and decide to split the bill, Bob shouldn't get to contribute less because he took his neighbor out for breakfast.
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United States42004 Posts
On May 10 2021 09:56 BlackJack wrote:Show nested quote +On May 09 2021 21:43 JimmiC wrote:On May 09 2021 13:15 GreenHorizons wrote:On May 09 2021 08:29 BlackJack wrote:On May 09 2021 06:33 ChristianS wrote:On May 08 2021 07:56 BlackJack wrote:On May 08 2021 07:23 ChristianS wrote:On May 08 2021 06:38 BlackJack wrote:On May 08 2021 06:03 ChristianS wrote:On May 08 2021 05:35 BlackJack wrote:
[quote]
It's not binary. If you raise the top marginal tax rate it still seems like an odd choice to use some of the money you raise to give a massive tax deduction that primarily goes to the 1% in blue states. But you’re not actually “giving” them anything. Decide how much you want the wealthy to pay, and set the rate at that. Then don’t tax them for “income” they already paid at the state and local levels, because it’s not really income. If at the end of that you think they’re not paying enough, raise the marginal rate more. I’m not exactly worried about the blue state rich people, rich people are usually fine whatever changes you make. But the point of deductions is not as a back door to changing effective rates. Should the inverse be true as well? That we should be able to deduct the full amount of federal taxes paid from our state tax bill since those taxes aren't really "income" either? I don’t really care? If you think you should pay federal tax on the full amount and then state tax less the federal tax amount I’m fine with that. They can’t both subtract each other, though, unless I’m misunderstanding something. Kind of a useless aside anyway. Then what's the argument against GreenHorizon's proposal to do away with the deductions altogether? If it's about the unfairness of having to pay taxes on "income" that isn't really "income" then it doesn't really hold up if you acknowledge that this unfairness is going to exist either way. You’re sort of Zeno’s paradoxing this to convolute the math. If you’re reducing 100 by 10% twice in succession, you should get 81. If you got 80 one reduction didn’t account for the other. If you wound up doing some goofy successive approximation that ends at 81 and some weird decimal, you’re trying to have both account for each other, which is complicated to calculate and useless because is actually a 10% reduction in any meaningful sense. The brookings institution conclusion that GH agreed with was to do away with the deduction altogether. Then the math could not be any less convoluted. $100k income with 40% federal tax rate and 10% state tax rate. 40k to the feds, 10k to the state, and you keep $50k. Easy. It gets convoluted because you have to ask whether you should pay 10% on 60k to the state or 40% on 90k to the feds. I think the tax code needs a complete overhaul so the removing the SALT deduction would only be a small part of that. I'm more focused on the political ridiculousness of Democrats threatening their own infrastructure bill for a handout to the richest people in their states. I think the logical thing to do is for Democrats with integrity to say they won't pass an infrastructure bill that lifts/repeals the cap and gives a big windfall to the richest people in the country. Why is it ridiculous for a centrist to be against a tax that impacts their constituents unfairly? Not all dems are progressives, nor is the party. Because of the two party system and American politics it is a who spectrum. Also your framing makes no sense, it is a small percentage (under 10) trying to effect the bill for their people, this is how a republic/democracy is meant to operate. It's not a "tax that impacts their constituents unfairly." It's a tax deduction that overwhelmingly favors their constituents that they are upset they can no longer use. You're trying to frame a tax deduction that primarily benefits blue states into a tax that primarily penalizes blue states. Even this argument of "fairness" doesn't necessarily ring true. Why should a Californian pay less federal taxes than a Floridian with similar incomes just because the Californian paid more in state and local taxes? The Californian should get something for his state tax dollars. It's not "fake income." It's income that is going to support his state. He is surely getting a lot more for his state tax dollars than the Floridian is getting for them. Maybe we should all have to contribute to the federal government equally regardless if you also contribute to your state. If you go out to dinner with a group and decide to split the bill, Bob shouldn't get to contribute less because he took his neighbor out for breakfast.
With the new higher standard deduction Floridians are already getting Federal tax deduction for a lot of state and local taxes without the burden of actually paying those taxes. Your metaphor with the restaurant doesn’t really work. It’d be more accurate if the restaurant had an old policy of letting you reduce your bill by however much you donated to the adjacent food bank but now has a new policy of assuming you donated $20. The Californian says “I donated $30 to the food bank, I want to reduce what I owe by that $30 but I’m only allowed to reduce it by $20” while the Floridian didn’t donate shit to anyone but is still claiming the full $20 discount as if he did. Letting the Floridian reduce his share of the bill by $20 is the bigger issue here. The question shouldn’t be “should the Californian get another $10 discount?”, it should be “why are we giving the Floridian a $20 discount?”.
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EPT
