But a ny public school education isnt better than the education you get in a state that doesnt have state taxes.
:cough:
NY Public school is basically prison. So my taxes were put towards me attending prison in my youth where the other inmates were assholes. FUN!
in fact, I think that my 2nd grade class was held in the annex that was actually once a prison.
Yeah, Iām not going to argue that schools are āgoodā things. I really donāt know. Certainly they are very prison like. Same with work, for that matter.
Yes, you have more individual control over your electric bill than your property tax. But, if you want to enjoy the benefits of living in a modern society, youāre going to be paying an electric bill.
You have some control over the state/local taxes you pay. You many choose to spend more money on cars and vacations than on house, and lower your property tax. In some states, not everything is subject to sales tax, so you can choose to spend more money on the nontaxed items than on the taxed items.
And, you and your fellow citizens working together have as much control over your state and local taxes as you have individual control of other spending. I donāt buy the notion that this is ācompletely out of my controlā. Some people (maybe including Lucy?) support the SALT deduction because it encourages people to vote for more S&L govāt services, believing they are chronically under-supported.
As I said, I want simple and progressive taxes. IMO, the difference you can find in ācontrolā here doesnāt come close to justifying a policy that complicates the tax law while making it less progressive.
Thatās true of tons of things that no one has remotely considered making tax-deductible. I think that taxes are in a different category, particularly income taxes.
Taken to an extreme, without the deductibility of state and local income taxes, you could easily end up with a combined marginal tax rate that is greater than 100%. That is not so much an issue now that the top marginal tax rate is only 37%, but back when it exceeded 90% that could happen very easily. And of course there are other scenarios where your marginal tax rate can already exceed 100%.
I will grant you that thereās not much political appetite for a marginal tax rate greater than 50% at this time.
Interestingly, the SALT deduction has been around and unlimited from the time the income tax was introduced in 1913 until the limitation was introduced in 2018. And temporary income taxes during the Civil War and Reconstruction also featured the SALT deduction. The purpose was to prevent federal encroachment on state revenue sources. An argument that I think holds equally well today as it did in 1913.
To the extent that those higher taxes provider for better services that the taxpayers want, I donāt think the federal govāt should be pushing people to chose one tax level over another.
To the extent that they offset problems of unequal distribution of the burden of poor people, I think the federal govāt should help poor people directly, or subsidize the state programs that help poor people. We already do a good deal of that.
In that case, the federal support can come directly from progressive federal taxes, rather than putting a regressive provision in federal tax law and hoping it will result in a beneficial effect. Generally, explicit subsidies are more efficient than generic tax deductions. (Iām probably agreeing with your parenthetical comment.)
āPunitiveā suggest some desire to punish. I donāt think thatās an accurate word in this case.
People who own houses in communities with higher property tax rates pay more dollars than people who own identically priced houses in communities with lower property tax rates.
If the differential is significant, it is probably reflected in the price of the house. Identical houses are likely to have lower market prices in the higher tax community.
If you think the federal govāt should do something about lower income places having lower tax base, it can subsidize certain things directly. That is far more efficient than just giving all higher income people a tax cut, wherever they happen to live.
(Note that in some cases lower income people live in communities with decent property tax bases because they live near property tax paying industries. So your assumption the low income residents = low property tax base ignores an very important factor.)
Disagree. Capping the SALT deduction was absolutely a desire to at least raise taxes on, if not outright punish, those who pay higher SALT taxes. They did the math and decided those people are disproportionately Democrats so f*** āem.
Okay, youāre talking about the 2017 tax law. Iām pretty confident that Paul Ryan saw it as simplifying and rationalizing the law, something favored by most economists (who would have eliminated it entirely). I assume Ryan had plenty of constituents whose taxes went up, but he was willing to live with the negatives in WI, because they were often offset by other positives in the law.
Iām also quite sure that when Trump understood that this would disproportionately impact people who didnāt vote for him, he got onboard quickly.
So Iāll agree that for Trump it was punitive, for others it was āgood tax policyā. Iām with the others.
Itās not giving all higher income people a tax cut. Itās giving highly taxed people a tax cut. There is a difference.
That depends on how you define āplentyā. Wisconsin 1 is not a particularly wealthy district. The median household income is $67,231 (as of 2018) which is pretty close to the national median.
He wasnāt exactly representing the upper east side, or Beverly Hills or anything.
Okay, its giving higher taxed high income a tax cut, whether they live in the places with high tax base per citizen or live in places with low tax base per citizen.
You seem to think itās a good thing to have them live in low tax base areas and a bad thing for them to live in high tax base areas.
Okay, āIām sure there are some people in Ryanās district who found their SALT deduction cappedā.
Actually, you are the one who seems to think that (since you wish to penalize them) and I think the opposite.
We seem to have a communication problem. I re-read my post, I donāt think I got it backwards. Hereās your earlier post.
The cap is certainly punitive to the high end homes in a low end school district though, such as the expensive homes in a big city where the average property value is pretty low. Those folks are already paying school taxes hugely disproportionate to their suburban peers and now they donāt get to deduct them. (Since their state income tax is likely over $10,000 even without the property tax.)
So it has the perverse incentive of providing additional incentive, above what was already there, for the rich and upper middle class to take their money and leave the big cities.
Youāre saying removing the SALT deduction would generate a āpervese incentiveā in that it would lead to more rich and upper middle class people leaving ābig citiesā (presumably places with low tax base per capita) and moving to suburbs (presumably places with high tax base per capita).
Isnāt that the same as this?
You seem to think itās a good thing to have them [high income] live in low tax base areas and a bad thing for them to live in high tax base area
No, itās the exact opposite of what you wrote. Switch the words āgoodā and ābadā in your version and then you have my view.
It helps everyone if rich people and poor people live in the same school district. Driving the rich people out of the poor school district is not a good thing.
Okay. I thought thatās what I said, but at least we agree on your opinion.
You think that the eliminating the SALT deduction, or even capping it, will ādrive peopleā out of low tax base districts. I donāt. I think it may ānudge peopleā out of low tax base districts. Whether it does is impacted by how much the difference in property tax rates is captured in the market price of the house.
The actual impact is quite small. In order to get this small nudge, you are willing to give all high income, highly taxed people a tax break, even those who choose to live in the high tax base districts. I find that extremely inefficient.
Itās like the mortgage interest deduction. Some people support it because it helps make buying a house a little more affordable for lower income people who are on the edge of buying vs. renting. But, since the deduction is available to everyone, the great majority of tax-dollars-not-collected are from higher income people who could have afforded a house without the deduction. It is an extremely inefficient way of helping lower income people get into ownership.
Mortgage interest deduction: if we were starting a new income tax that didnāt previously exist, I would definitely not put this in.
As my father says, some people simply donāt have what it takes to be homeowners. He converted an apartment building to condos and tried to sell the condos to the tenants. They were pretty cheap. I donāt recall the exact prices, but well under $100,000 for a 4-bedroom unit with a 2-car garage in a top-25 city. Not the fancy part of town, but not the slum either.
In the long run it would be cheaper for the tenants to buy. So some of them did. But within 2 years theyād all sold back to my dad. (Heād agreed to buy any unit back from anyone whoād changed their mind.)
Why? Because when the refrigerator stopped working or the faucet leaked, they didnāt have the skills to fix it themselves and they had $0 in savings to hire someone else to fix it. When it got hot in the summer and they were running the air conditioning, they couldnāt pay the above-average electric bill. They were completely dependent on having a fixed housing cost each month that had precisely zero variation.
It ends up not really helping these people to get them into a home that they own. And obviously a condo has way less variable costs than a house where youāre also responsible for replacing the roof and mowing the grass or paying someone else to do so and so much more.
So yeah, in a vacuum, a mortgage interest deduction is not really a good idea. And as you say, it disproportionately benefits theā¦ I would say upper middle class. (Totally rich folks pay cash.)
But, given that it has been an ingrained part of the tax code for decadesā¦ itās reflected in property values. You canāt get rid of it very easily or youāre going to wipe out the biggest asset many middle class families have: the equity in their home.
You have to phase it out SLOWLY. Like over 50 years or maybe even 100.
Iād support a gradual phaseout over 100 years, and possibly a phaseout over 50 years. I would not support phasing it out any faster than that.