Posted on 05/17/2018 4:17:01 PM PDT by re_tail20
Before the ink was dry on our new tax bill, outraged blue states were screaming about the cap on the deductibility of state and local taxes. Their governments were also frantically seeking ways around it, and small wonder. For decades, high-tax states with a lot of wealthy residents enjoyed a hefty subsidy from the rest of America. Legislators were understandably panicked over what voters might do when handed the rest of the bill.
That panic generated some desperate ideas. The most popular, currently, is allowing people to convert tax payments above the $10,000 cap into a "charitable donation." New York, New Jersey and Connecticut have already passed laws to allow this.
While charmingly innovative, this approach is likely to fall afoul of tax courts, as will the other proposed tactics. Blue-state taxpayers may finally have to confront the full cost of the government they want. And Democrats will finally have to confront the tension between what those voters want government to do and what they're willing to pay for.
That reckoning is long overdue.
Remember the Bush tax cuts, first passed in 2001? A heartless giveaway to the rich that did nothing for the middle class, Democrats said. But when their expiration date approached, President Barack Obama called for raising taxes only on families making more than $250,000 annually that being, apparently, what it now takes to call yourself "rich."
This absurdity is no accident. It's a function of the ideological beliefs of the Democratic activist base clashing with the geographic and demographic distribution of their voters.
Over the past few decades, the United States has undergone "the Big Sort," the clumping of the electorate into demographically, professionally and politically homogeneous neighborhoods. Hillary Clinton voters have their ZIP codes, and Donald Trump voters theirs, and ever more rarely do...
(Excerpt) Read more at chicagotribune.com ...
On the other hand, state taxation should be the responsibility of the people living in that particularly state and that is why the subsidy(SALT) was reduced.
Right. Because it effectively raised their FEDERAL tax rates, even though their state taxes remained unchanged.
1. My state income taxes and local property taxes are only deductible up to a $10,000 limit.
2. There is no limit to this deductibility for corporations.
Think about #2 for a second. So now you have people in states like New Jersey and Connecticut working with their accountants to figure out how to set up a corporation to own their home and live there as tenants. So they can deduct not only their full property taxes, but also every penny in utility expenses, maintenance, and even property depreciation.
I have already declared that corporations should have their deductions scrapped.
Each state must be accountable and responsible for their own STATE tax burden.
That is in my mind one of, if not the key issue related to this thread. All fifty States are in hock to the Fed, to the tune of 30 percent. That is the amount every state receives back from the Fed base on their Federal tax obligation. Some more some less but around 30 percent welfare payment, or return on investment if you consider Federal income taxes an investment.
In other words no state is completely responsible for their own State taxes. In my mind that makes them all welfare States. If they were truly responsible they would be self supporting without a third of their support coming from the Fed.
...and the bottom line to make it right, State citizens pay their State first, and what remains can then support the Fed. The State pays, not individual people sending money earned in a State directly to the Fed coffers. Thus the State is back in control and the bureaucracy saddled with sending money back to States where it originally came from can be severely curtailed.
I would find that statement hard to believe. Individual and corporate income taxes account for less than 60% of the Federal government’s revenue, so it seems unlikely on its face that this statement could be true.
If I remember the numbers from one of the studies in a link on this thread, we are only dealing with less than 15 percent of the total Fed income being returned to the States. The number was around 600 billion actually returned. So I could very easily see it as a true number. The real answer might be hiding in the total amount individual taxpayers contribute to the Fed.
As you and others have stated, it is a very complicated subject, that perhaps should be greatly simplified.
It's true that the Federal government actually pays very little money to State governments. But the Federal government pays enormous piles of money to individuals in the form of wages, benefits, Social Security payments, Medicare, etc. When you see a comparison of Federal taxes paid vs. Federal expenditures in any given State (like the list I show in Post #97), the "Federal expenditures" for a State include all of the payments made to individuals who live in that State.
Excellent point the expenditures my esteemed Senator calls on autopilot. They happen whether there are tax cuts, government shutdown, or attempts to contain Federal spending.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.