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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

#171

Post by handbanana »

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'm not ultra rich, and these tax changes benefit me. From what I understand, the tax changes do benefit a high number of people. But the amount they appear to negatively impact those that don't benefit from them, also appears to be high (which of course, isn't great)

I have not looked in depth at the tax changes (ie read the changes in detail), but I do think there's more to the changes than just giving the ultra rich a tax cut.

It seems to me that those living in high tax states, with expensive housing, appear to be negatively impacted.

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

#172

Post by tzs »

lettergram wrote: post #17
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…

California is the insane state with created the taxes. The government is trying to simplify the tax code, that means you should be able to say: "I'm taxed at 15%, and that means out of $100k you get $85k take home" Not all the deductions. I'm not really, for or against this bill. I used to live in Alameda, CA and thought the taxes were insane. The bag tax, the income tax, the property tax, literally if you didn't hav…

Reducing the number of brackets and removing a few of the simplest deductions while mostly leaving untouched or even increasing the hundreds or thousands of deductions that are generally only usable by companies and very wealthy people is not in any meaningful way simplifying the tax code.

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

#173

Post by eli »

AlexandrB wrote: post #87
eli wrote: post #52

Earlier quoted context omitted.

Taxes aren't based on how much you benefit from government. Progressive tax rates make sense because the wealthy can afford to pay a larger share of their paycheck to support shared society. Not because they necessarily derive more benefits than the middle class. If we taxed people based on the benefits they receive from the government, then the homeless would pay a fortune.

> If we taxes people based on the benefits they receive from the government, then the homeless would pay a fortune. This is a comical simplification. The public and legal infrastructure in America overwhelmingly helps companies and investors make money. Where would UPS be without public roads? Where would Warren Buffet be without a stable legal framework for investment? That's not to mention the military spending tha…

I think I phrased that poorly. My point is that how much the government spends "on you" is not relevant to what your income tax rate should be.

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

#174

Post by koolba »

hcknwscommenter wrote: post #77
jartelt wrote: post #23

Overall this bill seems really, really bad and poorly implemented (and costly). But as a renter in the bay area, I do like that increasing the standard deduction and reducing some of the other popular deductions will decrease the large tax break homeowners have been receiving. In my opinion we have been treating renters unfairly by letting homeowners deduct so much mortgage interest, property taxes, etc. We already i…

If owning real estate becomes more expensive, there is a very high likelihood that rents will increase rather than decrease.

Real estate prices would go down in response to increased costs associated with ownership (namely inability to deduct interest and property taxes).

To illustrate the point, if the carrying cost (i.e. property tax) of real estate was extreme, say 90%, nobody would want to own property and the price would plummet. Losing the deductibility for interest and property taxes is nowhere near that extreme but the direction of the effect is the same.

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

#175

Post by AFNobody »

creaghpatr wrote: post #165
AFNobody wrote: post #107

Earlier quoted context omitted.

> Two families both make $250,000 a year. One is in New York and one is in Texas. The family in Texas is carrying more of the federal tax burden than the family in New York. Why? Both are (in theory) receiving the same benefits from the Federal Government and should pay the same in taxes. This assertion isn't true. Federal policies already heavily favor funding Red, rural states over more urban states. It "sounds" tr…

>Federal policies already heavily favor funding Red, rural states over more urban states. It "sounds" true when you think about a person/household but when you factor in the other state services being funded (i.e. roads) it falls apart. Much of that funding goes to subsidies (farming, energy, etc) for which the whole country enjoys the benefits, if not proportionally. A state like SC that has a disproportionate amoun…

> local SC taxpayers only get marginally more benefit than the rest of the country.

I wouldn't agree its marginally more benefit. Those bases being shut down would crush SC's economy within 50 miles of every base.

Economically, they enjoy 100% of the benefit and pay less than 5% of the costs.

The US is not, in any real sense, threatened militarily that I benefit from a large defense budget. Similar is true of food and energy subsidies. They have strategic value but they don't benefit me economically. There is a reason food and energy imports are still competitive despite the subsidies.

The benefits of what you mention is it helps broaden the US's foreign policy options, not actual economic value to the average American.

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

#176

Post by [deleted] »

kevinh wrote: post #64
koolba wrote: post #36

Earlier quoted context omitted.

The counter argument is, why should the rest of the country and generally lower income tax payers be subsidizing the high State taxes, high property taxes, and higher mortgage deductions on your expensive homes? If you want to lower your State tax bill then lobby your State representatives. If you want to lower your property taxes then lobby your local officials. Or vote with your feet and move somewhere that doesn’t…

California already pays more to the federal government than it takes out. It is subsidizing poorer states, not the other way around.

[deleted]

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

#177

Post by SauciestGNU »

hcknwscommenter wrote: post #145
TheAdamAndChe wrote: post #100

Earlier quoted context omitted.

Both states still recieve the same benefits from the federal government, it's mostly just demographic and economic differences that cause different states to receive different amounts of aid. Or do you really think West Virginians, who are mostly poor, should receive exactly the amount as New York, who is much more rich overall?

You think it's just an accident that the rich states are high tax? No, the rich states have done much more to invest in education, safety nets, and regulation (work place safety, environment, police activity, etc.). That is why they have better economies. This tax bill just takes a look at all that investment and says: nope.

What's worse is that it actively sabotages responsible governance so rural and red state voters can get their revenge for being left behind.

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

#178

Post by falcolas »

hcknwscommenter wrote: post #77
jartelt wrote: post #23

Overall this bill seems really, really bad and poorly implemented (and costly). But as a renter in the bay area, I do like that increasing the standard deduction and reducing some of the other popular deductions will decrease the large tax break homeowners have been receiving. In my opinion we have been treating renters unfairly by letting homeowners deduct so much mortgage interest, property taxes, etc. We already i…

If owning real estate becomes more expensive, there is a very high likelihood that rents will increase rather than decrease.

It directly follows, really. The money for the increased costs has to come from somewhere.

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

#179

Post by tzs »

Aloha wrote: post #95
EgoIncarnate wrote: post #79

Earlier quoted context omitted.

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).

which makes it not worth the paperwork effort to do so.

The effort is something like filling in one line, adding up a handful of numbers, copying the result to another line, selecting which of two numbers is larger and copying that one to another line.

That hardly even merits the word "effort"...and if you are using tax prep software instead of filling out the forms by hand it isn't even that...it's just entering one number in one field.

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

#180

Post by falcolas »

koolba wrote: post #174
hcknwscommenter wrote: post #77

Earlier quoted context omitted.

If owning real estate becomes more expensive, there is a very high likelihood that rents will increase rather than decrease.

Real estate prices would go down in response to increased costs associated with ownership (namely inability to deduct interest and property taxes). To illustrate the point, if the carrying cost (i.e. property tax) of real estate was extreme, say 90%, nobody would want to own property and the price would plummet. Losing the deductibility for interest and property taxes is nowhere near that extreme but the direction of…

Only if all of those property owners respond to the increased costs by selling the property, and don't monetize it in another fashion (like renting it).
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