Our Tax Code Rewards Bad State Policies and Favors the Wealthy. That Needs to Change.

The Daily Signal ^ | October 12,2017 | Rachel Greszler

[Hojczyk]

The tax deduction encourages states to tax and spend more than they otherwise would.

Because federal taxpayers pick up a big portion of the tab, state and local governments spend more than they should, doing things like turning personal trash collection into a public, taxpayer-provided service.

And when they face budget shortfalls, the deduction makes tax increases preferable over spending cuts because federal taxpayers end up picking up as much as 40 percent of the tab.

Wealthy taxpayers receive the bulk of the deduction.

The state and local tax deduction is worth $6,300 for taxpayers with incomes over $200,000, but only $134 to those with incomes of $45,000. And it’s worth nothing to the 70 percent of taxpayers who don’t itemize.

The state and local tax deduction benefits high-tax states.

Just seven high-tax states receive more than 50 percent of the value of the deduction: California, New York, New Jersey, Illinois, Massachusetts, Maryland, and Connecticut. No wonder lawmakers in those states are pushing to spare or revamp the deduction.

The municipal bond deduction distorts infrastructure spending.

By making it easier for states to accumulate debt, a direct consequence of this deduction has been for state and local governments to turn what should be private infrastructure projects into public, taxpayer-supported ones.

Since 2000, 36 professional sports stadiums have received tax-exempt municipal bond financing, amounting to a $3.2 billion subsidy to the issuers and $3.7 billion in lost federal revenue.

[Okeydoker]

What utter BS. The reality is that big states with lots of roads, schools, population, etc etc require more taxes than states that are basically rural. To punish those of us who live in these states is insanity. This writer is a complete idiot if they think states will start lower taxes because they are no longer federally deductible they are nuts. This article and moron thinkers like this goofball are what bring conservative principles into disrepute.

[plain talk]

Wealthy taxpayers receive the bulk of the deduction.

That's because they pay most of the taxes

[Cicero]

Low taxes are bad state policies. So say the Communists who want to control the Proles.

[Pearls Before Swine]

Taxing money that’s already been taxed is double jeopardy, IMHO.

Sure, I understand the joy of screwing over NY and CA and IL residents, but the fundamental idea of double taxation really strikes me as wrong. It’s a two wrongs to correct a right sort of argument.

The problem with tax program modification is that while you can make it more efficient and less perverse, you are basically shuffling chairs on the top deck of the Titanic unless you cut spending. Finding angles to fund the spending is what makes the tax level too high, and greasing the squeaky wheels is what makes the tax code full of complexities and special loopholes. Cut spending, and a lot of the tax-side problems go away.

Politically impossible, but I can dream, can’t I?

[Nifster]

Who is this chick?

[RedStateRocker]

Then there is the issue that CA and NY send a lot more taxes to DC than they get back. That ought to change.

[Lurkina.n.Learnin]

CA and NY are big advocates of a progressive system where the rich pay more. Just consider it their fair share.

[Myrddin]

Both of my homes are mortgage free. My only deductions of merit are property tax and state income tax. My son is about to vacate house #2, so I will rent it for enough to make the tax and maintenance a wash. If it's not going to be a deduction, it doesn't need to be a liability either. I pay state income tax to CA, ID and sometimes NE. That's because my company tracks the hours I work in each state and collects state income tax for hours worked in a given state. ID is my state of residence. Filing CA and NE often cost as much for the software and filing fee as I get in refunds.