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Among the Tax Bill’s Biggest Losers: High-Income, Blue State Taxpayers

nytimes.com

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Re: Among the Tax Bill’s Biggest Losers: High-Income, Blue State Taxpayers

#201

Post by mcbruiser4 »

vkou wrote: post #8
mmanfrin wrote: post #5

I'm a highish earning single homeowner in Alameda County (Bay Area) -- between the Mortgage Interest deduction, the Property Tax deduction, and the State Income Tax deduction being slated for removal, my taxable income is about to go up something like $60k, which is a large chunk of my actual income. This tax bill utterly fucks me, to the point I'm considering selling my house to get ahead of the inevitable housing c…

> I cannot see this bill as anything short of theft. Why do I have to pay double-digit percentage more on my taxes to give the ultra rich a tax cut? In what fucking world does that make any economic sense. My rent isn't tax deductible. Why is yours blessed with such a status (In the form of a mortgage, and property tax deduction)? All that mortgage tax deductions do, economically, is increase the overall price of hom…

> My rent isn't tax deductible. Why is yours blessed with such a status

Because for better or worse (for better IMO), the government wants to encourage homeownership and families, which is why there's also a credit for children.

Re: Among the Tax Bill’s Biggest Losers: High-Income, Blue State Taxpayers

#202

Post by dragonwriter »

eridius wrote: post #65
refurb wrote: post #14

Earlier quoted context omitted.

People have been clamoring for more taxes on the rich. Well, this is what it looks like. Oh wait! You didn't think you were rich, right?

No, this is a hit on the upper middle class. The actual rich aren't feeling the pain.

It's actually a hit on economic growth, since it discourages local tax-funded programs that produce a net gain in output (even after considering their costs); it literally creates a structural incentive for reduced economic growth through suboptimal local and state decision-making.

It's a product of of irrational anti-tax dogmatism.

Re: Among the Tax Bill’s Biggest Losers: High-Income, Blue State Taxpayers

#203

Post by ctdonath »

smsm42 wrote: post #189
ctdonath wrote: post #152

Earlier quoted context omitted.

I don't see why state taxes wouldn't be federally deductible. Roughly: if I work 6 hours, I have to work an additional hour a day just to earn money to give to the state; you're suggesting I should work an additional 15 minutes to earn money to give to the feds just because I earned the money to give to the state. Absolutely I shouldn't be paying taxes on money earned just to pay taxes. It's not like I'm "shielding m…

With the same logic, every expense should be deducted. If I work additional hour to give money to the landlord/clothes store/pub owner, why should I work additional 15 minutes to give money to the feds just because I earned money to give to the landlord/clothes store/pub owner? Because tax is charged on the income, not on money left in your pocket after paying everybody else. That's why it is income tax, not wealth t…

Taxes are fundamentally different from other expenses. I'm not opting to purchase a service (or not, just saving the money) when paying taxes, I'm facing the implication of a gun to my head (the ultimate enforcement of government power). No other expense comes directly from simply how much I earn, and is not compulsory based thereon. If there's going to be deductions at all, the first should be taxes paid to other levels of gov't.

Re: Among the Tax Bill’s Biggest Losers: High-Income, Blue State Taxpayers

#204

Post by cortesoft »

EgoIncarnate wrote: post #79
cortesoft wrote: post #38

Earlier quoted context omitted.

> literally if you didn't have deductions out of $100k you might have a $30k take home. That is just not true. Up until very recently, I had ZERO deductions I could take. I made over $100k in San Francisco and my take home was about 65% of my income.

If you paid state income tax, you should have been able to deduct that at the very least (probably around 6k, or about the same as the standard deduction).

I would always try to itemize my deductions, but every time the standard deduction always ended up being more.

Re: Among the Tax Bill’s Biggest Losers: High-Income, Blue State Taxpayers

#205

Post by smsm42 »

ctdonath wrote: post #203
smsm42 wrote: post #189

Earlier quoted context omitted.

With the same logic, every expense should be deducted. If I work additional hour to give money to the landlord/clothes store/pub owner, why should I work additional 15 minutes to give money to the feds just because I earned money to give to the landlord/clothes store/pub owner? Because tax is charged on the income, not on money left in your pocket after paying everybody else. That's why it is income tax, not wealth t…

Taxes are fundamentally different from other expenses. I'm not opting to purchase a service (or not, just saving the money) when paying taxes, I'm facing the implication of a gun to my head (the ultimate enforcement of government power). No other expense comes directly from simply how much I earn, and is not compulsory based thereon. If there's going to be deductions at all, the first should be taxes paid to other le…

I do not see how compulsory nature of the expense matters in this particular case. You need to eat to live - should food expenses be deducted? What if you're sick and need to pay for medicine - should that be deducted? You need to be clothed to go on the street - should clothing expenses be deducted? You can find argument for many of those, but ultimately the decision is arbitrary based on preferred policy by state. If the state police would favor improving the clothing situation of the population - you may very well get clothes deduction. Depending on what the government wants to promote or suppress, you may get various policy deductions.

Re: Among the Tax Bill’s Biggest Losers: High-Income, Blue State Taxpayers

#206

Post by vostok »

smsm42 wrote: post #183
vostok wrote: post #60

Earlier quoted context omitted.

Two questions: ---- 1. What about the property tax deduction? Why are property taxes deductible, but income taxes are not? ---- 2. How do you feel about the mortgage interest deduction? A very similar question could be asked. Two families both make $250,000 a year. One took out a $750k mortgage and one took out a $300k mortgage. Why should the second family carry more of federal tax burden than the first? I don't hav…

> 1. What about the property tax deduction? Why are property taxes deductible, but income taxes are not? There's no objective reason why it should be. But since deductions are largely arbitrary policy instruments anyway - because property tax deduction encourages and makes easier home ownership (at least this is the theory) and the government wants more home ownership. State tax deduction does not really have such go…

> The difference here is that with property-related taxes there is a policy goal linked to it, and also long-term choice individuals make based on this policy, which would make them very upset if the policy changes.

Wouldn't you agree that choosing to live in particular state is just as much of a long term decision as choosing to live in a particular house?

Re: Among the Tax Bill’s Biggest Losers: High-Income, Blue State Taxpayers

#207

Post by smsm42 »

refurb wrote: post #192
smsm42 wrote: post #185

Earlier quoted context omitted.

> The renting family is not being subsidized Guess what happens to rent if cost of ownership rises due to interest not being deductible?

My guess is housing prices fall and rents follow?

Nope, at least not in the short term. In the short term, house price is locked for the current owner, and usually by their payments to the mortgage holder. If the expenses rise, so do the prices. And since this will happen on the whole market, the price rise would not be substantially constrained by the competition.

On the long term, this could depress the housing market and thus lead to lower prices. That would depend on the overall market state - in markets with housing shortage that probably won't happen anyway.

Re: Among the Tax Bill’s Biggest Losers: High-Income, Blue State Taxpayers

#208

Post by dragonwriter »

smsm42 wrote: post #205
ctdonath wrote: post #203

Earlier quoted context omitted.

Taxes are fundamentally different from other expenses. I'm not opting to purchase a service (or not, just saving the money) when paying taxes, I'm facing the implication of a gun to my head (the ultimate enforcement of government power). No other expense comes directly from simply how much I earn, and is not compulsory based thereon. If there's going to be deductions at all, the first should be taxes paid to other le…

I do not see how compulsory nature of the expense matters in this particular case. You need to eat to live - should food expenses be deducted? What if you're sick and need to pay for medicine - should that be deducted? You need to be clothed to go on the street - should clothing expenses be deducted? You can find argument for many of those, but ultimately the decision is arbitrary based on preferred policy by state.…

> You need to eat to live - should food expenses be deducted?

Reasonably necessary ones should be, or a value to cover them rolled into blanket deduction everyone gets, sure.

> You need to eat to live - should food expenses be deducted?

That's why there is a medical costs deduction. (It only cuts in at costs above 10% of AGI, which is a bit wonky, though.)

> You need to be clothed to go on the street - should clothing expenses be deducted?

Same answer as for food.

Re: Among the Tax Bill’s Biggest Losers: High-Income, Blue State Taxpayers

#209

Post by dragonwriter »

smsm42 wrote: post #189
ctdonath wrote: post #152

Earlier quoted context omitted.

I don't see why state taxes wouldn't be federally deductible. Roughly: if I work 6 hours, I have to work an additional hour a day just to earn money to give to the state; you're suggesting I should work an additional 15 minutes to earn money to give to the feds just because I earned the money to give to the state. Absolutely I shouldn't be paying taxes on money earned just to pay taxes. It's not like I'm "shielding m…

With the same logic, every expense should be deducted. If I work additional hour to give money to the landlord/clothes store/pub owner, why should I work additional 15 minutes to give money to the feds just because I earned money to give to the landlord/clothes store/pub owner? Because tax is charged on the income, not on money left in your pocket after paying everybody else. That's why it is income tax, not wealth t…

> With the same logic, every expense should be deducted.

That's essentially how business taxes work, so why not?

Re: Among the Tax Bill’s Biggest Losers: High-Income, Blue State Taxpayers

#210

Post by smsm42 »

vostok wrote: post #206
smsm42 wrote: post #183

Earlier quoted context omitted.

> 1. What about the property tax deduction? Why are property taxes deductible, but income taxes are not? There's no objective reason why it should be. But since deductions are largely arbitrary policy instruments anyway - because property tax deduction encourages and makes easier home ownership (at least this is the theory) and the government wants more home ownership. State tax deduction does not really have such go…

> The difference here is that with property-related taxes there is a policy goal linked to it, and also long-term choice individuals make based on this policy, which would make them very upset if the policy changes. Wouldn't you agree that choosing to live in particular state is just as much of a long term decision as choosing to live in a particular house?

Yes, but how much state tax deduction figures in that choice? I wouldn't say it's a lot. Presence and absence of state income tax - maybe, but presence of deduction - not very likely. And of course, if the state wanted to compete on that metric, they could easily lower the taxes, but I haven't seen many high-tax ones to be willing to.
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