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

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

#261

Post by SmellTheGlove » Wed, Dec 06, 2017, 4:16 PM UTC

freditup wrote: post #244

SmellTheGlove wrote: post #147

Earlier quoted context omitted.

> Second, it's interesting to see people who were in favor of tax increases suddenly change their mind when it hits them. I'm very much in favor of increasing taxes, if that tax increase went to taking care of some societal problem (I don't care what it is, so for the sake of argument, let's just stipulate that it's a problem we both agree needs funding to solve). In this case, anyone paying more in taxes is just sub…

Thanks for the response - I think your thoughts on tax increases are quite reasonable. I agree that it's much harder to swallow a tax increase when it seems as if the money is going towards causes you disagree with, and I also feel that way with this tax bill personally. Not sure if I understand the double taxation argument though. Say local/state/federal tax is 1%/5%/20%. Without the SALT deduction of any form, you…

> Not sure if I understand the double taxation argument though. Say local/state/federal tax is 1%/5%/20%. Without the SALT deduction of any form, you get taxed 26% on each dollar which seems intuitive and fair.

It does seem intuitive and fair, but I could (to myself at least) conclude it's intuitive and fair to not tax the money I use to pay taxes to someone else. To me, it's more that the taxes just keep coming - after those income taxes, I'll pay sales tax, property tax, etc.

I will say that part of my argument is probably a little irrational, and that stems from the fact that I don't agree with how my taxes get spent at the federal level. For what my town takes in property taxes, I feel they do a great job - the roads are in nice shape, the snow is cleared before my morning commute, services are timely, etc. The state does a pretty good job, even if we do pay one of the highest state income tax rates in the US and have a ridiculously bad governor (Maine), and I agree with a lot of where it's going even if we've needed the ballot box to do some of these things (like expand Medicare). My disagreements at the state level to what we're not spending money on, but that's a slightly classier problem than not liking where the money does go. The federal government, by contrast, seems to light a good portion of our money on fire, and then borrows some more and lights that on fire too.

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

#262

Post by AznHisoka » Wed, Dec 06, 2017, 4:22 PM UTC

SmellTheGlove wrote: post #257

AznHisoka wrote: post #250

Earlier quoted context omitted.

Ok that may be true but why should they be allowed to deduct it? They are not a business owner (unlike the landlord). Its like allowing people to deduct 10% of everything they buy from Amazon because they are paying a part of Amazon’s warehousing costs.

I'm not advocating for renters to be able to deduct a piece of the underlying property tax. I don't think it makes sense to have property tax as a federal deduction at all. In general, I'm not sure how great it is that we favor home ownership over renting in our tax policy. My bigger issue is being able to deduct mortgage interest but not rent. Mortgage interest is essentially rent on money, so I've always thought it…

OK, I see your point with mortgage interest interested being deductible.

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

#263

Post by alexanderstears » Wed, Dec 06, 2017, 4:31 PM UTC

ghouse wrote: post #51

seibelj wrote: post #16

Coastal liberals are very happy for tax increases except when they have to pay it themselves! This makes the situation more fair - eliminate market warping changes such as the property tax deduction and stop letting states get a free ride when increasing taxes by reducing the federal burden. Seems fair to me.

Two issues here: 1) I thought the GOP was in favor of strong local governance and believed money is more efficiently allocated at the state level. This action flies in the face of that. 2) _Generally_ the states who are penalized by this change in tax policy already pay more in federal taxes than they receive in benefits.[1] [1] https://www.theatlantic.com/business/archive/2014/05/which-s...

Hardly flies in the face of strong local governance, if anything, it makes local governance more important because the funding of local governments is more dear under this plan.

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

#264

Post by SmellTheGlove » Wed, Dec 06, 2017, 4:31 PM UTC

AznHisoka wrote: post #248

Turing_Machine wrote: post #218

Earlier quoted context omitted.

Renters are already paying all of the property tax. The expenses for any business (including being a landlord) are, in the long term, paid by the customers. Otherwise the business becomes insolvent.

I concede renters may be paying a part of it. However if a landlord is like a business owner, and property tax is a business expense, why should they not be allowed to deduct it (just like any other business expense)? Amazon has expenses too related to storing products in warehouses, which they can deduct. Part of that cost is priced into the product. So in theory, customers should be able to deduct a portion of ever…

Just my opinion, but society benefits from having manageable costs of living. I acknowledge that landlords have a business to run, but we also have a policy favoring ownership. Not allowing a property tax or non-occupied mortgage interest deduction raises the costs of being a landlord, disfavoring that activity a bit from a policy perspective. That, in turn, may lower housing costs (and increase owner-occupation of primary residences) by taking some landlords out of that market.

We built a broad middle class by favoring home ownership, allowing regular folks to build wealth in the form of their primary residence. I think we need to get back to that, and that does mean making policy decisions that eats into the margins of landlords.

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

#265

Post by klipt » Wed, Dec 06, 2017, 5:17 PM UTC

lebanon_tn wrote: post #258

klipt wrote: post #232

Earlier quoted context omitted.

You can say that about any deduction. Why should taxpayers who aren't Christian subsidize donations to churches?

I agree that a church should not be broadly exempt from taxation as the current system allows. Perhaps it could be narrowed to only exempt the value of actual goods and services provided to the community (like operating a homeless shelter or soup kitchen)

Why should donations that pay for churches to operate homeless shelters be tax deductible, while taxes that pay for state/city governments to operate homeless shelters aren't tax deductible?

This bill is just a GOP assault on states' rights.

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

#266

Post by redblacktree » Wed, Dec 06, 2017, 6:06 PM UTC

kamaal wrote: post #252

dragonwriter wrote: post #66

Earlier quoted context omitted.

> People have been clamoring for more taxes on the rich. But this “tax reform”, in net, does exactly the opposite.

If you mean by rich, Bill Gates and Warren Buffet level rich, then there are only a few dozen people whom you can tax that way. Also tax is on income, not wealth. Unless Bill Gates sells his stocks, its pretty much untouchable.

There are wealth taxes. (property tax is one of them, estate tax is another -- phased out by this bill) In my opinion, we could do with a lot more wealth taxes.

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

#267

Post by crzwdjk » Wed, Dec 06, 2017, 6:35 PM UTC

tzs wrote: post #228

BeetleB wrote: post #154

Earlier quoted context omitted.

>Relax. You’re not subsidizing anyone. Homeowners pay a larger share than renters to begin with. As someone who knows many landlords: Completely wrong. They buy properties with a loan. They pay interest on that loan. The money the renter pays goes towards the interest payments. Renters are essentially buying the properties for the owners. And landlords can keep deducting it, no matter how many properties. Homeowners…

Businesses generally get to deduct interest on loans used for the business, so landlords would probably be able to deduct mortgage interest under that even if there was no specific mortgage deduction in the tax code. Accordingly, I'm not sure it makes sense to discuss landlords when discussing the mortgage interest deduction.

As a point of comparison, Massachusetts does not have a mortgage interest deduction for individual homeowners, but for landlords income is computed using the federal Schedule E with only a few state-specific adjustments, so mortgage interest is still deductible. Of course landlords also pay tax on their rental income (minus expenses of course), while individual homeowners don't have to pay any tax on imputed rent.

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

#268

Post by smsm42 » Wed, Dec 06, 2017, 10:22 PM UTC

ctdonath wrote: post #260

smsm42 wrote: post #205

Earlier quoted context omitted.

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.…

Income earned for mundane food/clothing/shelter/healthcare costs SHOULD be deductible. That's basically what the poverty line is: the minimum income necessary for basic sustenance in national standard culture. If you're functioning at that level, you shouldn't pay taxes - precisely because you can barely care for yourself & your own, so you shouldn't be compelled to pay for others (with a bureaucracy siphoning off a…

> Income earned for mundane food/clothing/shelter/healthcare costs SHOULD be deductible

That gets into a rabbit hole pretty quickly. What's mundane? Am I allowed to shop in Whole Foods or only eat at McDonalds? What if I care about my health - should I be penalized by taxes for wanting to eat heathy (and therefore more expensive) food? What if I don't eat a lot but I must buy very expensive clothes because of peculiar set of allergies? Managing all those would make each tax return like a PhD thesis and make handling 300M of those infeasible.

> If you're functioning at that level, you shouldn't pay taxes

That is what is happening for low income people in US right now. Lowest quintile pays virtually no federal income tax.

> , all documentable taxes paid should be refunded if your income is below the poverty line

Since it's impossible to prove who bought certain thing, this would be huge motivation for abuse. Do you want to pay 10% sales tax on $100K car or pay a poor person $500 and have them "buy" that car, get the tax refunded and save $10K? Of course, you say, there are title records. For cars. Which need now to be checked (welcome another thousand of government employees, with their salaries, pensions, etc.). And how many expensive things don't even have formal ownership registration? These things get very complex and expensive to handle very quick.

> That's basically what the poverty line is

Poverty line is usually defined as percentage of median income. This is largely arbitrary and handwavy, and used because people need to use something. But it's a flimsy base for the tax policy.

> exactly how the transition from "below poverty line" to "above" should be handled,

This is called "poverty trap". It's a well-known phenomenon, especially in a welfare state.

> Suffice to say we pay representatives to sanely figure out such things.

We do pay them, and pay them very well, but their delivery on the "sane" part is very short of the desired, so far.

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

#269

Post by dragonwriter » Wed, Dec 06, 2017, 10:35 PM UTC

smsm42 wrote: post #268

ctdonath wrote: post #260

Earlier quoted context omitted.

Income earned for mundane food/clothing/shelter/healthcare costs SHOULD be deductible. That's basically what the poverty line is: the minimum income necessary for basic sustenance in national standard culture. If you're functioning at that level, you shouldn't pay taxes - precisely because you can barely care for yourself & your own, so you shouldn't be compelled to pay for others (with a bureaucracy siphoning off a…

> Income earned for mundane food/clothing/shelter/healthcare costs SHOULD be deductible That gets into a rabbit hole pretty quickly. What's mundane? Am I allowed to shop in Whole Foods or only eat at McDonalds? What if I care about my health - should I be penalized by taxes for wanting to eat heathy (and therefore more expensive) food? What if I don't eat a lot but I must buy very expensive clothes because of peculia…

> Poverty line is usually defined as percentage of median income.

Not in the US. The main US measure is based on three times the cost established for a ”minimun food diet” in 1963, adjusted by the standard inflation measure (CPI-U) since then.

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

#270

Post by Redoubts » Wed, Dec 06, 2017, 11:33 PM UTC

harryh wrote: post #19

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…

There are numerous items written by economists that discuss in detail why state and local taxes and mortgage interest should not be deductible from federal taxes. It's very highly agreed upon. Perhaps you should seek out some of this literature. I also strongly suspect that you are overestimating the magnitude of the tax increase you will see but if course it's very hard to know without the details of your particular…

> There are numerous items written by economists that discuss in detail why state and local taxes and mortgage interest should not be deductible from federal taxes. It's very highly agreed upon. Perhaps you should seek out some of this literature.

Could you show at least one? When I look for this, I don't see articles supporting your position.