I.R.S. Warns States Not to Circumvent State and Local Tax Cap • Hacker News Board

Re: I.R.S. Warns States Not to Circumvent State and Local Tax Cap

#31

Post by mindslight » Thu, May 24, 2018, 2:51 AM UTC

virmundi wrote: post #24

mindslight wrote: post #11

Enough of a push for some states to grow a backbone, stand up for their citizens, and work towards expelling this ever-consuming totalitarian USG? Nah, probably not.

We are to pick this as a topic to fight back on? How about fighting back on law requiring people to purchase a product that they don’t want? No, USG says I have to have insurance while I don’t use doctors in network because they are worth less than WebMD. Instead I go to a doctor that I pay $160 out of pocket for a full hour visit that keeps notes on me that help to inform my future care. Fighting what largess the US…

I share your gripe, but I brought it up around this topic because interest of the states and USG are in a bit of conflict. The local governments know that once people aren't able to deduct as much of their real estate rent, they'll be pushing to get their rent lowered.

Re: I.R.S. Warns States Not to Circumvent State and Local Tax Cap

#32

Post by RHSeeger » Thu, May 24, 2018, 2:51 AM UTC

mhneu wrote: post #9

koolba wrote: post #2

> New York recently began allowing taxpayers to convert local property taxes into charitable contributions, which are fully deductible from federal taxes. Other states, like New Jersey and Connecticut, have been moving forward with similar plans to reclassify state taxes as charitable contributions. If they consider their taxes a charitable contribution I should be able to decide to not pay it. I know a lot of charit…

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I don't have a problem with paying taxes. I have a problem with the government taking the money I pay in taxes and wasting it.

Re: I.R.S. Warns States Not to Circumvent State and Local Tax Cap

#33

Post by [deleted] » Thu, May 24, 2018, 2:52 AM UTC

dahdum wrote: post #29

JumpCrisscross wrote: post #20

Earlier quoted context omitted.

> I would be surprised to see a judge take kindly to that type of nonsense We're a nation of laws. Not taking kindly to a case isn't justification for a ruling. The tax law was haphazardly drafted and written specifically to increase wealth transfers from surplus states ( e.g. Delaware, Minnesota and New Jersey) to deficit states ( e.g. New Mexico, Mississippi and West Virginia) [1]. I see valid arguments for both si…

The SALT deduction was a handout to the most affluent and a subsidy to the wealthiest states. It allowed them to increase their state and local taxes at the expense of federal revenue, spreading that burden across the country. The tax plan certainly had flaws, but capping SALT was egalitarian IMO.

[deleted]

Re: I.R.S. Warns States Not to Circumvent State and Local Tax Cap

#34

Post by jon_richards » Thu, May 24, 2018, 2:53 AM UTC

lotsofpulp wrote: post #13

JumpCrisscross wrote: post #7

Earlier quoted context omitted.

> If they consider their taxes a charitable contribution I should be able to decide to not pay it You still owe regular property taxes, with all the standard penalties for non-payments. What these laws do is give "municipal and county governments and school districts the legal authority to create special charitable accounts" and then let "local governments offer residents who contribute to the new accounts a nearly d…

I would be surprised to see a judge take kindly to that type of nonsense.

If you donate money to a charity, you get to deduct that from your income for determining your tax obligation.

If you have long term capital gains on a stock, you can donate that stock and not pay tax on the long term capital gains. Additionally, the full value of the stock counts against your income for determining tax.

This type of nonsense is all over our tax code.

Re: I.R.S. Warns States Not to Circumvent State and Local Tax Cap

#35

Post by noobermin » Thu, May 24, 2018, 2:53 AM UTC

bcheung wrote: post #28

Classifying local taxes as "charitable contributions"? I'm really on the fence about this. On the one hand, it seems an absurd and grossly inaccurate characterization, borderline lying and definitely tax evasion. On the other hand, there's this: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." Also, some…

Not really. The IRS is enacting the law Congress gave them, as it's supposed to. You can disagree with that law (I do) but I don't see them stepping outside their constitutional authority

Re: I.R.S. Warns States Not to Circumvent State and Local Tax Cap

#36

Post by lr4444lr » Thu, May 24, 2018, 2:54 AM UTC

JumpCrisscross wrote: post #23

throwaway76543 wrote: post #18

Earlier quoted context omitted.

This would be a quid pro quo contribution, already prohibited by the IRS. It's hard to see this "charitable conversion" nonsense as anything other than (potentially criminal) tax evasion. https://www.irs.gov/charities-non-profits/substantiating-cha...

That's an oversimplification. "A quid pro quo contribution is a payment made to a charity by a donor partly as a contribution and partly for goods or services provided to the donor by the charity" [1]. In this case, the charity isn't providing the quid pro quo , the local government is. States are already allowed to let one deduct charitable contributions from state taxes however they like. And visiting a park one do…

I don't think you're understanding how this is being constructed: the money wouldn't be going to the government (i.e. directly to the department of finance), precisely for the reason you're describing. That's why they're floating the idea of establishing charitable institutions under a kind of trusteeship in the municipalities as per the bylaws of what those shell entities will be.

EDIT: Stated specifically, for NY: "The Budget establishes a charitable gift trust fund in the joint custody of the New York State Commissioner of Taxation and Finance and the State Comptroller."

[0] https://www.budget.ny.gov/pubs/archive/fy19/enac/enacted-tax...

Re: I.R.S. Warns States Not to Circumvent State and Local Tax Cap

#37

Post by duxup » Thu, May 24, 2018, 2:54 AM UTC

virmundi wrote: post #24

mindslight wrote: post #11

Enough of a push for some states to grow a backbone, stand up for their citizens, and work towards expelling this ever-consuming totalitarian USG? Nah, probably not.

We are to pick this as a topic to fight back on? How about fighting back on law requiring people to purchase a product that they don’t want? No, USG says I have to have insurance while I don’t use doctors in network because they are worth less than WebMD. Instead I go to a doctor that I pay $160 out of pocket for a full hour visit that keeps notes on me that help to inform my future care. Fighting what largess the US…

Aren't networks and medical insurance a problem across the board? I've had that problem on employer provided insurance plenty of times... it's got nothing to do with the federal requirements, it's just how dorked up the medical industry is.

I get what your'e saying but the details if what you describe is the a whole healthcare industry issue. Too often I see "OMG THIS IS THEIR FAULT" no it's just how the insurance industry is and nobody has a backbone enough to deal with that tangled mess. This networks and providers have been an issues since before any federal requirement(s).

Re: I.R.S. Warns States Not to Circumvent State and Local Tax Cap

#38

Post by ojbyrne » Thu, May 24, 2018, 2:55 AM UTC

An obvious solution (though not necessarily a good idea) is to raise state corporate taxes to offset the federal cuts and lower state individual rates correspondingly.

Re: I.R.S. Warns States Not to Circumvent State and Local Tax Cap

#39

Post by noobermin » Thu, May 24, 2018, 2:56 AM UTC

dahdum wrote: post #29

JumpCrisscross wrote: post #20

Earlier quoted context omitted.

> I would be surprised to see a judge take kindly to that type of nonsense We're a nation of laws. Not taking kindly to a case isn't justification for a ruling. The tax law was haphazardly drafted and written specifically to increase wealth transfers from surplus states ( e.g. Delaware, Minnesota and New Jersey) to deficit states ( e.g. New Mexico, Mississippi and West Virginia) [1]. I see valid arguments for both si…

The SALT deduction was a handout to the most affluent and a subsidy to the wealthiest states. It allowed them to increase their state and local taxes at the expense of federal revenue, spreading that burden across the country. The tax plan certainly had flaws, but capping SALT was egalitarian IMO.

Spreading that burden to states which have a negative contribution to the fed? The states that utilized SALT on net contribute more in tax to the fed gov't than they take in spending.

Re: I.R.S. Warns States Not to Circumvent State and Local Tax Cap

#40

Post by JumpCrisscross » Thu, May 24, 2018, 2:58 AM UTC

lr4444lr wrote: post #36

JumpCrisscross wrote: post #23

Earlier quoted context omitted.

That's an oversimplification. "A quid pro quo contribution is a payment made to a charity by a donor partly as a contribution and partly for goods or services provided to the donor by the charity" [1]. In this case, the charity isn't providing the quid pro quo , the local government is. States are already allowed to let one deduct charitable contributions from state taxes however they like. And visiting a park one do…

I don't think you're understanding how this is being constructed: the money wouldn't be going to the government (i.e. directly to the department of finance), precisely for the reason you're describing. That's why they're floating the idea of establishing charitable institutions under a kind of trusteeship in the municipalities as per the bylaws of what those shell entities will be. EDIT: Stated specifically, for NY:…

> the money wouldn't be going to the government

Hence my argument for the lack of a quid pro quo. The charity gets the quid; someone else provides the pro quo. How states and municipalities count their tax obligations could be argued to be local issues, from a Tenth Amendment perspective. (We just had a landmark anti-commandeering case get decided on by SCOTUS.)

Here's a clearer quid pro quo: churches.