A handful of Democrats want to hold up a $2 trillion infrastructure bill to save a choice tax deduction for the wealthy, not that you'll hear it described that way
SALT, State and local tax deductions limited amount of state and local taxes (SALT) that could be deducted on a federal income tax to $10,000 which seems a very large amount to most people. It prob. encouraged people to buy expensive houses. Real estate people do not like it.
I related earlier that if I had bought a much more expensive house, I could have itemized again and saved a few thousand in taxes every year. At the price of having a $3k mortgage payment. I know that doesn't sound like a lot on the West Coast, but it is for me. Mine is half that.
I spent 30 years as a tax professional at the top of my profession. The SALT deduction should not be reinstated, it’s terrible tax policy. It was passed to put pressure on states who’s fiscal house was in ruin, to force fiscal responsibility on those who’s spending was out of control. Too many times this is portrayed as a political matter, blue vs. red. But that’s a false narrative. States who rely on the wealthy to fund their largess have a spending problem, not a revenue problem. Reduced spending, reduce your tax rate, eliminate useless overhead from school boards and get your pension obligations under control. Then perhaps people will want to immigrate to your state and lift up all boats in the water.
The federal income tax system redistributes money from urban and suburban productive workers to rural states that haven't chose economic policies that would fix their backwardness. We should eliminate the federal income tax system, and the federal welfare programs that are funded by it.
All citizens should support the core federal obligations like defense and the basic federal departments. The states should pay a per capita tax to the federal government to support federal functions. The states can raise that money how they choose. I'll bet red states would find out who was in deep do-do and how much of their low taxes were the result of sucking up money from blue states taxpayers.
"The federal income tax system redistributes money from urban and suburban productive workers to rural states that haven't chose economic policies that would fix their backwardness."
That's a common narrative. In my experience, the rich and productive in every area are taxed in the name of the poor so politicians can reward their rich and well connected friends. I know they tell you that their increasing your taxes for social spending, but that's just a talking point. Very little of your exorbitant taxes go to the people who truly need it.
It's why we have so many private philanthropy groups to help the poor, often run by the same groups and companies that profited off of screwing the poor over to begin with. After the politicians get done paying off their corporate supporters, there's very little left for those they claimed they were going to help with your money.
Also, the common reason given for federal expenditures and taxation, "defense of the nation", would be more palatable if it were that instead of "massive cash flow to defense contractors". Which appears to be the actual goal of our defense spending.
100 years is a long time. State budgets back then were responsible. You can’t say the same about today. State pensions today are out of control, rendering many states insolvent. Allowing high wage earners to offset their federal tax to fund out of control state spending is foolish. Fix the problem. Don’t pass it off to someone else.
At this point, 100 years later, it's having the federal government subsidize high tax rate states' fiscal irresponsibility. That said, limiting the state and local tax deduction forces population out of blue states and to move elsewhere. I see several bad things about doing that. I'd put it back in place as before and stuff the genie back in the bottle.
So bail out the rich in irresponsible tyrannical blue states at the exact same time Biden is proposing significantly increasing taxes on all rich people across the country.
Terrible collateral damage of a good policy. My preference would be to keep blue people in blue states too. Their migration to red states is dangerous.
"...limiting the state and local tax deduction forces population out of blue states and to move elsewhere." I know this is reported in the press from time to time, but I'd like to see the long term evidence to support your assertion.
Anecdotally, it's why I moved. I was getting lambasted in MD with tax, and the SALT thing accentuated the issue. $21k in state and local taxes and it was now a worse strategy to try to itemize them.
I understand. I’m not commenting on the reason why the deduction was originally put in place 100 years ago. I’m commenting on why it was eliminated in December 2017.
Truly astonishing. Democrats have for as long as I can remember argued, correctly in my opinion, that people (especially the rich) should pay more in taxes. So here we are, paying more taxes (myself included!) and now its the Democratic party arguing the rich are taxed too much. When I say that I'm not quite sure what the Democrats stand for any longer, this SALT deduction brew-ha-ha is one of the big reasons why.
Are we willfully ignoring the reality that this tax policy is moving people around the country from high tax states to lower ones? It's a significant impact to blue states to lose high earners and erode their tax base. If you're making under $50k a year, you're probably a net negative revenue to the state you live in. Not so if that number is $150k. At that number you can easily exceed the SALT limits, and be therefore encouraged to move away.
I'd like to see the evidence showing: A) All blue states are losing population and B) said population loss is caused by said blue state's tax policy. As I noted above, this same line gets reported in the press from time to time, but I'd like to see the long-term evidence that this is true.
People migrating out of CA are being replaced with people earning less than those that have left, eroding the tax base. CA historically attracted $120k + engineers, but with COVID, the realization is that engineering work can be done from a hot tub in Des Moines and people don't have to be in high tax/cost of living areas like coastal CA.
Ah, data! Now you're speaking my language! Interesting! Did you notice the high-earner inbound / outbound numbers? $100k + earners made up 76% of inbound vs. 69% of outbound! Very interesting! The age numbers show us that folks move into CA skew younger, and the reasons for inbound favor "job" while the outbound reasons tends to "retirement". So you have a younger, wealthier demographic moving to CA to look for work or start a new job, and older people moving out because they want to retire somewhere else. Serious question, what category there do we think would capture tax policy impacts? Retirement, probably, right? Older folks on a relatively limited income might view taxes as a primary reason to move. So if we had to make judgements on this data alone, would it be fair to say different demographics might have different reasons to stay or go?
I don't think you can draw any conclusions from this other than blue states are at the top of the leaving list. The data doesn't look at net worth and this is important because retirement savings (via taxes on mandatory distributions of pre-tax savings) represent a significant consideration in future tax receipts. If you don't believe me look at the tentative discussions going on in NY, NJ and CA regards to levying state taxes on high net worth individuals even after they have left the state.
Actually...my company gives stock distributions out annually that vest over 5 years. All the distributions that happened while I was in MD, even though they didn't vest, get taxed by MD until that 5 year sunset. So, in a way, they are already doing this. I'm going to be filling out MD tax returns until 2023 on a move that happened in mid-2018.
would be interested to see the 'median' which skews towards lower income versus the 'average' which skews towards higher incomer, especially the very high income ($1M+). Either way we will see in a year or two what the effect on tax revenue is for raising taxes in California and New York.
I'm a fairly well off Republican in a deeply red state. I was supportive of the tax reform despite the fact it adversely affected my own finances, because I below it was good for the country overall. If it wasn't for all the idpol horseshit I might join ranks with the Dems. I feel so lost.
I really get tired of all this “wealthy”, “1%”, “the rich” and all that crap. How have we all forgotten that envy is a mortal sin?
Half the people in this country pay zero tax or have a negative tax via refundable tax credits that is welfare in another name.
Yet I DO agree that the SALT deduction should NOT be reinstated. And while I pay a shit ton of non resident tax to NY even though I live in Florida, I still feel that way.
Big blue states are profligate spenders. They pay off unions with unaffordable contracts that burden their budgets in exchange for political support. In NYC, 16 generations of dads in a cops family could have died of heart disease before 40 and still, if today’s cop gets heart disease at 36, it’s presumed to be job related and he gets a full tax free pension and healthcare for the rest of his life.
Teachers who harm children are kept in what are called rubber rooms, read books, magazines and do crossword puzzles all day long for their 6 figure salaries and are almost never fired.
The myriad taxes NY imposes on its citizens that aren’t SALT limited is crazy. A green grocer can’t put his produce outside his own store without a tax on the stand the produce sits on. A tenant in an office building who’s landlord pays real estate taxes based upon the level of rental income (not the value of the property) pays a commercial rent tax on the rent that his landlord pays real estate taxes on.
NYC has a vault tax. Not on safes. But if you own property, you own it to the street line. Technically you can build under the sidewalk as you own it and must keep it safe and clean or be heavily fined. You can’t build under the street (road) without paying the vault tax. But over the years, NYC has widened public streets taking away sidewalk. One day you find yourself owing the vault tax just due to eminent domain! There are tons of other silly taxes.
And hidden taxes too. You want to cross the Hudson River? $16 to cross a bridge built 90 years ago and long since paid for many times over. That’s every day if you commute. Trucks? As much as $95 just to drive over a bridge.
Illinois can’t reduce public worker salaries or benefits at all - it’s in their constitution.
They will tax anything that doesn’t move. And all these taxes aren’t enough to pay for their welfare state and intrusive government. So they tax income as much as much as 15% on top of their Federal taxes. And NY? If you earn a decent wage you lose most of your deductions and effectively pay a tax on gross income.
Now thats fine. The voters elected the people who Imposed these taxes and they demand all the free services that have to be paid for. And they should pay it.
The Federal tax rate is determined based upon the sum total of includible income less expenses that are deductible. More deductions allowed = higher tax rate across the country.
Why should Florida or Texas taxpayers subsidize a welfare state in NY or NJ that they reject themselves? Forget about Trump ”sticking it to blue states vindictively”. Let NY and NJ pay for their own sclerotic, expensive systems.
Now I don’t agree with much of what MT wrote about “the rich”. I’m sick of all that envy shit. And it’s not all accurate either. To offset the lost SALT Trump widely expanded the standard deduction. That’s why only 10% claim itemized deductions now. When SALT was allowed, many more claimed IDs.
The way they’ve broken the tax system such that half pay zero and the bottom quarter pay 4%, who the fuck else is going to benefit from ANY allowed deduction?
You want to complain about income disparities? I agree with you. So why did the left open the doors so that China, Korea, India and other countries could steal so many American manufacturing jobs from the delivery bays at Walmart and Amazon? Why always side with manufacturing unions which contributed to the destruction of the US auto and other industries? Why blanket business with crazy regulations such that a puddle of standing water is deemed wetlands that must be protected?
The Uber rich are pretty much concentrated in the left and east coasts and have built their fortunes by killing the middle class. Designed in California it says on your iphone box. But they’re built in China and India. Your Washington State Nikes are made in Vietnam. Facebook, Netflix, Microsoft - all that mammoth wealth is on the left coast. NY? All the lawyers and bankers - mostly left wing Democrats - paper it, lawyer it and finance it all. Where are the hedge funds located? A year ago, I saw Bill Ackman and Carl Icahn on the streets in NYC on the same day and Henry Kravitz a week later. They aren’t based in Idaho, North Carolina or a Georgia.
The left killed the middle class and it was no accident. They want dependent people who will vote for them, just like the drug pusher gives out free samples to hook his customers. They refuse to improve their education systems, to curb crime and keep their streets clean. They want it this way, with angry people who don’t get enough free shit while they live amongst the techies, financiers and lawyers who sent their jobs away.
So, fix the middle class by making it easier to do business here. Tariff countries who use their poverty as a trade weapon and have no concern for the environment - stop flagellating ourselves as we are well ahead of all other large countries in reducing carbon.
Amd stop with the class warfare - when a small group pays all the tax, they get most of the benefit of ANY tax relief.
And while we are at it - this $2 trillion bill being held up by east coast SALT warriors isn’t a stimulus. Most of it is little more then long desired left wing handouts. Whatever hold that up, if you ask me,is to be commended.
Half the people in this country pay zero tax or have a negative tax via refundable tax credits that is welfare in another name. "
This is a common view of those who pay too much taxes, but taxes are only one metric of the cost of living and having been both rich and poor, I found poverty to be far more expensive.
There's an entire industry in America that profits off the lack of choice the poor have available. From healthcare system that is more expensive when you pay in cash because you can't afford insurance to payday loans at extortionary rates when a family member ends up on jail for being poor and they need to somehow come up with the 10% to bail them out. People who can't afford the monthly rent increases on their lot in their depreciating in value trailer. Lots that are increasingly owned by hedge funds because they know there is no fixed mortgage so they charge based on the fact that these people don't have the money to move their home.
We have any entire extraction system in America designed to pulverize the desperate for profit so Jamie Dimon can buy another yacht.
That does not take away from your tax burden which is no doubt too high, but that money is not going to someone in a trailer in winter getting hammered with increased propane costs in Texas because the local government decided to deregulate so you now face $7000 a week energy Bills in an ice storm when your yearly income is $20,000. Your tax money is not going to these people. It's going to ensure Goldman Sachs does not fail in the next financial crisis. It's financing the current and next overseas war the elite dream up to reward themselves for finding a new place on the map.
There is very little connection between the exorbitant taxes you pay and the crushing poverty the poor experience.
I often hear the rich complain that the poor envy them, but that has not been my experience. I find that most poor people admire the wealthy who have earned it. The poor hate the wealthy who directly profit of their misery. That's who they hate.
I don't disagree with much of what you say, but the whole thing about "being in jail for being poor". I've been poor and i've never been to jail. Going to jail is behavior based. "Rich" or poor, I have successfully avoided LE attention by not doing things that get you that attention. And lest you say this is race or ethnically based, i've known lots of people with a whole spectrum of colors and ancestries who are as poor as I once was who also successfully avoid LE attention and are able to live life without that fear, at least.
That said, they still get raked over the coals financially by stuff like payday loans and title loans.
I recently read an analysis of the US prison population, and when offenders imprisoned for non-violent drug offenses were taken out of the equation, the demographics stayed almost exactly the same-the white/black/Latino violent offender prison demographic stayed within 1% of the demographic %s for all groups when non violent prisoners were also accounted for.
Yeah, solving that drug problem is ...I have no idea how to get people to stop taking drugs, and no idea how to keep people healthy when they are intent on killing themselves. There was a program in Vancouver BC a long while back where they were giving them heroin in a controlled setting, and they had to follow certain rules - show up on time, wash up, etc. The compliance was less than 100%, as you can imagine.
Making hardened criminals out of druggies is no real answer, of course. Suburban and rural young women, girls to me, whoring themselves out for opiates on the side of the road or via CL is breathtakingly sad.
I think race is a distraction here. I prefer the term marginalized since that covers a much wider group. That and when people interpret marginalized only in racial terms it let's me know where they are at.
If you think poverty is not criminalized in the US I suggest more research. Read the story of Eric Garner, or the motivation for the Ferguson unrest (the police targeting the poor to collect revenue through heavy enforcement of minor violations they knew they would be unable to defend themselves from).
Some of the links I will include below specifically separate out black people from other marginalized groups. Not the way I would have done it, but still valid data:
"These seven charts explain how Ferguson—and many other US cities—wring revenue from black people and the poor"
"One in every two arrests made by the Portland Police Bureau last year was of a homeless person, an analysis by The Oregonian/OregonLive has found."
Of course, this is because the homeless are uniquely criminal and violent right? That's not what the numbers show. From the article:
"Most often, police arrested homeless people on property, drug or low-level crimes. The vast majority of the arrests, 86 percent, were for non-violent crimes, the analysis found. And more than 1,200 arrests were solely for offenses that are typically procedural -- missing court or violating probation or parole."
I have included perhaps 10 major cities in this data, but you find this same pattern in most urban US cities. If you would like I can provide that data as well.
Over 95% of the arrests in this country involve non-violent misdemeanor crimes not happening in Bel Aire.
I think that's great you were able to avoid the constant dragnet our police have put in place to profit off the most marginalized part of society, but hard data shows that your personal experience was not the norm.
Does behavior play a role? Many times, yes. Is it the only or even primary role in who gets arrested and why? The data does not support that.
Link 1: Total BS that the law runs this way in the jurisdictions in question. Isn't St. Louis County MO under Democrat control? It's an ugly city, for sure, having spent some time there over the past couple of years, but you think they could locally fix that kind of crap. That said, the courts operating that way (as in Ferguson) are not that much different than my experiences in Jersey. They did everything they could to stop me from beating a charge, and even for a dismissal I had to pay a lot of fees. It would have been faster and cheaper to just pay the fine, and I think that was the point.
Link 2/3: Civil asset forfeiture is a scam. It should be illegal. I don't think the common law would acknowledge this. I have heard the excuses why we need it and it's a perverse incentive that requires no proof. Someone could show up at your house tomorrow and with no evidence seize your car. It's horseshit. That said, seizing your assets, by itself, doesn't make you a criminal.
Link 4: Homeless people get arrested more often because they are more visible. They don't show up in court because a lot of them are substance abusers or have psych problems. So they'd have a lot of arrests for that kind of thing. Also, easy to find, they are already on the street mostly. Cops are lazy.
Link 5: I'm not black and i'm afraid of cop stops. Same way after 9/11 I was driving up to a gate at the base I worked at and someone had a .50 cal pointed at my hood every morning, I wasn't loving it. I know the soldier was disciplined, I also know that mistakes happen and everyone is not fungible. Same with cops. Nothing is going to change that, though. So my hands are always visible and I only take actions when directed because I want to live.
If you're low income, your chances of having a brush with the cops are very much higher. I believe the statistic is 2.5x higher. That's probably a lot more fruitful a discussion than talking about race. If your local cops are white supremacists, maybe you need to vote or something. Local action.
Good, we seem to agree on much of this. To your points:
1. I admit I care even less about what party is running a city than I care about the racial dynamic of the marginalized and criminalized, but sure, this example in St. Louis is no different than Houston or the 100's of other cities across America that have laws designed simply to collect fines. Yes, the point is that it's easier to simply pay the fine, but often the system is designed to create multiple trip wires intentionally designed for them to fail so more fees are assessed they cannot afford to pay. If they don't pay, they go to jail, or American debtors prison. The US claimed to be against debtor prison when we fought a revolution, but apparently we were only kidding. I don't see how this is not criminalizing the poor. For those keeping track (I'm not) they show a poor white family on the cover of this story. Perhaps that will catch the interest of those who would normally dismiss a story like this out of hand if it had some other group they feel deserve it.
2/3: Civil Asset forfeiture is not only a scam, it's a scam that primarily targets poor communities who deal in cash and are least able to afford the loss:
"The potential for abuse is certainly very high. As the Justice [Thomas] highlights, this has the tendency to target the poor specifically who traditionally use cash to do purchases. Cash, of course, is easier to seize than credit cards."
"That said, seizing your assets, by itself, doesn't make you a criminal."
That's a distinction without a difference. First, we are all committing some crime all times under our endless byzantine legal code.
It's unbelievably easy for a cop to accuse someone of committing a crime and steal all they money they would need to hire an attorney to get it back. That and having your money taken means you can't pay for things that are a crime not to pay for, (tags for your car, etc) or your rent that makes you homeless and therefore more exposed to being arrested. Asset Forfeiture especially of the poor creates the opportunity for more crime just as working under the table does (which is also a crime).
Now is there a law on the books that specifically states you will get a ticket for being poor? I guess the answer is no. Just as sodomy laws in a previous generation were used to target the gay community, many of the laws that criminalize poverty do not expressly state that is their purpose. I suspect at least part of the reason for this is so those not affected by these laws can rationalize it as "well we did not outlaw being gay, only sodomy. Besides, I have committed sodomy as a heterosexual and I have never been arrested which proves my point!" That times 2 for poverty related crimes. That's the wonderful thing about a police state. As long as you are not targeted, you can enjoy oysters and champaign without being overly concerned what that jail across town is up to.
Link 4: "Homeless people get arrested more often because they are more visible."
I don't agree with all his conclusions, but there's an excellent book: "Arrest-Proof Yourself: An Ex-Cop Reveals How Easy It Is for Anyone to Get Arrested, How Even a Single Arrest Could Ruin Your Life, and What to Do If the Police Get in Your Face"
He makes the same argument that being exposed increases your risk of arrest. It also happens to be the case that certain poor communities are more likely to be out in public. Do you know what we call a country where simply being in public increases your chances of being arrested? A police state that targets marginalized communities. He talks about how most bike riders in Florida are poor and that is exactly who the police target for bike helmet law enforcement. When possible, many try to escalate the confrontation into resisting arrest so they can charge the kid with a felony. I life in a nice neighborhood where kids don't wear helmets all the time and we have nothing like what he describes, which apparently is common in Seattle and many other cities as well:
But sure, sodomy laws didn't actual mention being for gay people so they had nothing to worry about.
"They don't show up in court because a lot of them are substance abusers or have psych problems."
Yes and they get fined and incarcerated for that. Does that make any sense at all? That and you leave out that many courts don't play fair with the notification of court appearances. Often they purposely send notice late, publish it in a newspaper without notice or behave in a way designed to ensure people miss court dates so they can tack on more fines.
Link 5: Everyone should be afraid of cops. The thing to focus on in this article and the reason I included it (and prefaced my entire post with a disclaimer that it's unhelpful to separate out marginalized from black crime as some of these links do) is because the statistics in the linked url on police violence highlights how often police stop people as a pretext for something else, the old stop and frisk being the most obvious example of that. As the url in the article notes, 95% of police arrests are for non-violent misdemeanors that don't specifically mention being poor/marginalized, but are enforced just that way.
But sure, sodomy laws didn't actual mention being for gay people so they had nothing to worry about.
"If you're low income, your chances of having a brush with the cops are very much higher. I believe the statistic is 2.5x higher."
Yes, that was the original point I was making and we agree.
That poverty is criminalized in generally is certainly not denied by those who run the criminal system such as former AG Kamala Harris.
Harris arguing against prison reform because it would jeopardize the free labor pool her state depends on:
"How Kamala Harris Fought to Keep Nonviolent Prisoners Locked Up"
Of course she does not specifically state she is targeting the marginalized here even though they make up a majority of California's penal system.
As California attorney general, she spent years subverting a 2011 Supreme Court ruling requiring the state to reduce its prison population. The overseeing judicial panel nearly found the state in contempt of court. She also had children who missed school arrested. Purely by coincidence, she placed this impoverished mother who was working two job in jail for not getting her kid to school than laughed about it later:
I imagine I disagree with you some issues, but this post of yours is quite excellent. Civil forfeiture is so bad, turning police into pirates. I am quite critical of critical race theory, but I agree that there are too many trip wires that deleteriously impact poor people, who are disproportionately Black. That said, current DAs of LA and SF are not the answer.
Fairly high on the list of "Repulsive Things I've Heard Politicians Say" was a local legislator demonizing payday loan outfits. He whined about the usurious rates charged (calculating a yearly amount on a two-week loan), and the horrible fees...while overlooking that those places only existed, and were patronized, because the banks who contributed to his campaign and inspired his attack REFUSED TO DO BUSINESS WITH POOR PEOPLE.
Damn, I'm getting mad just recalling it. I did call his office and, like the idiot I am, ruined some poor flunkies day. *sigh* Little tiny feeble blows against the road the Empire rolls on...
I'm quite sure the banks won't do business with poor people because it is not profitable. Lots of bad debt to be written off. Of course, if government was going to be used to help these people out, how about some banking facility that only works with people below the poverty line or somesuch? Just a thought.
>> I often hear the rich complain that the poor envy them, but that has not been my experience. I find that most poor people admire the wealthy who have earned it.
I would add to this that there is general feeling that a lot of the rich people today didn't earn it. For example bankers who are only wealthy today due to bank bailouts. That kind of thing.
Tell it brother. While my investments and debt holdings have fantastic yields, everyone forgets the risks I take in putting my wealth to work. The Federal Reserve could end the party at any moment.
I know a guy who worked full time at Cracker Barrel until the pandemic. Hard worker, but despite working full time, he was homeless because his criminal record prohibited him from renting an apartment and at just above minimum wage he really couldn't afford a place anyway.
Now he's unemployed and homeless. Child support for his daughter (divorced due to the same drug problem that got him incarcerated) is out of the question.
So you see, lot's of people are facing the same types of risks with the Fed Reserve you are. Next time I see him I'll ask him how he has been affected by the yield curve.
You don't think he's impacted by larger economic trends? When I was in a crap situation 20+ years ago, the economy was pretty healthy and I was able to find a job working under the table - which would benefit someone with a criminal record. Those evading taxes usually also don't care much about records. In a poor economic climate, I doubt such employment would be available as much.
Just from a moral standpoint, SALT rubs me the wrong way. It's a way to increase local taxes without actually paying those taxes.
But to see the Democrats holding the bill hostage for it isn't a surprise at all. They're quite happy to have the rich keep getting richer. In fact, they made it illegal to compete with many of them!
Living in CT I have found it highly amusing how incensed rich liberals have been over this issue. After years of bleating about the Republicans “tax cuts for the rich” when it hits them they squeal like pigs. Rich white liberals are phonies.
I wasn't happy about losing most of my Cali state tax deduction, but I recognized that Trump was taking a shot at the high-tax blue states, so I hoped it might put some pressure on these one-party creeping(?) socialists to reassess their greedy, power-mad quest for wealth confiscation. That hope was in vain, of course, so I wouldn't mind getting that money back. However, I've adjusted to the new reality, so I'm not sweating bullets.
I know both parties play games with the tax code, but the Democrats in particular are extremely adept at using tax law and regulation to power a money-laundering operation in which campaign money flows back from the rich. Unions are another great source of Democrat revenue, which is why unreal pension benefits have been granted in red states and the federal government.
I feel the same way. I live in OC, own a modest 3 bedroom home and am in the top 10% in national income. My property taxes alone consume about 85% of the $10K cap leaving me hardly any room to further deduct my state income tax like I was once able. But I can live with it knowing that the truly elite brackets (who have supported Democrat one-party rule) with their $10M homes in Bel Air can't deduct their property taxes in the way they were able to before the SALT cap was enacted
I think I acknowledged that, but here in California, it's a one-party show. And aside from those whose calling puts them in mortal danger, i.e. first responders, the public union pensions are out of control. When teachers (who deserve a lot) can retire at 50 with 90% of their pay and medical coverage for them and their spouses for the rest of the lives, it's excessive, especially when our blue masters didn't bother to come up with a way to cover it. Today, 25% of the LAUSD budget, which is $7.3 billion, goes to cover unfunded pension liabilities. In other words, a quarter of the budget is used to pay teachers NOT to teach. As my friend Willie Brown said, "We may have given our union friends too much." Ya think?? It's an unholy loop, where million$ are kicked back in campaign donations.
You're completely right. I should have read your post more closely.
A friend lived in California for 20 years and was a Republican, moved to a State dominated by Republicans and became a Democrat. Power corrupts absolutely and if I lived in California I would feel the same way you do. As far as I can tell, there are about 5-6 States left that are not under one party rule.
California has it especially tough with state unions. Places like Stockton have declare bankruptcy because union retirement liabilities are more expensive than the actual workers.
The good news is I suspect the feds will ultimately bail states like California and Illinois out (look at the recent 2.1 trillion dollar pandemic law).
The bad news is that the Feds, meaning the people will be left holding the bag when we can't pay the debt.
This was done to reward them (for their services AND election backing) without increasing pay, which visibly comes out of year-to-year budgets. A fine example of next-level "kicking the can down the road".
Already bankrupted my hometown, Vallejo. More to come.
Great piece as always. As a democrat who would benefit from increasing the SALT cap, I personally think we should eliminate SALT entirely. This deduction only benefits high earners and all of us should be paying more in taxes. Further, increasing SALT cap sends the wrong message for what democrats are pushing for.
Has anybody noticed that Democrats are arrogant preppy elites and Republicans are working people? I guess people have switched parties. The only thing in common is the ones getting rich from China.....Pelosi’s hedge fund hubby, Mitch McConnell’s shipping magnate wife, and Hunter Biden, playboy influence peddler.
Nah. There's almost no substantive difference between the parties at this point. They've been congealing and moving rightward my entire life (Reagan onwards).
There was no substantive difference back then either. The last time an actual lefty got nominated was maybe McGovern and resulted in the most lopsided landslide since George Washington. Something like that.
I'm angry about the SALT cap and I don't care if that makes me a hypocrite. Why should I be discriminated against vs someone living in Texas? I pay more taxes here in California than my colleagues in London on the same pay package, but here I get nothing for it. Make corporates and the private equity moguls pay their fair share before you keep soaking me for more money.
Exactly! Anyone who benefits significantly from SALT is already a high earner and they have no reason to complain about higher taxes. As a democrat who would benefit from a SALT cap increase, I strongly believe SALT should be eliminated. We believe in higher taxes to fund more government services and we should pay them.
Don’t kid yourself. My sister is a deep blue activist liberal. And when I do her taxes every year, she becomes another unrecognizable person when she challenges me to claim additional and higher deductions for her. It’s almost like she is demonically possessed. And when I point it out, she gets mad, saying that I am exploiting my personal knowledge of her affairs obtained in a professional capacity when I call her a hypocrite.
This may be the case for wealthy people, but people who work for a living, who pay the lion’s share of their tax through income tax, aren’t typically wealthy. Our tax policy incentivizes the wrong behaviors and it’s never been more obvious than now.
The argument that one should pay more taxes because they can afford it is nonsense and based upon envy.
How crazy is it that anyone at any income level should pay half their income to someone else just because “they can afford it”.
When you have half the population who both vote and pay zero to negative income tax rates, the things they “shop for” in the federal benefit store is limitless.
It continues to grow and grow and grow - like children in candy stores they have to have everything. Free tuition, cancelled student loans, no work requirement for welfare, $1500 checks, no rent no eviction, $600 add on for unemployment, bailed out bankrupt states so they can run up the bill again on more freebies and on and on.
Why not pass a law charging people more for food based on what “they can afford”? Or clothing? You can go buy a $30 banana and a $75 pair of gold toe socks...because “you can afford it”.....
I think you misunderstand how MANY Californians feel about our high income tax rates, although based on how we vote, it’s easy to see why you think that. To give some context, only 10-12% of Los Angeles voters typically vote in local elections, so the problem is of our own making.
For clarification, you have a problem with any deduction, right? Also, try to calm down. I don't want to have to pay for your medical bills through higher insurance premiums because you have a stress or anger management problem
Yes, if you’d read my posts, you’d see I favor a flat tax. So no deducts. Get it? You don’t pay any of my bills, medical or otherwise. I pay exorbitant fees for health insurance. I’ve got no stress-related costs. BP is low, no pills, a happy camper. Try to keep up here.
It’s sad and kind of scary how ignorant people are about taxation, even though it’s the biggest cost they incur (at least half of the world).
The amount of tax you pay is a function of TWO numbers, not just the tax rate. Which is why I get a kick out of the incorrect Ed bald face lie that Biden and Democrats are spewing in support of their tax plan. We are raising taxes to 39.6%, the same rate it was under Bush.
Ummm, that’s lie by intentional misdirection. They don’t say they are restoring the Bush tax system. They are saying that they are restoring the Bush tax rate without restoring the reduction in tax benefits that were used to lower that tax rate.
Because revenue is revenue and when the government tinkers with taxes, they play not only with tax rates, they also play with how one defines taxable income, also known as the tax “base”.
So, you can have a 40% tax to raise $40 on $100 of income. Or you can have a 50% tax if you allow $20 of deductions from the $100 of income. It’s revenue neutral.
People always say stupid things like “the tax rate was 91% under JFK”. They ignore all of the tax shelters, deductions, exclusions and exemptions that made the effective tax rate much lower.
I get a kick out of how people the rich got tax cuts. They have NOT. Go back to the 1986 tax act under Reagan where the tax rate was reduced to 28%. By the way, people ignore that the 28% also applied to long term gains representing a 40% bump.
But all the tax benefits and deductions were sharply limited or eliminated. Actual cash ,oases from a business investment? No longer deductible unless you were managing the business. And even if you were if it was real estate, it didn’t matter if you managed the business if you made “too much money”. Mortgage interest limitations investment interest limitations, lots of things were taken away.
Because the basic equation never changes. Rate times base = tax. Reduce the rate? You have to blow up the base. So Biden hiking the rate to what was “agreed as fair” under Bush is a lie. He’s restoring the rate, but not the base.
But I opposed the Reagan tax rate cuts, because I’m a student of tax law.
Rates that are cut inevitably trend back upwards. But once taken away, deductions and the like never come back. Look at mortgage interest, used to be, the deduction was unlimited. But once they got the bug to cap it to the interest on no more than $1 million in the 1986 tax act, it was easy for Trump to further cut it to $750,000 in 2017. Yet the $1 million cap wasn’t inflation adjusted, so it was worth only about 60% of what it was in 1986 and today, it’s worth less than half due to the 2017 reduction.
I wish that Congress would stop “cutting taxes on the rich”. Because they really rarely do and whenever they tinker, there is the inevitable sop to the lower and middle class which results in taking more and more off the tax rolls, reducing their proportionate contribution or even creating “refundable” credits. Which is funny because it’s an oxymoron to say you are refunding something that was never paid to begin with.
Most of my “rich” clients would be paying hugely less taxes if the entire tax system had been left alone in 1986.
The usual a$$ hat numbskullery. Everything else? "Hey, you get what you pay for!" Taxes? jackel, you drank that kool-aid that Grover Norquist has been peddling. That kool-aid has accomplished several things. Student debt into orbit; crumbling infrastructure; K-12 schools that can't pay teachers a living wage. And racism is re-awakening. When times are hard, people start attacking others not in their tribe.
See, that's the point. That's what that "starve government until you can drown it in a bathtub" game is REALLY about. It's about reigniting racism in America. Don't kid yourself. They know exactly what they are doing.
Yeah, not quite sure what you're ranting about. High income liberals in California never complained about high state income tax rates as they new they could deduct a large portion of these taxes on their federal income tax returns, essentially nullifying the high state tax rates. In other words the federal government subsidized California's high tax rates. Same for New York and other states.
Trump saw this as a giant FU opportunity to states that would never lean his way anyway.
This put liberals in these states in an uncomfortable position. The SALT caps generated billions in additional tax revenue, paid mostly by the very rich. Usually this is the siren song of the left.
I guess liberals want the very wealthy to pay 'their fair share' as long as it's not THEIR "very wealthy"
This policy encouraged me to move out of a high tax state. That is the reason why the leadership in blue states do not like this. It's eating away at their tax base.
It’s pretty textbook good economic policy, putting the incidence of the tax on those making the decision (blue staters who say yes to high state income taxes)
Exactly. Blue state governments should have accountability for their tax policies, but of course that is exactly what they desperately want to avoid. I am a big proponent of the SALT cap, notwithstanding that it hurts me personally.
Except that to the extent low-tax states get bailed out by federal money when they cut social services normally funded by their own taxes, they're being allowed to evade the consequences of their economic decisions.
How about these states stop spending irresponsibly? You realize there is two sides to a ledger, right? And who cares if you moved? Democrats say raising taxes does not impact behavior. There is a pro Biden tax increase article in Bloomberg today saying exactly this.
They sure didn't interview me for that article. I left California 4 years ago because I could not justify living in that tax-happy state after I retired.
I can agree with much of what you imply here, but I don't buy the "re-igniting racism" part. They simply changed what "racism" means and started heaping it on in media and academia. They are more asserting a rise in the new racism than actual racism rising. The rage and anger end up in the same place, but the mechanics are slight-of-hand.
That rise of the new racism is precisely the goal. This has been a project that has lasted for 50 years. Impoverish the lower classes, and they will set upon each other again. We see it.
This is not happening in most states, only in the states with huge state budgets and local budgets. Outrageous pensions for state and local government employees are one of the drivers, but huge expenses across the board have created the problem in the states that are complaining.
Some good responses to your delusional "narrative-driven" post below.
I would add one other aspect: The re-awakening of "racism" is being generated by the people "leading" minority communities, and almost entirely the black community, and this is being done deliberately. It has certainly benefitted a number of race-grifters, not all of them black, that's for sure.
Talk about drowning in Kool-Ade, bitch, you must have it in your swimming pool. I have no voting rights in CA, NY, CT, NJ, etc. Why should the citizens there decide what I essentially pay to those states? Get over your self, Proggie troll.
Actually what people who think like you are doing is very much in step with Rules for Radicals by Saul Alinsky. Which is to flood the social service system with hungry mouths until the demands on government become so unsustainable thst the entire economic system collapses, so it can be remade into a socialist’s paradise.
6 trillion to be spent with ridiculous tax increases that are substantially comprised of handouts with a disguised name such as recover, infrastructure, etc. There’s an old Yiddish saying roughly translated means “the more you coat it with honey, the more it tastes like shit”.
And that’s what it is. Imagine - you can own your house for 40 years such that the substantial proportion of its value at sale is inflation. A house bought for $100,000 in 1980 sold for $650,000 today includes $325,000 based solely upon the National (not regional) CPI. Yet that guy is required to pay tax on inflation at a 42% tax rate just the same as a guy who earns a salary in today expressed in current non-inflated dollars.
Oh, and if he dies and has an estate tax based upon the lower exemption rate, he pays a 40% tax on the the remaining 58% for a total a tax approaching 65%!!!!
It’s really higher, because the guy likely paid income taxes on the original $100K he used to buy the house.
This level of tax is absolutely mental.
And to have others feeding at the government trough, including the state having a greater payoff from your labor is just as mental.
You go to work every day with the mentality that you do so to support yourself and your family. Imagine that bearing that burden knowing that you get to keep less than half of what you produce?
Your income is the fruit of your labor, and your labor is a function of how you spend your time, which is a personal freedom. Surely even the left assumes that because they choose to support layabouts and do nothings and doesn’t criticize their freedom based choices.
So when you take that much of my income, you deprive me of an element of my freedom. And you think it’s just dandy! Even though it’s almost akin to legislative slavery.
Silly answer the Fed budget is 4.7 Trillion the vast majority of it going to middle-class entitlements. But that does not count the extra 2 trillion or so we have borrowed annually by Obama and then Trump Spending is not the problem you think it is
The lack of a SALT deduction does not discriminate against you. You get the benefit of the higher taxes you pay.
A better question is why you should get a bigger federal deduction just because your state decided to tax you more. The feds pay for different things than states and the burdens of one should have no impact on the other.
The point of the cap was to make you pissed at your own state, not the federal government or states who manage their budgets better than yours. Demand your state lower their taxes to match the rate change at the federal level. People in my state were irate for the same reason, failing to see that the state chose not to change their standard deduction proportionally or adapt the parallel itemized deductions. Now my state is running a massive surplus and pretends they are budget geniuses while teasing some tax reform somewhere down the line...after they spend all the money they "saved." Red state, btw. They are all addicted to spending, just some are addicted to more than others.
But they are creatures of STATE LAW, not local law. Only a statute statutory or constitutional provision permits municipalities to impose taxes of their own.
SALT is combined: property taxes plus state and municipal taxes, if any. The largest chunk is typically the income tax and it is the income tax most readily adjusted by state or local governments to reflect changes in federal itemized deductions. Nearly every state kept their deductions tied to federal (excluding the state income tax dedution) AND kept their tax rate the same. They should have balanced either deductions or the rate to be revenue neutral when compared to previous years. Instead, they raked in more tax revenue and blamed the federal government. You are correct, however, that the state could do little with the property tax portion, which is also typically the smallest portion of SALT for those not in the highest 3% of earners.
I'm not blaming anyone but the CA voters. Since you're a bootstraps kind guy, you actively lobby your reps for a flat tax, yes? You don't take any tax deductions for anything, right? Not even the standard deduction, right?
But things differ amongst states. In California the largest portion of property taxes is for education. That money goes to Sacramento and is redistributed to the districts via the Local Control Funding Formula.
And what do you know? California has a lot of infrastructure. Before Jerry (Frack Me) Brown went all out to kill nuclear power, California was better. But now, CA is about to lose the primary stable source of power, and most of its CO2 free power generation. Notice how nobody talks about CO2 anymore in the climate issue. It's all "RENEWABLES!" which is a total crock.
Bizarre, right? They actually shut down efficient, operable reactors in the name of windmills. Climate debate aside, that's just stupid. Then again, you look at where ol' Jerry's family made their fortune...(love the frack me bit). Sadly, we live in a world of spin and have divided ourselves into boxes and teams to fight among ourselves rather than see through the smoke they lay down. They are now drawing the battle lines for us by changing what "infrastructure" means and, in the end, Jerry's grandchildren will have even more in the trust fund.
Don't forget the warmonger part of the Congressional Demonrats. It is a matter of time before that comes back on us and really hurts. When I say really hurts, I mean, the nation falls and does not ever come back to what it was for hundreds of years. The Democrats are corrupt beyond most imagination I could ever have dreamed of 25 years ago.
We learned from Japan that having reactors in earthquake zones is maybe not such a great idea. I'm all for nuclear power, but the old cold war reactors really do need to be modernized and moved away from large population centers. A thorium reactor creates waste with a 500 year half life instead of a 10,000 year half life, and it creates 1000-10,000x waste of conventional uranium reactors.
You should pay the higher overall tax because you should be receiving more benefits from the state and local governments that impose these taxes. There is no reason individuals in higher income tax states, such as yourself, should receive a federal deduction for these taxes.
If you truly don't believe you and your fellow local residences receive enough benefits for the state and local taxes then you should vote for changes at these levels. Failing that, you can always move to another area, such as Texas, where you believe the taxes reflect the benefits received.
Poor baby. You make enough it really makes a difference? Seriously, you need to rethink everything. Repealing this foists the tax burden onto the middle class and poor. So quit blubbering.
It's fascinating how Democrats have become what they once despised. At least you still have enough of a moral compass to recognize you're a hypocrite. Most Dems wealthy enough to be impacted by the SALT cap are a bunch of self-righteous fart sniffers.
Yeah, yeah, yeah. Cry me a river. Your bitch, bitch, is with YOUR STATE, not the rest of America. Stop depending on Kansans to subsidize through their own federal taxes your BLUE state stupidity. I live in a purple state, have way more than the $10K in SALTs so "lose" that deductibility beyond $10K. I am fine with that. I hate paying any taxes, understand they are needed, would love a flat tax, but will settle for folks across America not being leeches on other states. The elimination of SALT deduction is also a behavior constraint on the tendency of state legislatures and executives to raise state taxes. In other words, get over it. Bitch.
ID: nah, just a regular Homo sapiens. Nice accusation about meds. I’m not only not “angry”, I’m pretty calm. I’m not sure I care about “changing” anyone. I just enjoy outing the idiocy of contentions by folks like Evan. OK?
Well, you kinda lost your cool. If you like the debate, hurling insults detracts from good points you're making. You have a good argument. Don't mar it with distractions.
Ah, so you're like the people that stand on street corners yelling. They don't change anyone's mind either. They just yell for the sport of it. Whatever steams your beans I guess.
What do you mean "I get nothing for it."? The people YOU elect are taking your money and doing with it what they, presumably, said they were going to do. Do you only want racial justice, equity and inclusion if it's paid for by someone else??
Man, that's just sleazy. Take the tax hit with pride, and think of how much GOOD is being done with your money. Or shut up.
Think of it as an anti-discrimination tax. The original SALT deduction was the original discrimination against people that lived in states that had no state income taxes. Why should you get a federal tax deduction when they didn’t? That was unfair to them.
Don’t act so surprised when the third-world types you vote for start you on the path to third-world status. It might take a while, California was a stout place once; the rot will continue gradually. Have fun & stay put!
You asked if I can, and I can. However, since you require some guidance I trust you will allow me the honor of providing an example. Granted, this is the easiest for me, I’m on the phone, we are in the woods as we keep the fire aglow and scope out the moonscape.
I trust this will at least give you the basic idea:
Didn't get the "basic idea". I don't understand what that video shows other than one person rambling - how's that related to "third-world types you vote for start you on the path to third-world status"?
Two things: 1) My congresswoman is Mikie Sherrill, i.e. Rebecca Michelle Sherrill, not Mike Sherrill. 2) Very few people understand the SALT deduction. First of all, it's not a credit. It's a deduction, which means that in theory a $60,000 deduction would save 37% of that amount in federal taxes, depending on your bracket. But wait, there's more. There is an alternate minimum tax imposed on most deductions, including the SALT and this AMT tax is 28%. This means that for most people a $60,000 is worth no more than $5400 in tax savings, not $22000. The main reason to restore the SALT deduction is to encourage people to stay in high tax states rather than move to states with lower taxes. When I was in Florida this winter, it stunned me that there's no income tax, real estates taxes are reasonable and the services are in many ways better. The roads are maintained and the streets are clean. Despite reports to the contrary, public schools in Florida are actually pretty good.
Not disputing your analysis of Florida, but....Friends that live in Floribama, the panhandle, and various inland areas have told me the schools suck, i.e., they reflect the local income levels. Condition of roads is easy in FL, there's no freeze thaw. What will be most interesting is when coastal areas become flood zones; then, we'll see how FL works. Kind of like Texas; everything was fine until there was a crunch and the curtain got pulled back to show how things a really "work".
School districts vary in every state. I imagine that there might be a school or two in NYC worse than those in the panhandle. (I’m a NYC public school grad.) In the meantime, I know people who have moved to Florida because in-state tuitions at Florida colleges are much more reasonable than in New York or New Jersey. Per capital state spending in Florida is half that of New York. I’m a fifth generation New Yorker (city) and the trash and filth are everywhere. You’d think that for the taxes that New Yorkers pay, they could pick up the garbage. Certainly, there used to be a lot more culture in NYC than in Florida, but NYC/NYS taxes now top out at 15%. For that kind of money, you’d think you’d be getting deluxe services. Incidentally, New York City is also coastal and much of Manhattan is rated as a flood zone, though obviously the hurricanes are worse in Florida.
All true, and you kind of made my (poorly stated) point. The previous guy’s blanket statements about schools or services are specious; things vary greatly depending on specific localities, and it’s all linked to income, i.e., it’s about who’s got the Benjamin’s. As far as NY, my opinion is it’s a shithole. It’s the poster child for lousy Dem management practices with my city, Chicago, coming in at second place. Both cities a coming to an ugly reckoning.
I am not a tax expert, but my understanding is states give (roughly) equal amounts to each school based on number of students and the main reason why some schools are better is because of local real estate taxes and levies. Thus might not be as relevant as you might think. Roads? That makes more sense, but plenty of roads are at least federally funded.
And FL tends to be a battleground state so I would assume they are more likely to get federal funding from both sides of the aisle, but I would have to look it up.
Also, not fully related, and I am not sure about FL, but Delaware is a zero sales tax state for consumers, but businesses have to pay the tax based on estimated sales. IOW, it always seems there is often some rub once you start digging in the weeds.
That all sounds right, but I thought my “point” was that FL schools depended on income levels, i.e., local taxes make the difference between good and lousy. Some are fine, others not so fine. The rest of it, who knows? Not me...
" The main reason to restore the SALT deduction is to encourage people to stay in high tax states rather than move to states with lower taxes."
That should be of zero concern to the federal gov't and have no effect on tax collection. I can see why a state might want that, but, again, the fed doesn't care where you live, only that you pay, as the dems used to say, your fair share.
We could debate FL services. My daughters live there, are relatively low income (~25k), are both in college and the services there are not comparable to what they would have had if they'd stayed in the Northeast. It's also kind of wild-westy legally.
The standard response from the MMT camp and similar is that they impose responsibility, forcing economic decisions to bear costs. That way, even if the fiat-money national debt doesn't exist in the same sense as a personal obligation (I borrow a cup of sugar, I owe you one), you retain some sense of reason.
At least that's the way I understand the argument, anyway...
Taxes are essentially an anti-inflation measure. It removes $$$ from the pockets of the public without goods and services being actually bought. If that money were in play in the market, prices would go up quickly.
That's Larry Summers' argument, but it's pretty much been debunked in the de facto world. China has had a large deflationary affect on price inflation because they can produce so much so cheaply and sell it to so many different resellers. Thus demand has not created shortage in finished goods and thus no price inflation in them.
Also, there is a good argument to be made that commodities, equities and real estate, three major ways cash gets "invested" are causing huge inflationary bubbles that will end up as all bubbles do.
Perhaps you were referring to long term bonds? That would be astute, but it also gets complicated and has to do with maturity times, underlying value the bond represents, and relative interest rates/inflation.
Traditional economic arguments are losing predictability suggesting we don't have a full grasp on inflation...yet. Likely because it is never expressed evenly or in easily measured metrics.
I read recently the total national debt, funded and unfunded liabilities, is around $123 trillion. For the sake of discussion let’s say we voters select candidates who will eliminate ALL taxes, fees and fine, etc ... . Since it appears deficit spending has no detrimental effects on the economy, why have taxes?
Absurd you say? Probably, but what would elected officials do with no revenue coming in? Would they continue to spend carte blanche; or might they realize if they are not careful they might create a catastrophe?
Could this be the way to make government be fiscally responsible?
These region deals really do get thick. Can't tell you how many times folks I meet from CO start on rants about the "idiots" all coming up from TX. Texans feel that way about folks from CA. In TN it is people from the states to the south of them. Earlier in this comment section I learned people in NJ think that way about folks from NY.
Humans are drawn to the tribal.
The interview with Chomsky was interesting about the sports talk and how that feeds tribalism. BTW, finding interesting does not equal completely agree.
Great write up, Matt. This highlights two enduring aspects of the political class and our conundrum as a nation. First, both parties are hypocritical to a fault, driven by the demands of the few who can financially support their chosen politician. Second, the tax laws are now so convoluted and complicated that they can indeed be written to target specific individuals, zip codes or organizations. Your government is tying you down - freedom is slipping.
Yooo any chance this is from what I put in "Which topics need more coverage?" If so I'm feeling like a big boi and if not please don't tell cause I like feeling like a big dawg
Dear Matt, anytime you feel inundated by the naysayers over the Substack news model, please pin a copy of THIS article on your cork board just to remind yourself of the freedom that the Substack arrangement *does afford writers such as yourself. Can you (or I ) imagine *any Liberal or even Conservative paper out there *allowing this kind of "pants on fire" expose of the wealthy kinds of self-dealing manipulation and B.S. employed by literally *ALL the "Champions of the Little Guy" that we purportedly have in Congress ? Thank you for having both the courage and the willingness to do what you *DO !
SALT, State and local tax deductions limited amount of state and local taxes (SALT) that could be deducted on a federal income tax to $10,000 which seems a very large amount to most people. It prob. encouraged people to buy expensive houses. Real estate people do not like it.
I related earlier that if I had bought a much more expensive house, I could have itemized again and saved a few thousand in taxes every year. At the price of having a $3k mortgage payment. I know that doesn't sound like a lot on the West Coast, but it is for me. Mine is half that.
I spent 30 years as a tax professional at the top of my profession. The SALT deduction should not be reinstated, it’s terrible tax policy. It was passed to put pressure on states who’s fiscal house was in ruin, to force fiscal responsibility on those who’s spending was out of control. Too many times this is portrayed as a political matter, blue vs. red. But that’s a false narrative. States who rely on the wealthy to fund their largess have a spending problem, not a revenue problem. Reduced spending, reduce your tax rate, eliminate useless overhead from school boards and get your pension obligations under control. Then perhaps people will want to immigrate to your state and lift up all boats in the water.
The federal income tax system redistributes money from urban and suburban productive workers to rural states that haven't chose economic policies that would fix their backwardness. We should eliminate the federal income tax system, and the federal welfare programs that are funded by it.
All citizens should support the core federal obligations like defense and the basic federal departments. The states should pay a per capita tax to the federal government to support federal functions. The states can raise that money how they choose. I'll bet red states would find out who was in deep do-do and how much of their low taxes were the result of sucking up money from blue states taxpayers.
Areslentjust now
"The federal income tax system redistributes money from urban and suburban productive workers to rural states that haven't chose economic policies that would fix their backwardness."
That's a common narrative. In my experience, the rich and productive in every area are taxed in the name of the poor so politicians can reward their rich and well connected friends. I know they tell you that their increasing your taxes for social spending, but that's just a talking point. Very little of your exorbitant taxes go to the people who truly need it.
It's why we have so many private philanthropy groups to help the poor, often run by the same groups and companies that profited off of screwing the poor over to begin with. After the politicians get done paying off their corporate supporters, there's very little left for those they claimed they were going to help with your money.
Also, the common reason given for federal expenditures and taxation, "defense of the nation", would be more palatable if it were that instead of "massive cash flow to defense contractors". Which appears to be the actual goal of our defense spending.
100 years is a long time. State budgets back then were responsible. You can’t say the same about today. State pensions today are out of control, rendering many states insolvent. Allowing high wage earners to offset their federal tax to fund out of control state spending is foolish. Fix the problem. Don’t pass it off to someone else.
At this point, 100 years later, it's having the federal government subsidize high tax rate states' fiscal irresponsibility. That said, limiting the state and local tax deduction forces population out of blue states and to move elsewhere. I see several bad things about doing that. I'd put it back in place as before and stuff the genie back in the bottle.
So bail out the rich in irresponsible tyrannical blue states at the exact same time Biden is proposing significantly increasing taxes on all rich people across the country.
You can’t make this shit up.
Terrible collateral damage of a good policy. My preference would be to keep blue people in blue states too. Their migration to red states is dangerous.
"...limiting the state and local tax deduction forces population out of blue states and to move elsewhere." I know this is reported in the press from time to time, but I'd like to see the long term evidence to support your assertion.
Check out moving truck rates. Costs twice as much to leave California. Been that way for awhile now.
Anecdotally, it's why I moved. I was getting lambasted in MD with tax, and the SALT thing accentuated the issue. $21k in state and local taxes and it was now a worse strategy to try to itemize them.
I understand. I’m not commenting on the reason why the deduction was originally put in place 100 years ago. I’m commenting on why it was eliminated in December 2017.
Truly astonishing. Democrats have for as long as I can remember argued, correctly in my opinion, that people (especially the rich) should pay more in taxes. So here we are, paying more taxes (myself included!) and now its the Democratic party arguing the rich are taxed too much. When I say that I'm not quite sure what the Democrats stand for any longer, this SALT deduction brew-ha-ha is one of the big reasons why.
Are we willfully ignoring the reality that this tax policy is moving people around the country from high tax states to lower ones? It's a significant impact to blue states to lose high earners and erode their tax base. If you're making under $50k a year, you're probably a net negative revenue to the state you live in. Not so if that number is $150k. At that number you can easily exceed the SALT limits, and be therefore encouraged to move away.
Maybe the solution would be for high tax states to become low tax ones?
I'd like to see the evidence showing: A) All blue states are losing population and B) said population loss is caused by said blue state's tax policy. As I noted above, this same line gets reported in the press from time to time, but I'd like to see the long-term evidence that this is true.
People migrating out of CA are being replaced with people earning less than those that have left, eroding the tax base. CA historically attracted $120k + engineers, but with COVID, the realization is that engineering work can be done from a hot tub in Des Moines and people don't have to be in high tax/cost of living areas like coastal CA.
By the time you get something conclusive, the movement already happened.
https://www.unitedvanlines.com/newsroom/movers-study-2020
Ah, data! Now you're speaking my language! Interesting! Did you notice the high-earner inbound / outbound numbers? $100k + earners made up 76% of inbound vs. 69% of outbound! Very interesting! The age numbers show us that folks move into CA skew younger, and the reasons for inbound favor "job" while the outbound reasons tends to "retirement". So you have a younger, wealthier demographic moving to CA to look for work or start a new job, and older people moving out because they want to retire somewhere else. Serious question, what category there do we think would capture tax policy impacts? Retirement, probably, right? Older folks on a relatively limited income might view taxes as a primary reason to move. So if we had to make judgements on this data alone, would it be fair to say different demographics might have different reasons to stay or go?
I don't think you can draw any conclusions from this other than blue states are at the top of the leaving list. The data doesn't look at net worth and this is important because retirement savings (via taxes on mandatory distributions of pre-tax savings) represent a significant consideration in future tax receipts. If you don't believe me look at the tentative discussions going on in NY, NJ and CA regards to levying state taxes on high net worth individuals even after they have left the state.
Actually...my company gives stock distributions out annually that vest over 5 years. All the distributions that happened while I was in MD, even though they didn't vest, get taxed by MD until that 5 year sunset. So, in a way, they are already doing this. I'm going to be filling out MD tax returns until 2023 on a move that happened in mid-2018.
would be interested to see the 'median' which skews towards lower income versus the 'average' which skews towards higher incomer, especially the very high income ($1M+). Either way we will see in a year or two what the effect on tax revenue is for raising taxes in California and New York.
I'm a fairly well off Republican in a deeply red state. I was supportive of the tax reform despite the fact it adversely affected my own finances, because I below it was good for the country overall. If it wasn't for all the idpol horseshit I might join ranks with the Dems. I feel so lost.
I really get tired of all this “wealthy”, “1%”, “the rich” and all that crap. How have we all forgotten that envy is a mortal sin?
Half the people in this country pay zero tax or have a negative tax via refundable tax credits that is welfare in another name.
Yet I DO agree that the SALT deduction should NOT be reinstated. And while I pay a shit ton of non resident tax to NY even though I live in Florida, I still feel that way.
Big blue states are profligate spenders. They pay off unions with unaffordable contracts that burden their budgets in exchange for political support. In NYC, 16 generations of dads in a cops family could have died of heart disease before 40 and still, if today’s cop gets heart disease at 36, it’s presumed to be job related and he gets a full tax free pension and healthcare for the rest of his life.
Teachers who harm children are kept in what are called rubber rooms, read books, magazines and do crossword puzzles all day long for their 6 figure salaries and are almost never fired.
The myriad taxes NY imposes on its citizens that aren’t SALT limited is crazy. A green grocer can’t put his produce outside his own store without a tax on the stand the produce sits on. A tenant in an office building who’s landlord pays real estate taxes based upon the level of rental income (not the value of the property) pays a commercial rent tax on the rent that his landlord pays real estate taxes on.
NYC has a vault tax. Not on safes. But if you own property, you own it to the street line. Technically you can build under the sidewalk as you own it and must keep it safe and clean or be heavily fined. You can’t build under the street (road) without paying the vault tax. But over the years, NYC has widened public streets taking away sidewalk. One day you find yourself owing the vault tax just due to eminent domain! There are tons of other silly taxes.
And hidden taxes too. You want to cross the Hudson River? $16 to cross a bridge built 90 years ago and long since paid for many times over. That’s every day if you commute. Trucks? As much as $95 just to drive over a bridge.
Illinois can’t reduce public worker salaries or benefits at all - it’s in their constitution.
They will tax anything that doesn’t move. And all these taxes aren’t enough to pay for their welfare state and intrusive government. So they tax income as much as much as 15% on top of their Federal taxes. And NY? If you earn a decent wage you lose most of your deductions and effectively pay a tax on gross income.
Now thats fine. The voters elected the people who Imposed these taxes and they demand all the free services that have to be paid for. And they should pay it.
The Federal tax rate is determined based upon the sum total of includible income less expenses that are deductible. More deductions allowed = higher tax rate across the country.
Why should Florida or Texas taxpayers subsidize a welfare state in NY or NJ that they reject themselves? Forget about Trump ”sticking it to blue states vindictively”. Let NY and NJ pay for their own sclerotic, expensive systems.
Now I don’t agree with much of what MT wrote about “the rich”. I’m sick of all that envy shit. And it’s not all accurate either. To offset the lost SALT Trump widely expanded the standard deduction. That’s why only 10% claim itemized deductions now. When SALT was allowed, many more claimed IDs.
The way they’ve broken the tax system such that half pay zero and the bottom quarter pay 4%, who the fuck else is going to benefit from ANY allowed deduction?
You want to complain about income disparities? I agree with you. So why did the left open the doors so that China, Korea, India and other countries could steal so many American manufacturing jobs from the delivery bays at Walmart and Amazon? Why always side with manufacturing unions which contributed to the destruction of the US auto and other industries? Why blanket business with crazy regulations such that a puddle of standing water is deemed wetlands that must be protected?
The Uber rich are pretty much concentrated in the left and east coasts and have built their fortunes by killing the middle class. Designed in California it says on your iphone box. But they’re built in China and India. Your Washington State Nikes are made in Vietnam. Facebook, Netflix, Microsoft - all that mammoth wealth is on the left coast. NY? All the lawyers and bankers - mostly left wing Democrats - paper it, lawyer it and finance it all. Where are the hedge funds located? A year ago, I saw Bill Ackman and Carl Icahn on the streets in NYC on the same day and Henry Kravitz a week later. They aren’t based in Idaho, North Carolina or a Georgia.
The left killed the middle class and it was no accident. They want dependent people who will vote for them, just like the drug pusher gives out free samples to hook his customers. They refuse to improve their education systems, to curb crime and keep their streets clean. They want it this way, with angry people who don’t get enough free shit while they live amongst the techies, financiers and lawyers who sent their jobs away.
So, fix the middle class by making it easier to do business here. Tariff countries who use their poverty as a trade weapon and have no concern for the environment - stop flagellating ourselves as we are well ahead of all other large countries in reducing carbon.
Amd stop with the class warfare - when a small group pays all the tax, they get most of the benefit of ANY tax relief.
And while we are at it - this $2 trillion bill being held up by east coast SALT warriors isn’t a stimulus. Most of it is little more then long desired left wing handouts. Whatever hold that up, if you ask me,is to be commended.
Half the people in this country pay zero tax or have a negative tax via refundable tax credits that is welfare in another name. "
This is a common view of those who pay too much taxes, but taxes are only one metric of the cost of living and having been both rich and poor, I found poverty to be far more expensive.
There's an entire industry in America that profits off the lack of choice the poor have available. From healthcare system that is more expensive when you pay in cash because you can't afford insurance to payday loans at extortionary rates when a family member ends up on jail for being poor and they need to somehow come up with the 10% to bail them out. People who can't afford the monthly rent increases on their lot in their depreciating in value trailer. Lots that are increasingly owned by hedge funds because they know there is no fixed mortgage so they charge based on the fact that these people don't have the money to move their home.
We have any entire extraction system in America designed to pulverize the desperate for profit so Jamie Dimon can buy another yacht.
That does not take away from your tax burden which is no doubt too high, but that money is not going to someone in a trailer in winter getting hammered with increased propane costs in Texas because the local government decided to deregulate so you now face $7000 a week energy Bills in an ice storm when your yearly income is $20,000. Your tax money is not going to these people. It's going to ensure Goldman Sachs does not fail in the next financial crisis. It's financing the current and next overseas war the elite dream up to reward themselves for finding a new place on the map.
There is very little connection between the exorbitant taxes you pay and the crushing poverty the poor experience.
I often hear the rich complain that the poor envy them, but that has not been my experience. I find that most poor people admire the wealthy who have earned it. The poor hate the wealthy who directly profit of their misery. That's who they hate.
I don't disagree with much of what you say, but the whole thing about "being in jail for being poor". I've been poor and i've never been to jail. Going to jail is behavior based. "Rich" or poor, I have successfully avoided LE attention by not doing things that get you that attention. And lest you say this is race or ethnically based, i've known lots of people with a whole spectrum of colors and ancestries who are as poor as I once was who also successfully avoid LE attention and are able to live life without that fear, at least.
That said, they still get raked over the coals financially by stuff like payday loans and title loans.
I recently read an analysis of the US prison population, and when offenders imprisoned for non-violent drug offenses were taken out of the equation, the demographics stayed almost exactly the same-the white/black/Latino violent offender prison demographic stayed within 1% of the demographic %s for all groups when non violent prisoners were also accounted for.
Yeah, solving that drug problem is ...I have no idea how to get people to stop taking drugs, and no idea how to keep people healthy when they are intent on killing themselves. There was a program in Vancouver BC a long while back where they were giving them heroin in a controlled setting, and they had to follow certain rules - show up on time, wash up, etc. The compliance was less than 100%, as you can imagine.
Making hardened criminals out of druggies is no real answer, of course. Suburban and rural young women, girls to me, whoring themselves out for opiates on the side of the road or via CL is breathtakingly sad.
I think race is a distraction here. I prefer the term marginalized since that covers a much wider group. That and when people interpret marginalized only in racial terms it let's me know where they are at.
If you think poverty is not criminalized in the US I suggest more research. Read the story of Eric Garner, or the motivation for the Ferguson unrest (the police targeting the poor to collect revenue through heavy enforcement of minor violations they knew they would be unable to defend themselves from).
Some of the links I will include below specifically separate out black people from other marginalized groups. Not the way I would have done it, but still valid data:
"These seven charts explain how Ferguson—and many other US cities—wring revenue from black people and the poor"
https://qz.com/257042/these-seven-charts-explain-how-ferguson-and-many-other-us-cities-wring-revenue-from-black-people-and-the-poor/
Civil Asset Forfeiture is aimed at the poor who are far more likely to use cash and can't afford to defend their assets when the police steal them:
"Poor Neighborhoods Hit Hardest by Asset Forfeiture in Chicago, Data Shows"
https://reason.com/2017/06/13/poor-neighborhoods-hit-hardest-by-asset/
https://www.thelastamericanvagabond.com/chicago-police-department-caught-hiding-millions-secret-asset-forfeiture-fund/
https://www.chicagotribune.com/opinion/commentary/ct-chicago-civil-asset-forfeiture-20170614-story.html
Portland, OR
https://www.oregonlive.com/portland/2018/06/portland_homeless_accounted_fo.html
"One in every two arrests made by the Portland Police Bureau last year was of a homeless person, an analysis by The Oregonian/OregonLive has found."
Of course, this is because the homeless are uniquely criminal and violent right? That's not what the numbers show. From the article:
"Most often, police arrested homeless people on property, drug or low-level crimes. The vast majority of the arrests, 86 percent, were for non-violent crimes, the analysis found. And more than 1,200 arrests were solely for offenses that are typically procedural -- missing court or violating probation or parole."
I have included perhaps 10 major cities in this data, but you find this same pattern in most urban US cities. If you would like I can provide that data as well.
Over 95% of the arrests in this country involve non-violent misdemeanor crimes not happening in Bel Aire.
https://statuskuo.substack.com/p/we-need-to-bust-some-myths-about?r=1zr8b&utm_campaign=post&utm_medium=web&utm_source=copy
I think that's great you were able to avoid the constant dragnet our police have put in place to profit off the most marginalized part of society, but hard data shows that your personal experience was not the norm.
Does behavior play a role? Many times, yes. Is it the only or even primary role in who gets arrested and why? The data does not support that.
Link 1: Total BS that the law runs this way in the jurisdictions in question. Isn't St. Louis County MO under Democrat control? It's an ugly city, for sure, having spent some time there over the past couple of years, but you think they could locally fix that kind of crap. That said, the courts operating that way (as in Ferguson) are not that much different than my experiences in Jersey. They did everything they could to stop me from beating a charge, and even for a dismissal I had to pay a lot of fees. It would have been faster and cheaper to just pay the fine, and I think that was the point.
Link 2/3: Civil asset forfeiture is a scam. It should be illegal. I don't think the common law would acknowledge this. I have heard the excuses why we need it and it's a perverse incentive that requires no proof. Someone could show up at your house tomorrow and with no evidence seize your car. It's horseshit. That said, seizing your assets, by itself, doesn't make you a criminal.
Link 4: Homeless people get arrested more often because they are more visible. They don't show up in court because a lot of them are substance abusers or have psych problems. So they'd have a lot of arrests for that kind of thing. Also, easy to find, they are already on the street mostly. Cops are lazy.
Link 5: I'm not black and i'm afraid of cop stops. Same way after 9/11 I was driving up to a gate at the base I worked at and someone had a .50 cal pointed at my hood every morning, I wasn't loving it. I know the soldier was disciplined, I also know that mistakes happen and everyone is not fungible. Same with cops. Nothing is going to change that, though. So my hands are always visible and I only take actions when directed because I want to live.
If you're low income, your chances of having a brush with the cops are very much higher. I believe the statistic is 2.5x higher. That's probably a lot more fruitful a discussion than talking about race. If your local cops are white supremacists, maybe you need to vote or something. Local action.
Good, we seem to agree on much of this. To your points:
1. I admit I care even less about what party is running a city than I care about the racial dynamic of the marginalized and criminalized, but sure, this example in St. Louis is no different than Houston or the 100's of other cities across America that have laws designed simply to collect fines. Yes, the point is that it's easier to simply pay the fine, but often the system is designed to create multiple trip wires intentionally designed for them to fail so more fees are assessed they cannot afford to pay. If they don't pay, they go to jail, or American debtors prison. The US claimed to be against debtor prison when we fought a revolution, but apparently we were only kidding. I don't see how this is not criminalizing the poor. For those keeping track (I'm not) they show a poor white family on the cover of this story. Perhaps that will catch the interest of those who would normally dismiss a story like this out of hand if it had some other group they feel deserve it.
https://www.nytimes.com/2019/01/08/magazine/cities-fine-poor-jail.html
2/3: Civil Asset forfeiture is not only a scam, it's a scam that primarily targets poor communities who deal in cash and are least able to afford the loss:
https://www.freedomworks.org/content/justice-clarence-thomas-takes-civil-asset-forfeiture
"The potential for abuse is certainly very high. As the Justice [Thomas] highlights, this has the tendency to target the poor specifically who traditionally use cash to do purchases. Cash, of course, is easier to seize than credit cards."
"That said, seizing your assets, by itself, doesn't make you a criminal."
That's a distinction without a difference. First, we are all committing some crime all times under our endless byzantine legal code.
https://www.mic.com/articles/51551/most-americans-commit-three-felonies-a-day-and-here-s-what-happens-if-they-get-caught
It's unbelievably easy for a cop to accuse someone of committing a crime and steal all they money they would need to hire an attorney to get it back. That and having your money taken means you can't pay for things that are a crime not to pay for, (tags for your car, etc) or your rent that makes you homeless and therefore more exposed to being arrested. Asset Forfeiture especially of the poor creates the opportunity for more crime just as working under the table does (which is also a crime).
Now is there a law on the books that specifically states you will get a ticket for being poor? I guess the answer is no. Just as sodomy laws in a previous generation were used to target the gay community, many of the laws that criminalize poverty do not expressly state that is their purpose. I suspect at least part of the reason for this is so those not affected by these laws can rationalize it as "well we did not outlaw being gay, only sodomy. Besides, I have committed sodomy as a heterosexual and I have never been arrested which proves my point!" That times 2 for poverty related crimes. That's the wonderful thing about a police state. As long as you are not targeted, you can enjoy oysters and champaign without being overly concerned what that jail across town is up to.
Link 4: "Homeless people get arrested more often because they are more visible."
I don't agree with all his conclusions, but there's an excellent book: "Arrest-Proof Yourself: An Ex-Cop Reveals How Easy It Is for Anyone to Get Arrested, How Even a Single Arrest Could Ruin Your Life, and What to Do If the Police Get in Your Face"
https://www.amazon.com/Arrest-Proof-Yourself-Ex-Cop-Reveals-Arrested/dp/1556526377
He makes the same argument that being exposed increases your risk of arrest. It also happens to be the case that certain poor communities are more likely to be out in public. Do you know what we call a country where simply being in public increases your chances of being arrested? A police state that targets marginalized communities. He talks about how most bike riders in Florida are poor and that is exactly who the police target for bike helmet law enforcement. When possible, many try to escalate the confrontation into resisting arrest so they can charge the kid with a felony. I life in a nice neighborhood where kids don't wear helmets all the time and we have nothing like what he describes, which apparently is common in Seattle and many other cities as well:
https://www.seattletimes.com/seattle-news/transportation/racial-disparities-prompt-calls-to-repeal-king-countys-bicycle-helmet-law/
But sure, sodomy laws didn't actual mention being for gay people so they had nothing to worry about.
"They don't show up in court because a lot of them are substance abusers or have psych problems."
Yes and they get fined and incarcerated for that. Does that make any sense at all? That and you leave out that many courts don't play fair with the notification of court appearances. Often they purposely send notice late, publish it in a newspaper without notice or behave in a way designed to ensure people miss court dates so they can tack on more fines.
Link 5: Everyone should be afraid of cops. The thing to focus on in this article and the reason I included it (and prefaced my entire post with a disclaimer that it's unhelpful to separate out marginalized from black crime as some of these links do) is because the statistics in the linked url on police violence highlights how often police stop people as a pretext for something else, the old stop and frisk being the most obvious example of that. As the url in the article notes, 95% of police arrests are for non-violent misdemeanors that don't specifically mention being poor/marginalized, but are enforced just that way.
But sure, sodomy laws didn't actual mention being for gay people so they had nothing to worry about.
"If you're low income, your chances of having a brush with the cops are very much higher. I believe the statistic is 2.5x higher."
Yes, that was the original point I was making and we agree.
That poverty is criminalized in generally is certainly not denied by those who run the criminal system such as former AG Kamala Harris.
Harris arguing against prison reform because it would jeopardize the free labor pool her state depends on:
"How Kamala Harris Fought to Keep Nonviolent Prisoners Locked Up"
https://prospect.org/justice/how-kamala-harris-fought-to-keep-nonviolent-prisoners-locked-up/
Of course she does not specifically state she is targeting the marginalized here even though they make up a majority of California's penal system.
As California attorney general, she spent years subverting a 2011 Supreme Court ruling requiring the state to reduce its prison population. The overseeing judicial panel nearly found the state in contempt of court. She also had children who missed school arrested. Purely by coincidence, she placed this impoverished mother who was working two job in jail for not getting her kid to school than laughed about it later:
https://www.theguardian.com/commentisfree/2019/jan/31/kamala-harris-laughed-jailing-parents-truancy
"Kamala Harris laughed about jailing parents over truancy. But it's not funny"
I am not picking on VP Harris since this is how all DA's work. This is what our criminal system is based on and how it runs.
But sure, sodomy laws didn't actual mention being for gay people so they had nothing to worry about.
I imagine I disagree with you some issues, but this post of yours is quite excellent. Civil forfeiture is so bad, turning police into pirates. I am quite critical of critical race theory, but I agree that there are too many trip wires that deleteriously impact poor people, who are disproportionately Black. That said, current DAs of LA and SF are not the answer.
Fairly high on the list of "Repulsive Things I've Heard Politicians Say" was a local legislator demonizing payday loan outfits. He whined about the usurious rates charged (calculating a yearly amount on a two-week loan), and the horrible fees...while overlooking that those places only existed, and were patronized, because the banks who contributed to his campaign and inspired his attack REFUSED TO DO BUSINESS WITH POOR PEOPLE.
Damn, I'm getting mad just recalling it. I did call his office and, like the idiot I am, ruined some poor flunkies day. *sigh* Little tiny feeble blows against the road the Empire rolls on...
With that logic, bring on the mafioso! They do business with poor people...so they must be good...
A pound of flesh indeed...
I'm quite sure the banks won't do business with poor people because it is not profitable. Lots of bad debt to be written off. Of course, if government was going to be used to help these people out, how about some banking facility that only works with people below the poverty line or somesuch? Just a thought.
>> I often hear the rich complain that the poor envy them, but that has not been my experience. I find that most poor people admire the wealthy who have earned it.
I would add to this that there is general feeling that a lot of the rich people today didn't earn it. For example bankers who are only wealthy today due to bank bailouts. That kind of thing.
I don't know you, but I love you.
GOD life would be so easy if it were really so SIMPLE, Rick!!!
Unfortunately, I ate of the apple many years back and now I see things as, well, more complex.
But I do appreciate the time it must have taken you to type that post out...kudos!
Tell it brother. While my investments and debt holdings have fantastic yields, everyone forgets the risks I take in putting my wealth to work. The Federal Reserve could end the party at any moment.
I know a guy who worked full time at Cracker Barrel until the pandemic. Hard worker, but despite working full time, he was homeless because his criminal record prohibited him from renting an apartment and at just above minimum wage he really couldn't afford a place anyway.
Now he's unemployed and homeless. Child support for his daughter (divorced due to the same drug problem that got him incarcerated) is out of the question.
So you see, lot's of people are facing the same types of risks with the Fed Reserve you are. Next time I see him I'll ask him how he has been affected by the yield curve.
You don't think he's impacted by larger economic trends? When I was in a crap situation 20+ years ago, the economy was pretty healthy and I was able to find a job working under the table - which would benefit someone with a criminal record. Those evading taxes usually also don't care much about records. In a poor economic climate, I doubt such employment would be available as much.
Bite me
And your is the most worthless post in this entire forum. Please KYS immediately.
Right after you SMD
I can certainly smell one close by...
Just from a moral standpoint, SALT rubs me the wrong way. It's a way to increase local taxes without actually paying those taxes.
But to see the Democrats holding the bill hostage for it isn't a surprise at all. They're quite happy to have the rich keep getting richer. In fact, they made it illegal to compete with many of them!
Living in CT I have found it highly amusing how incensed rich liberals have been over this issue. After years of bleating about the Republicans “tax cuts for the rich” when it hits them they squeal like pigs. Rich white liberals are phonies.
I wasn't happy about losing most of my Cali state tax deduction, but I recognized that Trump was taking a shot at the high-tax blue states, so I hoped it might put some pressure on these one-party creeping(?) socialists to reassess their greedy, power-mad quest for wealth confiscation. That hope was in vain, of course, so I wouldn't mind getting that money back. However, I've adjusted to the new reality, so I'm not sweating bullets.
I know both parties play games with the tax code, but the Democrats in particular are extremely adept at using tax law and regulation to power a money-laundering operation in which campaign money flows back from the rich. Unions are another great source of Democrat revenue, which is why unreal pension benefits have been granted in red states and the federal government.
I feel the same way. I live in OC, own a modest 3 bedroom home and am in the top 10% in national income. My property taxes alone consume about 85% of the $10K cap leaving me hardly any room to further deduct my state income tax like I was once able. But I can live with it knowing that the truly elite brackets (who have supported Democrat one-party rule) with their $10M homes in Bel Air can't deduct their property taxes in the way they were able to before the SALT cap was enacted
That's the likely genesis of this effort.
Democratic tax breaks like the "Death Tax?"
Unions, like the police unions?
Both parties are masters at this. It's why they are there.
I think I acknowledged that, but here in California, it's a one-party show. And aside from those whose calling puts them in mortal danger, i.e. first responders, the public union pensions are out of control. When teachers (who deserve a lot) can retire at 50 with 90% of their pay and medical coverage for them and their spouses for the rest of the lives, it's excessive, especially when our blue masters didn't bother to come up with a way to cover it. Today, 25% of the LAUSD budget, which is $7.3 billion, goes to cover unfunded pension liabilities. In other words, a quarter of the budget is used to pay teachers NOT to teach. As my friend Willie Brown said, "We may have given our union friends too much." Ya think?? It's an unholy loop, where million$ are kicked back in campaign donations.
You're completely right. I should have read your post more closely.
A friend lived in California for 20 years and was a Republican, moved to a State dominated by Republicans and became a Democrat. Power corrupts absolutely and if I lived in California I would feel the same way you do. As far as I can tell, there are about 5-6 States left that are not under one party rule.
California has it especially tough with state unions. Places like Stockton have declare bankruptcy because union retirement liabilities are more expensive than the actual workers.
The good news is I suspect the feds will ultimately bail states like California and Illinois out (look at the recent 2.1 trillion dollar pandemic law).
The bad news is that the Feds, meaning the people will be left holding the bag when we can't pay the debt.
This was done to reward them (for their services AND election backing) without increasing pay, which visibly comes out of year-to-year budgets. A fine example of next-level "kicking the can down the road".
Already bankrupted my hometown, Vallejo. More to come.
Great piece as always. As a democrat who would benefit from increasing the SALT cap, I personally think we should eliminate SALT entirely. This deduction only benefits high earners and all of us should be paying more in taxes. Further, increasing SALT cap sends the wrong message for what democrats are pushing for.
Here's my go to resources for quantifying just who benefits from SALT and illustrating just how regressive this deduction is, https://taxfoundation.org/salt-deduction-salt-cap-repeal/
Has anybody noticed that Democrats are arrogant preppy elites and Republicans are working people? I guess people have switched parties. The only thing in common is the ones getting rich from China.....Pelosi’s hedge fund hubby, Mitch McConnell’s shipping magnate wife, and Hunter Biden, playboy influence peddler.
Nah. There's almost no substantive difference between the parties at this point. They've been congealing and moving rightward my entire life (Reagan onwards).
There was no substantive difference back then either. The last time an actual lefty got nominated was maybe McGovern and resulted in the most lopsided landslide since George Washington. Something like that.
I'm angry about the SALT cap and I don't care if that makes me a hypocrite. Why should I be discriminated against vs someone living in Texas? I pay more taxes here in California than my colleagues in London on the same pay package, but here I get nothing for it. Make corporates and the private equity moguls pay their fair share before you keep soaking me for more money.
Wow. So you don't mind the high state income tax rates in California as long as you don't have to pay them. Hypocrite indeed.
Exactly! Anyone who benefits significantly from SALT is already a high earner and they have no reason to complain about higher taxes. As a democrat who would benefit from a SALT cap increase, I strongly believe SALT should be eliminated. We believe in higher taxes to fund more government services and we should pay them.
Indeed. Rich liberals hate paying taxes just as much as rich conservatives.
Don’t kid yourself. My sister is a deep blue activist liberal. And when I do her taxes every year, she becomes another unrecognizable person when she challenges me to claim additional and higher deductions for her. It’s almost like she is demonically possessed. And when I point it out, she gets mad, saying that I am exploiting my personal knowledge of her affairs obtained in a professional capacity when I call her a hypocrite.
There are no Rich liberals. Just rich people cosplaying liberal.
An honorable Democrat! Would that ye were not so rare, sir.
This may be the case for wealthy people, but people who work for a living, who pay the lion’s share of their tax through income tax, aren’t typically wealthy. Our tax policy incentivizes the wrong behaviors and it’s never been more obvious than now.
The argument that one should pay more taxes because they can afford it is nonsense and based upon envy.
How crazy is it that anyone at any income level should pay half their income to someone else just because “they can afford it”.
When you have half the population who both vote and pay zero to negative income tax rates, the things they “shop for” in the federal benefit store is limitless.
It continues to grow and grow and grow - like children in candy stores they have to have everything. Free tuition, cancelled student loans, no work requirement for welfare, $1500 checks, no rent no eviction, $600 add on for unemployment, bailed out bankrupt states so they can run up the bill again on more freebies and on and on.
Why not pass a law charging people more for food based on what “they can afford”? Or clothing? You can go buy a $30 banana and a $75 pair of gold toe socks...because “you can afford it”.....
I think you misunderstand how MANY Californians feel about our high income tax rates, although based on how we vote, it’s easy to see why you think that. To give some context, only 10-12% of Los Angeles voters typically vote in local elections, so the problem is of our own making.
So why is the stupidity of the Cali electorate the responsibility of citizens of other states? Good grief.
For clarification, you have a problem with any deduction, right? Also, try to calm down. I don't want to have to pay for your medical bills through higher insurance premiums because you have a stress or anger management problem
Yes, if you’d read my posts, you’d see I favor a flat tax. So no deducts. Get it? You don’t pay any of my bills, medical or otherwise. I pay exorbitant fees for health insurance. I’ve got no stress-related costs. BP is low, no pills, a happy camper. Try to keep up here.
That's great!
"So you don't mind the high state income tax rates in California as long as you don't have to pay them."
That's not how the SALT deduction works.
Actually, that’s exactly how it works.
It’s sad and kind of scary how ignorant people are about taxation, even though it’s the biggest cost they incur (at least half of the world).
The amount of tax you pay is a function of TWO numbers, not just the tax rate. Which is why I get a kick out of the incorrect Ed bald face lie that Biden and Democrats are spewing in support of their tax plan. We are raising taxes to 39.6%, the same rate it was under Bush.
Ummm, that’s lie by intentional misdirection. They don’t say they are restoring the Bush tax system. They are saying that they are restoring the Bush tax rate without restoring the reduction in tax benefits that were used to lower that tax rate.
Because revenue is revenue and when the government tinkers with taxes, they play not only with tax rates, they also play with how one defines taxable income, also known as the tax “base”.
So, you can have a 40% tax to raise $40 on $100 of income. Or you can have a 50% tax if you allow $20 of deductions from the $100 of income. It’s revenue neutral.
People always say stupid things like “the tax rate was 91% under JFK”. They ignore all of the tax shelters, deductions, exclusions and exemptions that made the effective tax rate much lower.
I get a kick out of how people the rich got tax cuts. They have NOT. Go back to the 1986 tax act under Reagan where the tax rate was reduced to 28%. By the way, people ignore that the 28% also applied to long term gains representing a 40% bump.
But all the tax benefits and deductions were sharply limited or eliminated. Actual cash ,oases from a business investment? No longer deductible unless you were managing the business. And even if you were if it was real estate, it didn’t matter if you managed the business if you made “too much money”. Mortgage interest limitations investment interest limitations, lots of things were taken away.
Because the basic equation never changes. Rate times base = tax. Reduce the rate? You have to blow up the base. So Biden hiking the rate to what was “agreed as fair” under Bush is a lie. He’s restoring the rate, but not the base.
But I opposed the Reagan tax rate cuts, because I’m a student of tax law.
Rates that are cut inevitably trend back upwards. But once taken away, deductions and the like never come back. Look at mortgage interest, used to be, the deduction was unlimited. But once they got the bug to cap it to the interest on no more than $1 million in the 1986 tax act, it was easy for Trump to further cut it to $750,000 in 2017. Yet the $1 million cap wasn’t inflation adjusted, so it was worth only about 60% of what it was in 1986 and today, it’s worth less than half due to the 2017 reduction.
I wish that Congress would stop “cutting taxes on the rich”. Because they really rarely do and whenever they tinker, there is the inevitable sop to the lower and middle class which results in taking more and more off the tax rolls, reducing their proportionate contribution or even creating “refundable” credits. Which is funny because it’s an oxymoron to say you are refunding something that was never paid to begin with.
Most of my “rich” clients would be paying hugely less taxes if the entire tax system had been left alone in 1986.
The usual a$$ hat numbskullery. Everything else? "Hey, you get what you pay for!" Taxes? jackel, you drank that kool-aid that Grover Norquist has been peddling. That kool-aid has accomplished several things. Student debt into orbit; crumbling infrastructure; K-12 schools that can't pay teachers a living wage. And racism is re-awakening. When times are hard, people start attacking others not in their tribe.
See, that's the point. That's what that "starve government until you can drown it in a bathtub" game is REALLY about. It's about reigniting racism in America. Don't kid yourself. They know exactly what they are doing.
Yeah, not quite sure what you're ranting about. High income liberals in California never complained about high state income tax rates as they new they could deduct a large portion of these taxes on their federal income tax returns, essentially nullifying the high state tax rates. In other words the federal government subsidized California's high tax rates. Same for New York and other states.
Trump saw this as a giant FU opportunity to states that would never lean his way anyway.
This put liberals in these states in an uncomfortable position. The SALT caps generated billions in additional tax revenue, paid mostly by the very rich. Usually this is the siren song of the left.
I guess liberals want the very wealthy to pay 'their fair share' as long as it's not THEIR "very wealthy"
This policy encouraged me to move out of a high tax state. That is the reason why the leadership in blue states do not like this. It's eating away at their tax base.
It’s pretty textbook good economic policy, putting the incidence of the tax on those making the decision (blue staters who say yes to high state income taxes)
Exactly. Blue state governments should have accountability for their tax policies, but of course that is exactly what they desperately want to avoid. I am a big proponent of the SALT cap, notwithstanding that it hurts me personally.
Except that to the extent low-tax states get bailed out by federal money when they cut social services normally funded by their own taxes, they're being allowed to evade the consequences of their economic decisions.
How about these states stop spending irresponsibly? You realize there is two sides to a ledger, right? And who cares if you moved? Democrats say raising taxes does not impact behavior. There is a pro Biden tax increase article in Bloomberg today saying exactly this.
They aren't going to stop spending like drunken sailors. They're going to try to redirect federal monies to the states and tax us from that level.
They sure didn't interview me for that article. I left California 4 years ago because I could not justify living in that tax-happy state after I retired.
Yep.
Essentially nullifying? Spending a dollar and getting back 30 cents is hardly nullification
Libs are liars.
I can agree with much of what you imply here, but I don't buy the "re-igniting racism" part. They simply changed what "racism" means and started heaping it on in media and academia. They are more asserting a rise in the new racism than actual racism rising. The rage and anger end up in the same place, but the mechanics are slight-of-hand.
That rise of the new racism is precisely the goal. This has been a project that has lasted for 50 years. Impoverish the lower classes, and they will set upon each other again. We see it.
This is not happening in most states, only in the states with huge state budgets and local budgets. Outrageous pensions for state and local government employees are one of the drivers, but huge expenses across the board have created the problem in the states that are complaining.
Democrat states. Disasters
I prefer to think of it as the final FU from the boomers.
Some good responses to your delusional "narrative-driven" post below.
I would add one other aspect: The re-awakening of "racism" is being generated by the people "leading" minority communities, and almost entirely the black community, and this is being done deliberately. It has certainly benefitted a number of race-grifters, not all of them black, that's for sure.
Change my mind.
This is completely incoherent.
Talk about drowning in Kool-Ade, bitch, you must have it in your swimming pool. I have no voting rights in CA, NY, CT, NJ, etc. Why should the citizens there decide what I essentially pay to those states? Get over your self, Proggie troll.
Actually what people who think like you are doing is very much in step with Rules for Radicals by Saul Alinsky. Which is to flood the social service system with hungry mouths until the demands on government become so unsustainable thst the entire economic system collapses, so it can be remade into a socialist’s paradise.
6 trillion to be spent with ridiculous tax increases that are substantially comprised of handouts with a disguised name such as recover, infrastructure, etc. There’s an old Yiddish saying roughly translated means “the more you coat it with honey, the more it tastes like shit”.
And that’s what it is. Imagine - you can own your house for 40 years such that the substantial proportion of its value at sale is inflation. A house bought for $100,000 in 1980 sold for $650,000 today includes $325,000 based solely upon the National (not regional) CPI. Yet that guy is required to pay tax on inflation at a 42% tax rate just the same as a guy who earns a salary in today expressed in current non-inflated dollars.
Oh, and if he dies and has an estate tax based upon the lower exemption rate, he pays a 40% tax on the the remaining 58% for a total a tax approaching 65%!!!!
It’s really higher, because the guy likely paid income taxes on the original $100K he used to buy the house.
This level of tax is absolutely mental.
And to have others feeding at the government trough, including the state having a greater payoff from your labor is just as mental.
You go to work every day with the mentality that you do so to support yourself and your family. Imagine that bearing that burden knowing that you get to keep less than half of what you produce?
Your income is the fruit of your labor, and your labor is a function of how you spend your time, which is a personal freedom. Surely even the left assumes that because they choose to support layabouts and do nothings and doesn’t criticize their freedom based choices.
So when you take that much of my income, you deprive me of an element of my freedom. And you think it’s just dandy! Even though it’s almost akin to legislative slavery.
Silly answer the Fed budget is 4.7 Trillion the vast majority of it going to middle-class entitlements. But that does not count the extra 2 trillion or so we have borrowed annually by Obama and then Trump Spending is not the problem you think it is
The lack of a SALT deduction does not discriminate against you. You get the benefit of the higher taxes you pay.
A better question is why you should get a bigger federal deduction just because your state decided to tax you more. The feds pay for different things than states and the burdens of one should have no impact on the other.
The point of the cap was to make you pissed at your own state, not the federal government or states who manage their budgets better than yours. Demand your state lower their taxes to match the rate change at the federal level. People in my state were irate for the same reason, failing to see that the state chose not to change their standard deduction proportionally or adapt the parallel itemized deductions. Now my state is running a massive surplus and pretends they are budget geniuses while teasing some tax reform somewhere down the line...after they spend all the money they "saved." Red state, btw. They are all addicted to spending, just some are addicted to more than others.
Property taxes are administered by and for local municipal governments not states.
But they are creatures of STATE LAW, not local law. Only a statute statutory or constitutional provision permits municipalities to impose taxes of their own.
SALT is combined: property taxes plus state and municipal taxes, if any. The largest chunk is typically the income tax and it is the income tax most readily adjusted by state or local governments to reflect changes in federal itemized deductions. Nearly every state kept their deductions tied to federal (excluding the state income tax dedution) AND kept their tax rate the same. They should have balanced either deductions or the rate to be revenue neutral when compared to previous years. Instead, they raked in more tax revenue and blamed the federal government. You are correct, however, that the state could do little with the property tax portion, which is also typically the smallest portion of SALT for those not in the highest 3% of earners.
Blaming someone else has become as American as Apple pie once was.
SALT deductibility is precisely that - blaming other states' citizens for your profligacy.
I'm not blaming anyone but the CA voters. Since you're a bootstraps kind guy, you actively lobby your reps for a flat tax, yes? You don't take any tax deductions for anything, right? Not even the standard deduction, right?
Apple pie is designed in California, and made in China.
With slave labor. But don't worry! Apple will tell you how carbon neutral and woke they are as they fight right to repair efforts.
That's the Apple® iPie®, not the "American as apple pie" pie.
But things differ amongst states. In California the largest portion of property taxes is for education. That money goes to Sacramento and is redistributed to the districts via the Local Control Funding Formula.
Simply because you get nothing for those high taxes you pay in California should be reason enough to leave.
And what do you know? California has a lot of infrastructure. Before Jerry (Frack Me) Brown went all out to kill nuclear power, California was better. But now, CA is about to lose the primary stable source of power, and most of its CO2 free power generation. Notice how nobody talks about CO2 anymore in the climate issue. It's all "RENEWABLES!" which is a total crock.
Bizarre, right? They actually shut down efficient, operable reactors in the name of windmills. Climate debate aside, that's just stupid. Then again, you look at where ol' Jerry's family made their fortune...(love the frack me bit). Sadly, we live in a world of spin and have divided ourselves into boxes and teams to fight among ourselves rather than see through the smoke they lay down. They are now drawing the battle lines for us by changing what "infrastructure" means and, in the end, Jerry's grandchildren will have even more in the trust fund.
Don't forget the warmonger part of the Congressional Demonrats. It is a matter of time before that comes back on us and really hurts. When I say really hurts, I mean, the nation falls and does not ever come back to what it was for hundreds of years. The Democrats are corrupt beyond most imagination I could ever have dreamed of 25 years ago.
So I'm clear on the concept....It's the Dems that are corrupt and not the 'Pubs? (FTR, I believe both are heinous and both have sold us out.)
Republicans are certainly not lacking in corruption.
It's like the one armed economist.
So true. A force for evil
PS - I am a lifelong democrat voter.
Are you still that way?
We learned from Japan that having reactors in earthquake zones is maybe not such a great idea. I'm all for nuclear power, but the old cold war reactors really do need to be modernized and moved away from large population centers. A thorium reactor creates waste with a 500 year half life instead of a 10,000 year half life, and it creates 1000-10,000x waste of conventional uranium reactors.
You did mean "LESS waste" right?
Yes. 1000-10,000 time less waste than conventional reactors. Thank you for pointing that out.
Always go to "discrimination" mode. People in Texas and London need to feel responsible for the California tax system. (Laughing emoji)
You should pay the higher overall tax because you should be receiving more benefits from the state and local governments that impose these taxes. There is no reason individuals in higher income tax states, such as yourself, should receive a federal deduction for these taxes.
If you truly don't believe you and your fellow local residences receive enough benefits for the state and local taxes then you should vote for changes at these levels. Failing that, you can always move to another area, such as Texas, where you believe the taxes reflect the benefits received.
Tax the rich. That’s what the libs have been screaming for years. How’s it feel??😎
Poor baby. You make enough it really makes a difference? Seriously, you need to rethink everything. Repealing this foists the tax burden onto the middle class and poor. So quit blubbering.
Wow, so you don’t like paying high income taxes and want to keep more of your money?
Then lobby the CA legislature for lower taxes or move to a low tax state.
Skip to #2 to save time.
Good, good. Let the hate flow through you.
It's fascinating how Democrats have become what they once despised. At least you still have enough of a moral compass to recognize you're a hypocrite. Most Dems wealthy enough to be impacted by the SALT cap are a bunch of self-righteous fart sniffers.
Yeah, yeah, yeah. Cry me a river. Your bitch, bitch, is with YOUR STATE, not the rest of America. Stop depending on Kansans to subsidize through their own federal taxes your BLUE state stupidity. I live in a purple state, have way more than the $10K in SALTs so "lose" that deductibility beyond $10K. I am fine with that. I hate paying any taxes, understand they are needed, would love a flat tax, but will settle for folks across America not being leeches on other states. The elimination of SALT deduction is also a behavior constraint on the tendency of state legislatures and executives to raise state taxes. In other words, get over it. Bitch.
Are you on prescription meds? How does your anger translate into anyone changing their minds? Explain.
ID: nah, just a regular Homo sapiens. Nice accusation about meds. I’m not only not “angry”, I’m pretty calm. I’m not sure I care about “changing” anyone. I just enjoy outing the idiocy of contentions by folks like Evan. OK?
Well, you kinda lost your cool. If you like the debate, hurling insults detracts from good points you're making. You have a good argument. Don't mar it with distractions.
“Insults” are de rigeuer in Internet commentary. Only snowflakes don’t get them, my bro! As I wrote, I don’t really look to changing anyone.
Ah, so you're like the people that stand on street corners yelling. They don't change anyone's mind either. They just yell for the sport of it. Whatever steams your beans I guess.
Uh, because systemic racism and global warming....obviously.
What do you mean "I get nothing for it."? The people YOU elect are taking your money and doing with it what they, presumably, said they were going to do. Do you only want racial justice, equity and inclusion if it's paid for by someone else??
Man, that's just sleazy. Take the tax hit with pride, and think of how much GOOD is being done with your money. Or shut up.
Think of it as an anti-discrimination tax. The original SALT deduction was the original discrimination against people that lived in states that had no state income taxes. Why should you get a federal tax deduction when they didn’t? That was unfair to them.
Don’t act so surprised when the third-world types you vote for start you on the path to third-world status. It might take a while, California was a stout place once; the rot will continue gradually. Have fun & stay put!
Can you clarify what you mean by "third-world types you vote for"?
Yes
Guess you're not up to the task...
You asked if I can, and I can. However, since you require some guidance I trust you will allow me the honor of providing an example. Granted, this is the easiest for me, I’m on the phone, we are in the woods as we keep the fire aglow and scope out the moonscape.
I trust this will at least give you the basic idea:
https://youtu.be/iY1mAlFjJTw
How does acting the way your acting persuade anyone to come around to your way if thinking?
Try a new strategy.
Didn't get the "basic idea". I don't understand what that video shows other than one person rambling - how's that related to "third-world types you vote for start you on the path to third-world status"?
Well said.
Two things: 1) My congresswoman is Mikie Sherrill, i.e. Rebecca Michelle Sherrill, not Mike Sherrill. 2) Very few people understand the SALT deduction. First of all, it's not a credit. It's a deduction, which means that in theory a $60,000 deduction would save 37% of that amount in federal taxes, depending on your bracket. But wait, there's more. There is an alternate minimum tax imposed on most deductions, including the SALT and this AMT tax is 28%. This means that for most people a $60,000 is worth no more than $5400 in tax savings, not $22000. The main reason to restore the SALT deduction is to encourage people to stay in high tax states rather than move to states with lower taxes. When I was in Florida this winter, it stunned me that there's no income tax, real estates taxes are reasonable and the services are in many ways better. The roads are maintained and the streets are clean. Despite reports to the contrary, public schools in Florida are actually pretty good.
Not disputing your analysis of Florida, but....Friends that live in Floribama, the panhandle, and various inland areas have told me the schools suck, i.e., they reflect the local income levels. Condition of roads is easy in FL, there's no freeze thaw. What will be most interesting is when coastal areas become flood zones; then, we'll see how FL works. Kind of like Texas; everything was fine until there was a crunch and the curtain got pulled back to show how things a really "work".
School districts vary in every state. I imagine that there might be a school or two in NYC worse than those in the panhandle. (I’m a NYC public school grad.) In the meantime, I know people who have moved to Florida because in-state tuitions at Florida colleges are much more reasonable than in New York or New Jersey. Per capital state spending in Florida is half that of New York. I’m a fifth generation New Yorker (city) and the trash and filth are everywhere. You’d think that for the taxes that New Yorkers pay, they could pick up the garbage. Certainly, there used to be a lot more culture in NYC than in Florida, but NYC/NYS taxes now top out at 15%. For that kind of money, you’d think you’d be getting deluxe services. Incidentally, New York City is also coastal and much of Manhattan is rated as a flood zone, though obviously the hurricanes are worse in Florida.
All true, and you kind of made my (poorly stated) point. The previous guy’s blanket statements about schools or services are specious; things vary greatly depending on specific localities, and it’s all linked to income, i.e., it’s about who’s got the Benjamin’s. As far as NY, my opinion is it’s a shithole. It’s the poster child for lousy Dem management practices with my city, Chicago, coming in at second place. Both cities a coming to an ugly reckoning.
MArk M and Kurtocracy: interesting convo.
I am not a tax expert, but my understanding is states give (roughly) equal amounts to each school based on number of students and the main reason why some schools are better is because of local real estate taxes and levies. Thus might not be as relevant as you might think. Roads? That makes more sense, but plenty of roads are at least federally funded.
And FL tends to be a battleground state so I would assume they are more likely to get federal funding from both sides of the aisle, but I would have to look it up.
Also, not fully related, and I am not sure about FL, but Delaware is a zero sales tax state for consumers, but businesses have to pay the tax based on estimated sales. IOW, it always seems there is often some rub once you start digging in the weeds.
That all sounds right, but I thought my “point” was that FL schools depended on income levels, i.e., local taxes make the difference between good and lousy. Some are fine, others not so fine. The rest of it, who knows? Not me...
That part was more in response to Mark M about where good schools are and where they aren't.
However, I wasn't really disagreeing as much as trying to add to what I thought was an interesting thread.
" The main reason to restore the SALT deduction is to encourage people to stay in high tax states rather than move to states with lower taxes."
That should be of zero concern to the federal gov't and have no effect on tax collection. I can see why a state might want that, but, again, the fed doesn't care where you live, only that you pay, as the dems used to say, your fair share.
We could debate FL services. My daughters live there, are relatively low income (~25k), are both in college and the services there are not comparable to what they would have had if they'd stayed in the Northeast. It's also kind of wild-westy legally.
While I won’t benefit I hope they repeal the cap. Maybe some of our new neighbors will move back to the states they ran away from. We can hope....
Also, since deficits are nothing to get worked up about, why do we have taxes?
That has occurred to me recently. Why tax me when they've obviously got plenty of paper and printing presses (figuratively speaking)?
The standard response from the MMT camp and similar is that they impose responsibility, forcing economic decisions to bear costs. That way, even if the fiat-money national debt doesn't exist in the same sense as a personal obligation (I borrow a cup of sugar, I owe you one), you retain some sense of reason.
At least that's the way I understand the argument, anyway...
Taxes are essentially an anti-inflation measure. It removes $$$ from the pockets of the public without goods and services being actually bought. If that money were in play in the market, prices would go up quickly.
Sounds like there's an excellent argument in there to cut taxes for the wealthy. Their excess cash gets invested rather than spent.
One would think.
That's Larry Summers' argument, but it's pretty much been debunked in the de facto world. China has had a large deflationary affect on price inflation because they can produce so much so cheaply and sell it to so many different resellers. Thus demand has not created shortage in finished goods and thus no price inflation in them.
Also, there is a good argument to be made that commodities, equities and real estate, three major ways cash gets "invested" are causing huge inflationary bubbles that will end up as all bubbles do.
Perhaps you were referring to long term bonds? That would be astute, but it also gets complicated and has to do with maturity times, underlying value the bond represents, and relative interest rates/inflation.
Traditional economic arguments are losing predictability suggesting we don't have a full grasp on inflation...yet. Likely because it is never expressed evenly or in easily measured metrics.
I read recently the total national debt, funded and unfunded liabilities, is around $123 trillion. For the sake of discussion let’s say we voters select candidates who will eliminate ALL taxes, fees and fine, etc ... . Since it appears deficit spending has no detrimental effects on the economy, why have taxes?
Absurd you say? Probably, but what would elected officials do with no revenue coming in? Would they continue to spend carte blanche; or might they realize if they are not careful they might create a catastrophe?
Could this be the way to make government be fiscally responsible?
Just something to chew on.
The Californians are everywhere! It's an infestation. Call TX Parks & Wildlife or the EPA.
These region deals really do get thick. Can't tell you how many times folks I meet from CO start on rants about the "idiots" all coming up from TX. Texans feel that way about folks from CA. In TN it is people from the states to the south of them. Earlier in this comment section I learned people in NJ think that way about folks from NY.
Humans are drawn to the tribal.
The interview with Chomsky was interesting about the sports talk and how that feeds tribalism. BTW, finding interesting does not equal completely agree.
Great write up, Matt. This highlights two enduring aspects of the political class and our conundrum as a nation. First, both parties are hypocritical to a fault, driven by the demands of the few who can financially support their chosen politician. Second, the tax laws are now so convoluted and complicated that they can indeed be written to target specific individuals, zip codes or organizations. Your government is tying you down - freedom is slipping.
Yooo any chance this is from what I put in "Which topics need more coverage?" If so I'm feeling like a big boi and if not please don't tell cause I like feeling like a big dawg
Dear Matt, anytime you feel inundated by the naysayers over the Substack news model, please pin a copy of THIS article on your cork board just to remind yourself of the freedom that the Substack arrangement *does afford writers such as yourself. Can you (or I ) imagine *any Liberal or even Conservative paper out there *allowing this kind of "pants on fire" expose of the wealthy kinds of self-dealing manipulation and B.S. employed by literally *ALL the "Champions of the Little Guy" that we purportedly have in Congress ? Thank you for having both the courage and the willingness to do what you *DO !
“mainstream publications rarely use words like 'lie' in conjunction with Democrats, and never phrases like 'open political whoring.' ”
Milk out my nose. Well played, Matt.