What is the SALT deduction?
You can remove state and local taxes from your federal taxes. Blue states have higher state and local taxes, but also contribute far more and take far less from the federal government. Its messy.
Democrats want to give a tax cut to the top%, 6x bigger than any other bracket
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Re: Democrats want to give a tax cut to the top%, 6x bigger than any other bracket
#12I'm surprised Democrats haven't made taking a loan against an asset a taxible capital-gains event.
Democrats tax millionaires, not billionaires.
Re: Democrats want to give a tax cut to the top%, 6x bigger than any other bracket
#13I'm not arguing for or against this but there are some points of subtlety:
First, this is not at all guaranteed. It's the current state of the bill in the House, and the Democrats are arguing amongst themselves, were on vacation last week, and will return to a list of critical legislation over the next few weeks (debt ceiling, defense, then maybe this if they can pencil in some time to spend $1.75T).
This is in regards to the SALT cap, which didn't exist at all until 2017, and in the House bill it's raised to something like an $80k limit. Sen. Sanders in the Senate wants to income-cap it instead. The summary from the article does a better job of explaining than the editor who wrote the headline:
"Taxpayers making between $500,000 and $1 million are set to see an average tax cut of over $6,000 next year [...] The bill still raises taxes on the top 0.1%, with the average household making over $1 million paying over $65,000 more."
So an overall tax cut for the top couple percent up to the top 0.1% in high-income/property tax states. Which lean blue. Just four years ago much of the press around this was howling at how Trump was doing this to punish blue states (IMO it was primarily to balance the corporate tax cuts for reconciliation, with tax-those-who-didn't-vote-for-me being secondary), and now it seems difficult to repeal since it can be seen as a fresh new tax cut.
IMO analyses need to treat the ultra-rich independently; it doesn't seem fair to group a couple making $500k and owning a house in New Jersey with the 0.001% and then to start talking about averages. Though I can understand there's not going to be a ton of sympathy for the plight of a couple making north of $500k.
IIUC, SALT tax deduction limit will expire in 2025 naturally. Though Sanders's proposed amendment may extend it indefinitely?
Re: Democrats want to give a tax cut to the top%, 6x bigger than any other bracket
#14Isn’t SALT preventing double taxation? And isn’t this just returning it to the state prior to the trump tax bill?
Whether or not a state and local tax deduction counts as "double taxation" depends entirely on what you mean by "double taxation". For example, one could say that sales tax is a form of "double taxation" because you were already charged tax on your income and now you are being charged tax again when you try to spend it. Or, one could say that income tax and sales tax are two unrelated taxes, and they should not be co…
Sales tax is indeed double taxation. That's why you're allowed to deduct it on your federal taxes under the SALT rules.
Re: Democrats want to give a tax cut to the top%, 6x bigger than any other bracket
#15Isn’t SALT preventing double taxation? And isn’t this just returning it to the state prior to the trump tax bill?
Whether or not a state and local tax deduction counts as "double taxation" depends entirely on what you mean by "double taxation". For example, one could say that sales tax is a form of "double taxation" because you were already charged tax on your income and now you are being charged tax again when you try to spend it. Or, one could say that income tax and sales tax are two unrelated taxes, and they should not be co…
This. I’m a huge fan of tax cuts but the double taxation thing never made any sense to me. But then I realized it resonated with a lot of people so I just went with it. In todays society if someone favors reducing taxes it’s wise to just roll with it.
One of the biggest advantages to deriving revenue from taxation is that if you tax everyone 10% by the time the money changes hands 10 times you’ve got your dollar back. It’s all double taxation
Re: Democrats want to give a tax cut to the top%, 6x bigger than any other bracket
#16Re: Democrats want to give a tax cut to the top%, 6x bigger than any other bracket
#17I'm surprised Democrats haven't made taking a loan against an asset a taxible capital-gains event.
There's a more general proposal to tax unrealized capital gains, for the wealthy. It came up in funding negotiations for this bill but wasn't ever in a draft IIRC.
Re: Democrats want to give a tax cut to the top%, 6x bigger than any other bracket
#18Re: Democrats want to give a tax cut to the top%, 6x bigger than any other bracket
#19I'm surprised Democrats haven't made taking a loan against an asset a taxible capital-gains event.
Think about that for a moment, why might that be a bad idea?
I don’t want to get into politics on HN, but I’ll say it’s a bad idea because many people don’t want to pay another penny in taxes. And this isn’t about my personal politics. If you want a tax because society will benefit, great - many of us are for it. But that’s not the debate.
If the government was efficient or effective at spending, then it’s just a question of, “well, do we agree spending on X benefits our community or society?”
Where I live, the infrastructure is in bad shape. Public schools are an embarrassment. Teachers are paid nothing (hence, we have unqualified teachers because skilled ones go into other fields). Homelessness is a separate industrial complex where we pump billions each year, but there are no results.
The debate on taxes always turns into the rich or whoever “paying their fair share”. But there’s another topic of greed, blatant corruption, and incompetence in the government apparatus that we have. If I give another penny from my dollar, I don’t see how my community benefits. There’s no accountability. Why should I pay my community gets nothing in return? In fact, it’s not that my community pays and another community wins. It’s that the money seems to go down a black hole of bureaucratic corruption and greed.
Re: Democrats want to give a tax cut to the top%, 6x bigger than any other bracket
#20> An analysis from the Tax Policy Center on the latest version of the bill shows that, while nearly all Americans making under $1 million will get a tax cut, those on the upper end of that spectrum — the merely rich making between $500,000 and $1 million — will see a much bigger dollar-value tax cut than the bulk of the working and middle class
So everyone under 1 million gets a tax cut, but the 500k-1m range sees a bigger cut.
I mean, it seems good at first, it be nice to amortize the break more evenly, but I think it's because it's done through a deduction mechanism instead of altering the brackets themselves, so it's probably harder to control.
What exactly is the "bad angle" though here? Is there a different way to do it?
P.S.: Also they do the comparison on tax dollar. Which seems strange. Obviously the same percentage cut for someone making more money will be bigger, so if someone makes 6x more money the same cut will result in 6x more absolute dollar no? Is it true that the 500k-1mil earners are getting a special treatment here or is it just the way the same treatment applies to them?