Democrats want to give a tax cut to the top%, 6x bigger than any other bracket(businessinsider.com) |
Democrats want to give a tax cut to the top%, 6x bigger than any other bracket(businessinsider.com) |
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?
Edit: yeesh, phone keyboard really made a mess of that originally.
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 considered "double taxation".
In the case of the SALT deduction, it depends on whether you think that states (and local governments) taxing your income is a separate tax from the federal government taxing your income, or whether you think that they overlap and should count as "double taxation".
But mostly it just depends on whether you think it benefits your political party or the other political party.
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
Alternatively, enabling high-tax states to increase the burden of taxation while depriving federal government of tax revenue.
Then at least even if they make stupid cross comparisons in titles, people would know they can quickly look inside for a breakdown of the reality which can't be confused by wording.
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.
This isn't obvious to me. Can you help me understand?
I have no problem with them eliminating the stepped-up basis on inheritance of investments. IMO, the only reason they do this is because if you inherit stocks from your great grandmother, who knows what she paid for them? But with today's computer systems, tracking the basis through generations should not be a huge deal.
Why should the federal government subsidize high state and local taxes? It obviously most benefits the wealthy who are well above the current SALT cap. The standard deduction is already pretty high, ~25k for married couple. And if you're paying that much in state and local taxes, you're pretty well off.
Regions with higher taxes also tend to have higher populations and more dense populations and provide more social services. And regions with more dense populations also tend to vote for one party over the other. It was pretty clear to most that this was aimed solely at punishing one party over the other, which to me is enough to support its repeal.
But beyond all that, do we support double taxation or not? I think most people would say it's unfair to tax someone on income they derived no value from (beyond the social services aspect).
So someone in Oklahoma should pay more federal taxes that someone in California ... why? California sets its own policies, whether its housing or the social services they provide, as does Oklahoma. Someone from OK does not benefit from CA policies that provide more social services, so why should they subsidize them?
> do we support double taxation or not?
I'm taxed on my income and I'm taxed again on sales tax and if i transfer above a certain amount I'm taxed again as a transfer or gift tax, and if I leave an estate I'm taxed again, and if I use it to buy a home, I'm taxed again...
If you're actually against double taxation, you should be against all of these taxes because you're being taxed on top of already taxed income.
The deductibility of state and local taxes has been around since income tax was created in 1913, and almost all state and local taxes have passed under that old framework. That's not to say it has to be done that way forever.
That...seems pretty negligible. Especially if you consider the number of people actually in that tax bracket. According to this link [0], approximately 1.6MM households are in this tax bracket...so that's about 10 billion dollars in lost revenue, which seems small relative to the size of the spending bills.
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?
I wouldn't expect to see taxes being raised in the near term to compensate for reduced taxes on residents either.
The SALT cap put a limit on how much you can deduct. So folks paying more State Tax than the limit that previously benefited from deducting that amount could only deduct up to the limit.
Yes!
> That's why you're allowed to deduct it
It's complicated.
First, Sales taxes cannot be deducted from SALT if you deduct state income tax. You have to pick which one you deduct. But if the intention was to avoid double taxation, they would have allowed you to deduct both.
Second, SALT exists from the era when top marginal rates were 90 percent, so you could end up in situation where you paid more than your income in taxes. Actually this is true even with the SALT deduction, but the deduction was basically a tax break to top earners in order to compensate for very high federal rates. The rationale for it doesn't exist today.
Third, double taxation does not refer to the amount of tax paid but to the fact that the same income is taxed twice. Deducting the sales tax (or the income tax) would not eliminate double taxation, it would only reduce it by a small amount.
E.g. if you earn $1 in income and spend half of it, and if the sales tax is 10% and state income tax is 10% and the Fed tax is 30%, then:
* Without SALT, your liability is 45 cents (thank God you only spent half!) and you have triple taxation on $.50 (sales, state, federal) and double taxation on $.50 (state, federal)
* With SALT, your liability is 42 cents and there is triple taxation on $.50 (sales, state, federal) and double taxation on $.40 (state, federal). Thus the SALT deduction saves you 3 cents by reducing your federal liability from 30 cents to 27 cents. But you paid 15 cents to the state. This is because the SALT deduction is not a tax credit, it's a tax deduction that just reduces your taxable income a bit.
There's also things like houses and land that records are likely to be iffy for. Especially because some improvements add to the basis, and who knows where grandma kept her files for improvements or if there's enough detail in there to say for sure.
It's definitely a loophole though, same with donating apprechiated capital property.
Which punishes poor people for being poor.
When you take out a collateralized loan, you still have to pay it back.
...and yet, the rest of your comment is all your politically motivated beliefs and suggestions for policy based on those beliefs. Why do you believe all government is corrupt or incompetent? It can't be direct observation; there's just too much of it for one person to do that. Why do you focus on schools and homelessness, instead of (for example) military spending or corporate non-taxation? Could it be because of something you read, written by someone with a distinct political agenda?
"I'm not political, but <political opinion>" is one of the oldest tricks in the book, disingenuously trying to put one's own opinions above the "mere" politics others believe in. Stop. Own your political beliefs. Engage as an equal, not a superior authority representing "common sense" or whatever.
...it's amazing how much of this is caused by local and state governments being unable to afford:
1. Qualified talent
2. Equipment
3. Effective professional services
"The beatings will continue until morale improves" or, perhaps more aptly, "funding will trickle until programs improve."
a.k.a putting the cart before the horse.
I get that this isn't uniform across the board, but anecdotally, it's been true everywhere I've been. What's more appropriate, at least to me, is to include temporary funding that renews on meeting certain OKRs.
1. They hire their friends instead of qualified talent, and pay their unqualified friends ridiculous amounts
2. Local officials have businesses on the side and arrange to have their business get local government contracts
3. They don't want anyone qualified looking at their finances, because all the corruption and fraud will be obvious.
We've had local elected officials steal money and yet they can't be removed from office because they were elected. The whole local government situation is shit, starting with the fact that the people elected may be "popular" in some sense (they won the election, yipee!), but that doesn't mean they are qualified to run a city or county or manage a large budget.
I can't imagine just throwing up my hands and saying "welp, its politics" if I had this sort of information.