Free Republic

This year, Uncle Sam will take his cut of the past year’s earnings on April 18. Many taxpayers are undoubtedly wondering how this year’s Tax Day will affect their finances, as a lot of people are still struggling financially as a result of the pandemic. Since the tax code is so complicated and has rules based on individual household characteristics, it’s hard for the average person to tell how they will be impacted. One simple ratio known as the “tax burden” helps cut through the confusion. Unlike tax rates, which vary widely based on an individual’s circumstances, tax burden measures...

A federal judge ruled that a provision in President Biden’s $1.9 trillion coronavirus relief law limiting states from cutting taxes is unconstitutional. U.S. District Judge Douglas Cole issued the permanent injunction requested by Ohio Attorney General Dave Yost, a Republican who argued the administration was trying to impose a “tax mandate” on states. “The Biden administration reached too far, seized too much and got its hand slapped,” Mr. Yost said. “This is a monumental win for the preservation of the U.S. Constitution — the separation of powers is real, and it exists for a reason.” Mr. Yost had filed a...

Behind the scenes, congressional Democrats’ main priority is bringing back a big tax loophole for rich people in high-tax blue states: their donors. House Speaker Nancy Pelosi, D-Calif., has political priorities. During negotiations over the three Wuhan coronavirus stimulus bills, Pelosi and Senate Minority Leader Chuck Schumer, D-N.Y., tried to include loans for abortion providers, as well as a bailout of the Obamacare exchanges that would end up funding abortion.That led to some bad PR for Pelosi, but the House speaker may be a glutton for punishment. If there’s one thing Democrats are beholden to more than the abortion lobby,...

Is it better to live in a state with no income tax? It’s a great question considering we already have to set aside a portion of our paychecks for the federal government. The case for removing an individual income tax typically goes like this: states that don’t dip directly into their residents’ pay become beacons for growth. They’re better at creating jobs and keeping a core of young, educated workers from moving to other states. The American Legislative Exchange Council reports that over the past decade the nine states without a personal income tax have consistently outperformed – on GDP...

In the U.S., apparently not every dollar is equal. The value of $1 varies depending on where you go. According to new data compiled by 24/7 Wall Street from the Bureau of Economic Analysis (BEA), a dollar goes the furthest in America's "poorest states," such as Mississippi and Alabama. Overall, purchasing power is nearly 35 percent greater in The Magnolia State compared to New York, Forbes reported last year, citing 2016 findings from the BEA. In New York, $100 is worth only about $86.51, while $100 in Mississippi is valued at $115.74, the publication stated.

Gov. Andrew Cuomo recently complained that the cap on the SALT (state and local tax) deduction is causing people to flee New York. That’s like a recent college graduate complaining that his parents’ decision to cut off his monthly allowance has forced him to get a job and face a budget. It’s not the new SALT cap causing New Yorkers to flee. Even before the Tax Cuts and Jobs Act limited the SALT deduction to $10,000, New York’s population fell by 1.9 million from 2005 to 2016. Rather, if anything, it would be the state’s high taxes. At $6,993 per...

The Constitution Does not Mandate Deduction of State Taxes. Four high-tax blue states — New York, Connecticut, Maryland, and New Jersey — have filed suit against the federal government over the recent tax reform. Specifically, they object to its limitation on the deduction for state and local taxes (SALT). Under federal tax law, filers are allowed to deduct property taxes (the local part) and either state income or sales taxes. But under the Tax Cut and Jobs Act (TCJA), the SALT deduction is now capped at $10,000. This deduction had been particularly valuable in high-tax, high-house-price states such as California...

In Fiscal Year (FY) 2016, Colorado collected $25.4 billion in state and local taxes—or $4,590 for every man, woman, and child. While this is an impressive sum of money, it tells us little about whether or not the average Colorado taxpayer can afford this level of taxation. ... Colorado’s state and local tax burden (tax collections divided by private sector personal income) was the sixth lowest in the nation for FY 2016 at 11.8 percent—or -17 percent below the national average of 14.3 percent. ... Colorado’s tax burden has increased over time by only 3 percent to 11.8 percent in...

I’ve noticed that a number of FReepers are having conniptions over the possibility that legislation reducing federal income tax rates will also ELIMINATE ITEMIZED DEDUCTION OF STATE & LOCAL INCOME TAXES (SALT). I have a proposal for the new legislation. Have it give tax payers the CHOICE of 1) still deducting SALT but STILL ALSO using the current (i.e., unreduced) tax rate tables or 2) not deducting SALT but having their taxes computed using the new reduced rates. Having worked in systems development for a number of years, automating that feature could be relatively simple for Intuit (maker of Turbo...

As President Trump prepares to sell his tax plan to the nation's manufacturing lobby on Friday, his best-laid tax plans have already drawn objections from some fellow Republicans who are fuming over the decision to end deductions for state and local income taxes. The situation will pit the White House against members of Congress from states that pile high income taxes on top of what the federal government takes from paychecks. High-income Californians, for instance, pay as much as 13.3 per cent of their income to the state in addition to their federal taxes. New Yorkers can pay up to...

President Trump will release a sweeping plan Wednesday to cut taxes and simplify the tax code that will eliminate the deduction for state and local taxes — a move that Gov. Andrew Cuomo has warned would be a “death blow” for New York.

Bush wants to cancel the deduction for state and local taxes. As the presidential candidates roll out tax reforms, one test of seriousness is which tax deductions they’ll cut. One of the better ideas is Jeb Bush’s proposal to end the deduction for state taxes. While liberals decry tax cuts for the rich, they adore this particular subsidy for the rich, and especially for rich states and the political class in Sacramento, Albany and Trenton. Since the creation of the federal income tax in 1913, taxpayers who itemize have been allowed to deduct the income and property taxes paid to...

... When looking at taxes paid as a share of the income earned, all states have a regressive tax system, which means poorer residents are taxed more than the wealthiest ones. The difference in effective tax rates between income groups, however, varies widely between states. According to “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States,” a report released by the Institute on Taxation and Economic Policy (ITEP), Washington has by far the most regressive tax system nationwide. Based on the index score, a ratio calculated from a range of factors to measure income inequality before...

The day when the nation collectively has made enough money to pay its total tax burden for the year is three days later this year, according to a new report. According to a report released Monday by the Tax Foundation, this year Tax Freedom Day falls 111 days into 2014, on April 21. By April 21, to group says, Americans will have made enough to pay the $3 trillion in federal taxes and $1.5 trillion in state taxes — more than they will spend on food clothing and housing combined.

Each year we produce the Index to enable business leaders, government policymakers, and taxpayers to gauge how their states' tax systems compare. While total taxes paid is a relevant measure, another is how the elements of a state tax system enhance or harm the competitiveness of a state's business environment. The Index looks at over 100 variables in individual income tax, corporate income tax, sales tax, unemployment insurance tax, and property tax to reduce these many complex considerations to an easy-to-use ranking. The 10 best states in this year's 2013 Index are Wyoming, South Dakota, Nevada, Alaska, Florida, Washington, New...

How high is the marginal tax rate on each additional dollar the average American earns? In other words, if you got a raise of one dollar, how much of that dollar would be taxed away? These rates are already high, and they’re getting higher next year. A middle-class taxpayer’s income is subject to a 25 percent federal income tax. Then there is the federal Social Security and Medicare payroll tax of 13.3 percent in 2012—5.65 percent of that is removed from the employee’s paycheck, and the remaining 7.65 percent is paid by the employer. (In reality, the employee pays the...

Across the United States more than 2,700 companies are collecting state income taxes from hundreds of thousands of workers – and are keeping the money with the states’ approval, says an eye-opening report published on Thursday. The report from Good Jobs First, a nonprofit taxpayer watchdog organization funded by Ford, Surdna and other major foundations, identifies 16 states that let companies divert some or all of the state income taxes deducted from workers’ paychecks. None of the states requires notifying the workers, whose withholdings are treated as taxes they paid. General Electric, Goldman Sachs, Procter & Gamble, Chrysler, Ford, General...

Thanks to Illinois governor Pat Quinn and the Illinois legislature Illinois Loses Most Jobs in the Nation. In a trend that continues to worsen, more Illinoisans found themselves unemployed in the month of July. Illinois lost more jobs during the month of July than any other state in the nation. ... When it comes to putting people back to work, Illinois is going backwards. Since January, Illinois has dropped 89,000 people from its employment rolls. A combination of high taxes, overspending and red tape do nothing but chase away job creators and leave too many citizens without jobs. Springfield needs...

Different states tax their residences at different levels. In some states, like New Jersey, residents pay 12.2% as a percentage of their income. In others, like Alaska, they pay as little as 6.3%. 24/7 Wall St. reviewed a report recently released by the Tax Foundation to identify the states where residents paid the most and least in state and local taxes as a percent of income.

Caterpillar Inc., suggesting that it could shift jobs out of Illinois, is prodding its home state to cut government spending and roll back tax increases. Doug Oberhelman, chief executive officer of the giant Peoria, Ill.-based maker of construction and mining equipment, protested against the state's tax and spending policies in a March 21 letter to Illinois Gov. Pat Quinn, a Democrat who took office in January 2009. In the letter, first reported Friday by the Lee Enterprises newspaper chain and provided to The Wall Street Journal Saturday, Mr. Oberhelman said other states have stepped up their efforts to lure Caterpillar...