Trump flip flops on SALT Tax Deduction

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Isn't he the one who capped them in the first place?

He capped b/c the standard deduction was raised, which is a better deal under current tax law.

The best deal was lowering overall tax rates. Too many people are forgetting this fact. And thank Obama for the Net Investment Income Tax that added a 3.8% tax on investment earnings for incomes over $250K (MFJ). This hits a lot of middle class earners.

Ha ha household income of $250k puts you in 91st percentile. Very middle class.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I personally would be better off with a higher SALT limit, all else equal, but it's clearly the right policy to limit or eliminate the deduction.

SALT deductions have been around since the 1860s. Why? Because it was considered Big Government overreach for the federal government to double-tax the states.

The United States’ first income tax was enacted in 1861, and tweaked in 1862. Both versions contained only one deduction; and, you guessed it, it was the SALT deduction! A recently minted political party called the Republican party controlled Congress and a Republican-party President occupied the White House for the first time (a 6’ 4” fellow named Abraham Lincoln). Records of why the SALT deduction was included in the first income tax are scarce, but there are documented statements by Congressional Republicans that may support two justifications. The first was federalism and keeping the Federal tax out of the orbit of State levies. The second was double taxation: preventing the Federal government from taxing a dollar that the States had already taxed. There is no record of political discord over the SALT deduction.

https://www.chamberlainlaw.com/tax-blawg/history-of-the-salt-deduction

Capping SALT deductions in 2017 was the radical policy.

I don't see anything here making a serious policy case for a SALT deduction (and no, "we've done it this way for a century" is not a serious case). The core issue is that SALT amounts to a federal subsidy of state taxes and mortgage interest in proportion to the taxpayer's income, with high income folks receiving a greater subsidy as a percentage and folks in high tax states receiving a higher level of subsidy. This makes no sense! Just eliminate the deduction and lower the rates by a couple percentage points until revenue is equalized.

The states with low/no state income tax are subsidized by wealthier states - ie the ones that tend to have higher state and local taxes. Seems a fair way to offset that.

Not PP, but disagree with this statement. How are states w/higher state income tax, subsidizing those with lower state income tax ? It’s not like the high tax states are sending part of their state budget to the Feds to spend for the benefit of all. Sure, you can say they have higher per capita income, so what, they pay more federal income tax as they should, but has nothing to with the state taxes. They would pay the same Federal tax if they lived in low tax states.

The reality is that states with higher tax rates have chosen to provide more services and better paid civil servants, compared to that of low tax states. They may also be inefficient in providing those services. The SALT deduction is a way to hide this from their citizens. I say let them pay the full freight. And if they don’t like it, move or complain at the voter box.

When states with low/no state or local taxes underfund their programs, the federal government steps in. So while we with higher taxes pay for our services with our high taxes up front, we're also paying for those who refuse to fund their local services through their own state taxes with the extra federal support they receive as a result.

Its a weak argument with no specifics. And it’s impossible to untangle from the argument that some states are less efficient than others, so why should the entire country subsidize those inefficient states with high state income taxes by giving a Federal deduction for their citizens ? Makes no sense.

Every state is in control of its own budget. They decide every year what services to provide and at what level, and what the tax rate will be to support that spending. It has nothing to do with what some other state has decided to spend on its service level.

Citizens of NY,NJ,CA,MD,VA have tacitly voted for their current tax rate and services, based on who is in state office. Let them pay for what they voted for. A federal deduction is unrelated to that decision making.

Here’s some specifics. Mississippi get 79.6% of its Medicaid program paid for by the federal government. High income states like CA, MD, CT, NY and NJ get only 50% covered. Medicaid is one of the biggest budget items for states and the fact that the federal government pays way more of the share for red states than blue states is a big part of the reason blue states need to have higher state taxes.

So what? None of this is relevant to why high-income residents of high tax states should get a very specific kind of tax break that is not available to high income residents of low tax states, or to low-middle income taxpayers in any state.

It’s very relevant. High income residents of low tax states are paying lower state taxes because their states budgets are heavily subsidized by the federal government. High tax states residents have to pay higher state taxes because their states aren’t getting such big subsidies. The SALT partially offsets that disparity.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Just remember that when this legislation fails, the 2017 tax cuts expired and SALT will be back in full (along with higher rates, but I digress).

And those higher rates will more than offset the full SALT deduction. But I digress.

It depends on your particular situation. Our overall tax bill didn’t change much at all from the Trump tax changes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I personally would be better off with a higher SALT limit, all else equal, but it's clearly the right policy to limit or eliminate the deduction.

SALT deductions have been around since the 1860s. Why? Because it was considered Big Government overreach for the federal government to double-tax the states.

The United States’ first income tax was enacted in 1861, and tweaked in 1862. Both versions contained only one deduction; and, you guessed it, it was the SALT deduction! A recently minted political party called the Republican party controlled Congress and a Republican-party President occupied the White House for the first time (a 6’ 4” fellow named Abraham Lincoln). Records of why the SALT deduction was included in the first income tax are scarce, but there are documented statements by Congressional Republicans that may support two justifications. The first was federalism and keeping the Federal tax out of the orbit of State levies. The second was double taxation: preventing the Federal government from taxing a dollar that the States had already taxed. There is no record of political discord over the SALT deduction.

https://www.chamberlainlaw.com/tax-blawg/history-of-the-salt-deduction

Capping SALT deductions in 2017 was the radical policy.

I don't see anything here making a serious policy case for a SALT deduction (and no, "we've done it this way for a century" is not a serious case). The core issue is that SALT amounts to a federal subsidy of state taxes and mortgage interest in proportion to the taxpayer's income, with high income folks receiving a greater subsidy as a percentage and folks in high tax states receiving a higher level of subsidy. This makes no sense! Just eliminate the deduction and lower the rates by a couple percentage points until revenue is equalized.

The states with low/no state income tax are subsidized by wealthier states - ie the ones that tend to have higher state and local taxes. Seems a fair way to offset that.

Not PP, but disagree with this statement. How are states w/higher state income tax, subsidizing those with lower state income tax ? It’s not like the high tax states are sending part of their state budget to the Feds to spend for the benefit of all. Sure, you can say they have higher per capita income, so what, they pay more federal income tax as they should, but has nothing to with the state taxes. They would pay the same Federal tax if they lived in low tax states.

The reality is that states with higher tax rates have chosen to provide more services and better paid civil servants, compared to that of low tax states. They may also be inefficient in providing those services. The SALT deduction is a way to hide this from their citizens. I say let them pay the full freight. And if they don’t like it, move or complain at the voter box.

When states with low/no state or local taxes underfund their programs, the federal government steps in. So while we with higher taxes pay for our services with our high taxes up front, we're also paying for those who refuse to fund their local services through their own state taxes with the extra federal support they receive as a result.

Its a weak argument with no specifics. And it’s impossible to untangle from the argument that some states are less efficient than others, so why should the entire country subsidize those inefficient states with high state income taxes by giving a Federal deduction for their citizens ? Makes no sense.

Every state is in control of its own budget. They decide every year what services to provide and at what level, and what the tax rate will be to support that spending. It has nothing to do with what some other state has decided to spend on its service level.

Citizens of NY,NJ,CA,MD,VA have tacitly voted for their current tax rate and services, based on who is in state office. Let them pay for what they voted for. A federal deduction is unrelated to that decision making.

Here’s some specifics. Mississippi get 79.6% of its Medicaid program paid for by the federal government. High income states like CA, MD, CT, NY and NJ get only 50% covered. Medicaid is one of the biggest budget items for states and the fact that the federal government pays way more of the share for red states than blue states is a big part of the reason blue states need to have higher state taxes.

So what, these are federal programs, higher earners in red states pay the same federal taxes as those in blue states.

And again, blue state voters voted for their state budgets and state taxes based who is in office. They didn’t go to poles thinking I am going vote Democrat (year after year) b/c I am getting a SALT deduction on my federal return to offset the higher state taxes. You want big state programs, lavish pensions, etc, you pay for it at the state level, without a federal subsidy on your federal return.

Let me guess, you are Trump voter from a red state? I vote at my local school, not local strip club. Lol.

I am in Fairfax Cty, and would be better off with SALT. My property taxes increase every year and will hit 14K this year. My state income tax is about 35K.

I notice you don’t address the substance of the argument b/c can’t. Instead, some stupid reference to strip clubs.

What’s really stupid is spelling polls (where you vote) “poles.” You are barely literate.

[Anonymous]

Latest is $40k per household for earners under $500k.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I personally would be better off with a higher SALT limit, all else equal, but it's clearly the right policy to limit or eliminate the deduction.

SALT deductions have been around since the 1860s. Why? Because it was considered Big Government overreach for the federal government to double-tax the states.

The United States’ first income tax was enacted in 1861, and tweaked in 1862. Both versions contained only one deduction; and, you guessed it, it was the SALT deduction! A recently minted political party called the Republican party controlled Congress and a Republican-party President occupied the White House for the first time (a 6’ 4” fellow named Abraham Lincoln). Records of why the SALT deduction was included in the first income tax are scarce, but there are documented statements by Congressional Republicans that may support two justifications. The first was federalism and keeping the Federal tax out of the orbit of State levies. The second was double taxation: preventing the Federal government from taxing a dollar that the States had already taxed. There is no record of political discord over the SALT deduction.

https://www.chamberlainlaw.com/tax-blawg/history-of-the-salt-deduction

Capping SALT deductions in 2017 was the radical policy.

I don't see anything here making a serious policy case for a SALT deduction (and no, "we've done it this way for a century" is not a serious case). The core issue is that SALT amounts to a federal subsidy of state taxes and mortgage interest in proportion to the taxpayer's income, with high income folks receiving a greater subsidy as a percentage and folks in high tax states receiving a higher level of subsidy. This makes no sense! Just eliminate the deduction and lower the rates by a couple percentage points until revenue is equalized.

The states with low/no state income tax are subsidized by wealthier states - ie the ones that tend to have higher state and local taxes. Seems a fair way to offset that.

Not PP, but disagree with this statement. How are states w/higher state income tax, subsidizing those with lower state income tax ? It’s not like the high tax states are sending part of their state budget to the Feds to spend for the benefit of all. Sure, you can say they have higher per capita income, so what, they pay more federal income tax as they should, but has nothing to with the state taxes. They would pay the same Federal tax if they lived in low tax states.

The reality is that states with higher tax rates have chosen to provide more services and better paid civil servants, compared to that of low tax states. They may also be inefficient in providing those services. The SALT deduction is a way to hide this from their citizens. I say let them pay the full freight. And if they don’t like it, move or complain at the voter box.

When states with low/no state or local taxes underfund their programs, the federal government steps in. So while we with higher taxes pay for our services with our high taxes up front, we're also paying for those who refuse to fund their local services through their own state taxes with the extra federal support they receive as a result.

Its a weak argument with no specifics. And it’s impossible to untangle from the argument that some states are less efficient than others, so why should the entire country subsidize those inefficient states with high state income taxes by giving a Federal deduction for their citizens ? Makes no sense.

Every state is in control of its own budget. They decide every year what services to provide and at what level, and what the tax rate will be to support that spending. It has nothing to do with what some other state has decided to spend on its service level.

Citizens of NY,NJ,CA,MD,VA have tacitly voted for their current tax rate and services, based on who is in state office. Let them pay for what they voted for. A federal deduction is unrelated to that decision making.

Here’s some specifics. Mississippi get 79.6% of its Medicaid program paid for by the federal government. High income states like CA, MD, CT, NY and NJ get only 50% covered. Medicaid is one of the biggest budget items for states and the fact that the federal government pays way more of the share for red states than blue states is a big part of the reason blue states need to have higher state taxes.

So what? None of this is relevant to why high-income residents of high tax states should get a very specific kind of tax break that is not available to high income residents of low tax states, or to low-middle income taxpayers in any state.

Because you aren’t being double taxed.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I personally would be better off with a higher SALT limit, all else equal, but it's clearly the right policy to limit or eliminate the deduction.

SALT deductions have been around since the 1860s. Why? Because it was considered Big Government overreach for the federal government to double-tax the states.

The United States’ first income tax was enacted in 1861, and tweaked in 1862. Both versions contained only one deduction; and, you guessed it, it was the SALT deduction! A recently minted political party called the Republican party controlled Congress and a Republican-party President occupied the White House for the first time (a 6’ 4” fellow named Abraham Lincoln). Records of why the SALT deduction was included in the first income tax are scarce, but there are documented statements by Congressional Republicans that may support two justifications. The first was federalism and keeping the Federal tax out of the orbit of State levies. The second was double taxation: preventing the Federal government from taxing a dollar that the States had already taxed. There is no record of political discord over the SALT deduction.

https://www.chamberlainlaw.com/tax-blawg/history-of-the-salt-deduction

Capping SALT deductions in 2017 was the radical policy.

I don't see anything here making a serious policy case for a SALT deduction (and no, "we've done it this way for a century" is not a serious case). The core issue is that SALT amounts to a federal subsidy of state taxes and mortgage interest in proportion to the taxpayer's income, with high income folks receiving a greater subsidy as a percentage and folks in high tax states receiving a higher level of subsidy. This makes no sense! Just eliminate the deduction and lower the rates by a couple percentage points until revenue is equalized.

The states with low/no state income tax are subsidized by wealthier states - ie the ones that tend to have higher state and local taxes. Seems a fair way to offset that.

Not PP, but disagree with this statement. How are states w/higher state income tax, subsidizing those with lower state income tax ? It’s not like the high tax states are sending part of their state budget to the Feds to spend for the benefit of all. Sure, you can say they have higher per capita income, so what, they pay more federal income tax as they should, but has nothing to with the state taxes. They would pay the same Federal tax if they lived in low tax states.

The reality is that states with higher tax rates have chosen to provide more services and better paid civil servants, compared to that of low tax states. They may also be inefficient in providing those services. The SALT deduction is a way to hide this from their citizens. I say let them pay the full freight. And if they don’t like it, move or complain at the voter box.

When states with low/no state or local taxes underfund their programs, the federal government steps in. So while we with higher taxes pay for our services with our high taxes up front, we're also paying for those who refuse to fund their local services through their own state taxes with the extra federal support they receive as a result.

Its a weak argument with no specifics. And it’s impossible to untangle from the argument that some states are less efficient than others, so why should the entire country subsidize those inefficient states with high state income taxes by giving a Federal deduction for their citizens ? Makes no sense.

Every state is in control of its own budget. They decide every year what services to provide and at what level, and what the tax rate will be to support that spending. It has nothing to do with what some other state has decided to spend on its service level.

Citizens of NY,NJ,CA,MD,VA have tacitly voted for their current tax rate and services, based on who is in state office. Let them pay for what they voted for. A federal deduction is unrelated to that decision making.

Here’s some specifics. Mississippi get 79.6% of its Medicaid program paid for by the federal government. High income states like CA, MD, CT, NY and NJ get only 50% covered. Medicaid is one of the biggest budget items for states and the fact that the federal government pays way more of the share for red states than blue states is a big part of the reason blue states need to have higher state taxes.

So what, these are federal programs, higher earners in red states pay the same federal taxes as those in blue states.

And again, blue state voters voted for their state budgets and state taxes based who is in office. They didn’t go to poles thinking I am going vote Democrat (year after year) b/c I am getting a SALT deduction on my federal return to offset the higher state taxes. You want big state programs, lavish pensions, etc, you pay for it at the state level, without a federal subsidy on your federal return.

Let me guess, you are Trump voter from a red state? I vote at my local school, not local strip club. Lol.

I am in Fairfax Cty, and would be better off with SALT. My property taxes increase every year and will hit 14K this year. My state income tax is about 35K.

I notice you don’t address the substance of the argument b/c can’t. Instead, some stupid reference to strip clubs.

What’s really stupid is spelling polls (where you vote) “poles.” You are barely literate.

Thanks spelling police, I do pretty well considering my illiteracy. And somehow l got 3 college degrees, even though I can’t read according to you. ( Just so you know, there is this thing called auto correct that introduces unwanted errors. Most literate people can look past it)

You still have no substantive argument against my points. You can’t come up with one, even against an illiterate. That’s ok, tossing personal insults makes up for it. Enjoy your evening, but try to contribute something more substantive than insults if you continue to post.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I personally would be better off with a higher SALT limit, all else equal, but it's clearly the right policy to limit or eliminate the deduction.

SALT deductions have been around since the 1860s. Why? Because it was considered Big Government overreach for the federal government to double-tax the states.

The United States’ first income tax was enacted in 1861, and tweaked in 1862. Both versions contained only one deduction; and, you guessed it, it was the SALT deduction! A recently minted political party called the Republican party controlled Congress and a Republican-party President occupied the White House for the first time (a 6’ 4” fellow named Abraham Lincoln). Records of why the SALT deduction was included in the first income tax are scarce, but there are documented statements by Congressional Republicans that may support two justifications. The first was federalism and keeping the Federal tax out of the orbit of State levies. The second was double taxation: preventing the Federal government from taxing a dollar that the States had already taxed. There is no record of political discord over the SALT deduction.

https://www.chamberlainlaw.com/tax-blawg/history-of-the-salt-deduction

Capping SALT deductions in 2017 was the radical policy.

I don't see anything here making a serious policy case for a SALT deduction (and no, "we've done it this way for a century" is not a serious case). The core issue is that SALT amounts to a federal subsidy of state taxes and mortgage interest in proportion to the taxpayer's income, with high income folks receiving a greater subsidy as a percentage and folks in high tax states receiving a higher level of subsidy. This makes no sense! Just eliminate the deduction and lower the rates by a couple percentage points until revenue is equalized.

The states with low/no state income tax are subsidized by wealthier states - ie the ones that tend to have higher state and local taxes. Seems a fair way to offset that.

Not PP, but disagree with this statement. How are states w/higher state income tax, subsidizing those with lower state income tax ? It’s not like the high tax states are sending part of their state budget to the Feds to spend for the benefit of all. Sure, you can say they have higher per capita income, so what, they pay more federal income tax as they should, but has nothing to with the state taxes. They would pay the same Federal tax if they lived in low tax states.

The reality is that states with higher tax rates have chosen to provide more services and better paid civil servants, compared to that of low tax states. They may also be inefficient in providing those services. The SALT deduction is a way to hide this from their citizens. I say let them pay the full freight. And if they don’t like it, move or complain at the voter box.

When states with low/no state or local taxes underfund their programs, the federal government steps in. So while we with higher taxes pay for our services with our high taxes up front, we're also paying for those who refuse to fund their local services through their own state taxes with the extra federal support they receive as a result.

Its a weak argument with no specifics. And it’s impossible to untangle from the argument that some states are less efficient than others, so why should the entire country subsidize those inefficient states with high state income taxes by giving a Federal deduction for their citizens ? Makes no sense.

Every state is in control of its own budget. They decide every year what services to provide and at what level, and what the tax rate will be to support that spending. It has nothing to do with what some other state has decided to spend on its service level.

Citizens of NY,NJ,CA,MD,VA have tacitly voted for their current tax rate and services, based on who is in state office. Let them pay for what they voted for. A federal deduction is unrelated to that decision making.

Here’s some specifics. Mississippi get 79.6% of its Medicaid program paid for by the federal government. High income states like CA, MD, CT, NY and NJ get only 50% covered. Medicaid is one of the biggest budget items for states and the fact that the federal government pays way more of the share for red states than blue states is a big part of the reason blue states need to have higher state taxes.

So what? None of this is relevant to why high-income residents of high tax states should get a very specific kind of tax break that is not available to high income residents of low tax states, or to low-middle income taxpayers in any state.

Because you aren’t being double taxed.

You voted for your double tax. Just own it, or move.

[Anonymous]

Anonymous wrote:Latest is $40k per household for earners under $500k.

This benefits low earners who inherited houses with high taxes and old people in big houses with high taxes. Both groups are fine.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Latest is $40k per household for earners under $500k.

This benefits low earners who inherited houses with high taxes and old people in big houses with high taxes. Both groups are fine.

Isn’t this always the problem with these carve outs, etc. This group or that group can claim it’s unfair, someone else unfairly benefits. Better to just not go there. No Federal tax break for state taxes. If you don’t like your state tax, move to another state.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I personally would be better off with a higher SALT limit, all else equal, but it's clearly the right policy to limit or eliminate the deduction.

SALT deductions have been around since the 1860s. Why? Because it was considered Big Government overreach for the federal government to double-tax the states.

The United States’ first income tax was enacted in 1861, and tweaked in 1862. Both versions contained only one deduction; and, you guessed it, it was the SALT deduction! A recently minted political party called the Republican party controlled Congress and a Republican-party President occupied the White House for the first time (a 6’ 4” fellow named Abraham Lincoln). Records of why the SALT deduction was included in the first income tax are scarce, but there are documented statements by Congressional Republicans that may support two justifications. The first was federalism and keeping the Federal tax out of the orbit of State levies. The second was double taxation: preventing the Federal government from taxing a dollar that the States had already taxed. There is no record of political discord over the SALT deduction.

https://www.chamberlainlaw.com/tax-blawg/history-of-the-salt-deduction

Capping SALT deductions in 2017 was the radical policy.

I don't see anything here making a serious policy case for a SALT deduction (and no, "we've done it this way for a century" is not a serious case). The core issue is that SALT amounts to a federal subsidy of state taxes and mortgage interest in proportion to the taxpayer's income, with high income folks receiving a greater subsidy as a percentage and folks in high tax states receiving a higher level of subsidy. This makes no sense! Just eliminate the deduction and lower the rates by a couple percentage points until revenue is equalized.

The states with low/no state income tax are subsidized by wealthier states - ie the ones that tend to have higher state and local taxes. Seems a fair way to offset that.

Not PP, but disagree with this statement. How are states w/higher state income tax, subsidizing those with lower state income tax ? It’s not like the high tax states are sending part of their state budget to the Feds to spend for the benefit of all. Sure, you can say they have higher per capita income, so what, they pay more federal income tax as they should, but has nothing to with the state taxes. They would pay the same Federal tax if they lived in low tax states.

The reality is that states with higher tax rates have chosen to provide more services and better paid civil servants, compared to that of low tax states. They may also be inefficient in providing those services. The SALT deduction is a way to hide this from their citizens. I say let them pay the full freight. And if they don’t like it, move or complain at the voter box.

Here is a revised version with improved grammar, clarity, and flow:

⸻

It is well documented that higher-tax states pay more in federal taxes than they receive in return.

So how do higher-tax states subsidize lower-tax states? The answer lies in the fact that lower-tax states rely more heavily on federal funding to support their budgets.

That’s the essence of the subsidy. Even before the SALT cap change in 2017, high-tax states were still contributing more to the federal government than they received. Increasing the SALT deduction would simply reduce the extent to which high-tax states subsidize low-tax states.

https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I personally would be better off with a higher SALT limit, all else equal, but it's clearly the right policy to limit or eliminate the deduction.

SALT deductions have been around since the 1860s. Why? Because it was considered Big Government overreach for the federal government to double-tax the states.

The United States’ first income tax was enacted in 1861, and tweaked in 1862. Both versions contained only one deduction; and, you guessed it, it was the SALT deduction! A recently minted political party called the Republican party controlled Congress and a Republican-party President occupied the White House for the first time (a 6’ 4” fellow named Abraham Lincoln). Records of why the SALT deduction was included in the first income tax are scarce, but there are documented statements by Congressional Republicans that may support two justifications. The first was federalism and keeping the Federal tax out of the orbit of State levies. The second was double taxation: preventing the Federal government from taxing a dollar that the States had already taxed. There is no record of political discord over the SALT deduction.

https://www.chamberlainlaw.com/tax-blawg/history-of-the-salt-deduction

Capping SALT deductions in 2017 was the radical policy.

I don't see anything here making a serious policy case for a SALT deduction (and no, "we've done it this way for a century" is not a serious case). The core issue is that SALT amounts to a federal subsidy of state taxes and mortgage interest in proportion to the taxpayer's income, with high income folks receiving a greater subsidy as a percentage and folks in high tax states receiving a higher level of subsidy. This makes no sense! Just eliminate the deduction and lower the rates by a couple percentage points until revenue is equalized.

The states with low/no state income tax are subsidized by wealthier states - ie the ones that tend to have higher state and local taxes. Seems a fair way to offset that.

Not PP, but disagree with this statement. How are states w/higher state income tax, subsidizing those with lower state income tax ? It’s not like the high tax states are sending part of their state budget to the Feds to spend for the benefit of all. Sure, you can say they have higher per capita income, so what, they pay more federal income tax as they should, but has nothing to with the state taxes. They would pay the same Federal tax if they lived in low tax states.

The reality is that states with higher tax rates have chosen to provide more services and better paid civil servants, compared to that of low tax states. They may also be inefficient in providing those services. The SALT deduction is a way to hide this from their citizens. I say let them pay the full freight. And if they don’t like it, move or complain at the voter box.

Here is a revised version with improved grammar, clarity, and flow:

⸻

It is well documented that higher-tax states pay more in federal taxes than they receive in return.

So how do higher-tax states subsidize lower-tax states? The answer lies in the fact that lower-tax states rely more heavily on federal funding to support their budgets.

That’s the essence of the subsidy. Even before the SALT cap change in 2017, high-tax states were still contributing more to the federal government than they received. Increasing the SALT deduction would simply reduce the extent to which high-tax states subsidize low-tax states.

https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700

Yeah yeah I used ChatGPT to fix my grammar.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I personally would be better off with a higher SALT limit, all else equal, but it's clearly the right policy to limit or eliminate the deduction.

SALT deductions have been around since the 1860s. Why? Because it was considered Big Government overreach for the federal government to double-tax the states.

The United States’ first income tax was enacted in 1861, and tweaked in 1862. Both versions contained only one deduction; and, you guessed it, it was the SALT deduction! A recently minted political party called the Republican party controlled Congress and a Republican-party President occupied the White House for the first time (a 6’ 4” fellow named Abraham Lincoln). Records of why the SALT deduction was included in the first income tax are scarce, but there are documented statements by Congressional Republicans that may support two justifications. The first was federalism and keeping the Federal tax out of the orbit of State levies. The second was double taxation: preventing the Federal government from taxing a dollar that the States had already taxed. There is no record of political discord over the SALT deduction.

https://www.chamberlainlaw.com/tax-blawg/history-of-the-salt-deduction

Capping SALT deductions in 2017 was the radical policy.

I don't see anything here making a serious policy case for a SALT deduction (and no, "we've done it this way for a century" is not a serious case). The core issue is that SALT amounts to a federal subsidy of state taxes and mortgage interest in proportion to the taxpayer's income, with high income folks receiving a greater subsidy as a percentage and folks in high tax states receiving a higher level of subsidy. This makes no sense! Just eliminate the deduction and lower the rates by a couple percentage points until revenue is equalized.

The states with low/no state income tax are subsidized by wealthier states - ie the ones that tend to have higher state and local taxes. Seems a fair way to offset that.

Not PP, but disagree with this statement. How are states w/higher state income tax, subsidizing those with lower state income tax ? It’s not like the high tax states are sending part of their state budget to the Feds to spend for the benefit of all. Sure, you can say they have higher per capita income, so what, they pay more federal income tax as they should, but has nothing to with the state taxes. They would pay the same Federal tax if they lived in low tax states.

The reality is that states with higher tax rates have chosen to provide more services and better paid civil servants, compared to that of low tax states. They may also be inefficient in providing those services. The SALT deduction is a way to hide this from their citizens. I say let them pay the full freight. And if they don’t like it, move or complain at the voter box.

Here is a revised version with improved grammar, clarity, and flow:

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It is well documented that higher-tax states pay more in federal taxes than they receive in return.

So how do higher-tax states subsidize lower-tax states? The answer lies in the fact that lower-tax states rely more heavily on federal funding to support their budgets.

That’s the essence of the subsidy. Even before the SALT cap change in 2017, high-tax states were still contributing more to the federal government than they received. Increasing the SALT deduction would simply reduce the extent to which high-tax states subsidize low-tax states.

https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700

You are wrong. No state government pays a dime to the Federal government in taxes. Not one. This where this BS logic breaks down.

US citizens with the same income/deductions pay the same Federal tax, regardless of what state they live in. They may pay higher state taxes b/c they CHOOSE to live in a state with higher state tax rates. Hopefully, they feel they are getting something valuable for the higher state taxes. If not, then move to a state with a lower state income tax.

So own your CHOICE, pay your state taxes without Federal subsidy, and quit whining about it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Latest is $40k per household for earners under $500k.

This benefits low earners who inherited houses with high taxes and old people in big houses with high taxes. Both groups are fine.

Isn’t this always the problem with these carve outs, etc. This group or that group can claim it’s unfair, someone else unfairly benefits. Better to just not go there. No Federal tax break for state taxes. If you don’t like your state tax, move to another state.

I’m fine with my taxes. I’m against carve outs if SALT is expanded. I’m also against mortgage interest being written off up to $1M for homes bought before 2017 and up to $750K for homes bought after, which is an even more arbitrary carve out. End the carve outs!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I personally would be better off with a higher SALT limit, all else equal, but it's clearly the right policy to limit or eliminate the deduction.

SALT deductions have been around since the 1860s. Why? Because it was considered Big Government overreach for the federal government to double-tax the states.

The United States’ first income tax was enacted in 1861, and tweaked in 1862. Both versions contained only one deduction; and, you guessed it, it was the SALT deduction! A recently minted political party called the Republican party controlled Congress and a Republican-party President occupied the White House for the first time (a 6’ 4” fellow named Abraham Lincoln). Records of why the SALT deduction was included in the first income tax are scarce, but there are documented statements by Congressional Republicans that may support two justifications. The first was federalism and keeping the Federal tax out of the orbit of State levies. The second was double taxation: preventing the Federal government from taxing a dollar that the States had already taxed. There is no record of political discord over the SALT deduction.

https://www.chamberlainlaw.com/tax-blawg/history-of-the-salt-deduction

Capping SALT deductions in 2017 was the radical policy.

I don't see anything here making a serious policy case for a SALT deduction (and no, "we've done it this way for a century" is not a serious case). The core issue is that SALT amounts to a federal subsidy of state taxes and mortgage interest in proportion to the taxpayer's income, with high income folks receiving a greater subsidy as a percentage and folks in high tax states receiving a higher level of subsidy. This makes no sense! Just eliminate the deduction and lower the rates by a couple percentage points until revenue is equalized.

The states with low/no state income tax are subsidized by wealthier states - ie the ones that tend to have higher state and local taxes. Seems a fair way to offset that.

Not PP, but disagree with this statement. How are states w/higher state income tax, subsidizing those with lower state income tax ? It’s not like the high tax states are sending part of their state budget to the Feds to spend for the benefit of all. Sure, you can say they have higher per capita income, so what, they pay more federal income tax as they should, but has nothing to with the state taxes. They would pay the same Federal tax if they lived in low tax states.

The reality is that states with higher tax rates have chosen to provide more services and better paid civil servants, compared to that of low tax states. They may also be inefficient in providing those services. The SALT deduction is a way to hide this from their citizens. I say let them pay the full freight. And if they don’t like it, move or complain at the voter box.

Here is a revised version with improved grammar, clarity, and flow:

⸻

It is well documented that higher-tax states pay more in federal taxes than they receive in return.

So how do higher-tax states subsidize lower-tax states? The answer lies in the fact that lower-tax states rely more heavily on federal funding to support their budgets.

That’s the essence of the subsidy. Even before the SALT cap change in 2017, high-tax states were still contributing more to the federal government than they received. Increasing the SALT deduction would simply reduce the extent to which high-tax states subsidize low-tax states.

https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700

You are wrong. No state government pays a dime to the Federal government in taxes. Not one. This where this BS logic breaks down.

US citizens with the same income/deductions pay the same Federal tax, regardless of what state they live in. They may pay higher state taxes b/c they CHOOSE to live in a state with higher state tax rates. Hopefully, they feel they are getting something valuable for the higher state taxes. If not, then move to a state with a lower state income tax.

So own your CHOICE, pay your state taxes without Federal subsidy, and quit whining about it.

No. Poorer states with lower income taxes take higher subsidies from the federal government for things like Medicaid, school lunches, etc.

When every state receives equal federal dollars per capita, then we can stop deducting state taxes.