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Eliminating SALT is double taxation

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CriticalThought

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Killing the state and local tax deduction may be unconstitutional. Here's why - LA Times

Moynihan drew his argument from the principle of federalism enshrined in the Constitution, the essence of which is that “there are arenas of government that must not be invaded by other governments.” He observed that the notion that this applied to taxation had been understood dating back to the origins of the federal income tax, enacted under Abraham Lincoln to finance the Civil War.
The Revenue Act of 1862, Moynihan noted, provided that federal tax liability was to be calculated only after state and local taxes were first deducted, “and this under the most pressing emergency conditions ever faced by our country.” The deduction was enshrined in the Revenue Act of 1913, which created the modern federal income tax.
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Another principle Moynihan discussed was the issue of “double taxation.” Interestingly, an aversion to “double taxation” is frequently cited by Republicans and conservatives to justify reducing or eliminating taxes on dividends — dividends already are taxed once as corporate income, so why should they be taxed again when they’re received by shareholders.

But eliminating the SALT deduction would be a more far-reaching example of double taxation, Moynihan said, citing a resolution by the National League of Cities calling the deduction “a fundamental statement of the historical right of state and local governments to raise revenues and of individuals not to be double taxed.” As it happens, the Supreme Court has spoken on the issue of double-taxation: It’s wrong. In a 2015 decision written by Justice Samuel Alito, the court ruled that a Maryland provision denying its taxpayers credit for taxes paid to other states was unconstitutional.
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Since there are conservatives on this board who favor eliminating the estate tax on principle because it is "double taxation" they should oppose this as well.
 
The double taxation defense is awful. Our estate tax is (I'd say) one of the fundamental differences between the USA as a democratic republic, and the autocratic states of the world, or for example, the aristocratic monarchy that Americans rebelled against in establishing our nation.

During the war the Revolutionary governments attacked and ended English customs like primogeniture and entail. The Revolutionaries opposed the English aristocracy that sought to subjugate them, and instead believed in the empowerment of the average citizen.

Thomas Jefferson argued in his autobiography during this time, "To annul this privilege, and instead of an aristocracy of wealth, of more harm and danger, than benefit, to society, to make an opening for the aristocracy of virtue and talent, which nature has wisely provided for the direction of the interests of society, & scattered with equal hand through all it's conditions, was deemed essential to a well ordered republic."

In other words, by the USA taking steps to limit the ability for the wealthy to pass along wealth to their children encourages a meritocratic system that values virtue and talent rather than power by birth. Which aligns I think quite nicely with values that conservatives say ought be embraced.

The full quote, which IS in the public domain, mods,

Jefferson said:
The transmission of this property from generation to generation in the same name raised up a distinct set of families who, being privileged by law in the perpetuation of their wealth were thus formed into a Patrician order, distinguished by the splendor and luxury of their establishments. From this order too the king habitually selected his Counsellors of State, the hope of which distinction devoted the whole corps to the interests & will of the crown. To annul this privilege, and instead of an aristocracy of wealth, of more harm and danger, than benefit, to society, to make an opening for the aristocracy of virtue and talent, which nature has wisely provided for the direction of the interests of society, & scattered with equal hand through all it's conditions, was deemed essential to a well ordered republic. To effect it no violence was necessary, no deprivation of natural right, but rather an enlargement of it by a repeal of the law. - Jefferson, Vol 1, Chpt 15, Doc 20
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CriticalThought said:
Killing the state and local tax deduction may be unconstitutional. Here's why - LA Times





Since there are conservatives on this board who favor eliminating the estate tax on principle because it is "double taxation" they should oppose this as well.
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That (or a very similar) argument should make the state taxation of income "illegal" since taxation of income become a federal power with the 16A. The 16A mentions nothing about how any portion of that income was previously taxed or later spent. Why should a state with an income tax not allow deduction of federal (and local) taxes paid yet insist that the federal government exempt income later used to pay state taxes?
 
If the electorate of those high state and local tax regions don't like the size of their state and local tax bill, they should convince their state and local elected officials to reduce them.
 
eohrnberger said:
If the electorate of those high state and local tax regions don't like the size of their state and local tax bill, they should convince their state and local elected officials to reduce them.
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The term, "convince" has been completely severed from the vote and americans by and large simply will not get off their arses and make demands of their power structure. Taken as a whole, all we as a society are prepared to do is tweet and post. The power structure not only doesn't mind, but leverages the anxiety, chaos and incoherence to its own ends as the public participates in their own subjugation.
 
CriticalThought said:
Killing the state and local tax deduction may be unconstitutional. Here's why - LA Times





Since there are conservatives on this board who favor eliminating the estate tax on principle because it is "double taxation" they should oppose this as well.
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Not to mention, the states most hurt by eliminating SALT are all donor states in that they already pay far more in federal taxes than they get back in spending. They essentially subsidize lower taxes in rural red states by transferring so much of their wealth to them. Hell if it were not for wealthy blue state taxpayers, states like Wyoming or Alaska would be doing good to have flush toilets and a paved road. Eliminating SALT only makes that worse.
 
eohrnberger said:
If the electorate of those high state and local tax regions don't like the size of their state and local tax bill, they should convince their state and local elected officials to reduce them.
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It seems that they prefer having all others share that load instead.
 
Fenton Lum said:
The term, "convince" has been completely severed from the vote and americans by and large simply will not get off their arses and make demands of their power structure. Taken as a whole, all we as a society are prepared to do is tweet and post. The power structure not only doesn't mind, but leverages the anxiety, chaos and incoherence to its own ends as the public participates in their own subjugation.
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If the electorate can't manage to get off their asses, become familiar with the issues, and vote, I'm not sure how sorry I should feel for them.

Become familiar with the issues, and voting, it's kinda a requirement of the electorate in this system of government.
 
eohrnberger said:
Agreed. This being removed; I'm struggling to see it as a bad thing.
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How you see it seems to depend on whether you get or give that federal subsidy for state taxation. None of this would be an issue if the income tax code was "reformed" to have only two numbers: a truly standard deduction and a single tax rate applied to any income above that level.
 
CriticalThought said:
Killing the state and local tax deduction may be unconstitutional. Here's why - LA Times

Since there are conservatives on this board who favor eliminating the estate tax on principle because it is "double taxation" they should oppose this as well.
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I don't think that will fly. The taxation levied by the state is Tax #1 state, the tax levied by the federal government is Tax #1 federal. State and federal cannot each create a Tax #2. That is double taxation. There is plenty of history of cities, counties, and states each taxing income as Tax #1, but neither one can tax the same income twice.

California is creating all kinds of goof ball ideas to get around the deletion of the SALT taxes, not of which are going to work. The customs, laws, and precedence are too strong, and even if some idiot judge rules against the feds, all they can do is try to delay it like the Hawaii judge did with screening terrorists out of the immigration lottery from dangerous nations.
 
SouthernDemocrat said:
Not to mention, the states most hurt by eliminating SALT are all donor states in that they already pay far more in federal taxes than they get back in spending. They essentially subsidize lower taxes in rural red states by transferring so much of their wealth to them. Hell if it were not for wealthy blue state taxpayers, states like Wyoming or Alaska would be doing good to have flush toilets and a paved road. Eliminating SALT only makes that worse.
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I'm okay with getting rid of the transfer, then all them damn blue state peeps wouldn't come here visiting, because our roads would be so ****ty. :2razz:

That being said "recipient" states have a **** pile of federal land relative to the population, they're also good places to place our ICBMs, these things cost money, hardly fair to expect the residents to foot the whole bill for things that technically benefit the country.
 
Winchester said:
I'm okay with getting rid of the transfer, then all them damn blue state peeps wouldn't come here visiting, because our roads would be so ****ty. :2razz:

That being said "recipient" states have a **** pile of federal land relative to the population, they're also good places to place our ICBMs, these things cost money, hardly fair to expect the residents to foot the whole bill for things that technically benefit the country.
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They have a high amount of federal land relative to their populations because the do not have sufficient population densities to have the tax base necessary to manage that land at the state level. Most of the land isn't for defense, its National Forest and BLM land.

I just think its rather ironical that the folks that complain the most about wealth transfers are wanting an even bigger one by eliminating SALT.
 
SouthernDemocrat said:
They have a high amount of federal land relative to their populations because the do not have sufficient population densities to have the tax base necessary to manage that land at the state level. Most of the land isn't for defense, its National Forest and BLM land.

I just think its rather ironical that the folks that complain the most about wealth transfers are wanting an even bigger one by eliminating SALT.
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And you think the residents are the only ones who use or benefit from the federal land?
 
eohrnberger said:
If the electorate of those high state and local tax regions don't like the size of their state and local tax bill, they should convince their state and local elected officials to reduce them.
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Exactly. That's why it's the states with the insanely high state and local tax rates that are doing most of the whining about losing the deductions.
 
ObamacareFail said:
Exactly. That's why it's the states with the insanely high state and local tax rates that are doing most of the whining about losing the deductions.
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So the choice seems to be pretty clear then.

Those states and locales can either whine about what is going to happen, whine some more after its happened and continue to pay those "insanely high state and local tax rates" or they can chose to force their states and local governments to be more frugal. I would choose the latter, thanks, but they are free to chose however they will.

Also a choice that can be made is to move out to a lower tax state / locale.
 
ObamacareFail said:
Exactly. That's why it's the states with the insanely high state and local tax rates that are doing most of the whining about losing the deductions.
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Your damn right I'm whining about it. Cuomo is coming out laying this all on the Feds, but I say it's about time he starts feeling some heat for the high taxes we have. People have always complained, but they could deduct it so it was a half hearted. Now that it's going to disappear they'll start complaining a lot louder.

While I personally will be hurt by this, I think it's about time states, especially New York aka the welfare state, were accountable for letting the taxes get out of hand. The Govs. should be getting prepared for the resulting backlash this will have.
 
eohrnberger said:
So the choice seems to be pretty clear then.

Those states and locales can either whine about what is going to happen, whine some more after its happened and continue to pay those "insanely high state and local tax rates" or they can chose to force their states and local governments to be more frugal. I would choose the latter, thanks, but they are free to chose however they will.

Also a choice that can be made is to move out to a lower tax state / locale.
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Planning on retiring elsewhere. Got a few more years them I'm out of here :)
 
holbritter said:
Your damn right I'm whining about it. Cuomo is coming out laying this all on the Feds, but I say it's about time he starts feeling some heat for the high taxes we have. People have always complained, but they could deduct it so it was a half hearted. Now that it's going to disappear they'll start complaining a lot louder.

While I personally will be hurt by this, I think it's about time states, especially New York aka the welfare state, were accountable for letting the taxes get out of hand. The Govs. should be getting prepared for the resulting backlash this will have.
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Lol. The difference won't be in the state taxes people pay but in the federal taxes. The blame will go where it belongs, to the people currently holding the reigns of the federal government. I think Trump supporters in blue states will almost certainly enjoy the double whammy.
 
CriticalThought said:
Lol. The difference won't be in the state taxes people pay but in the federal taxes. The blame will go where it belongs, to the people currently holding the reigns of the federal government. I think Trump supporters in blue states will almost certainly enjoy the double whammy.
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If the state and local taxes are high and out of hand, why would the blame for this properly fall on the feds? Can you elaborate your thoughts on this please?
 
eohrnberger said:
If the state and local taxes are high and out of hand, why would the blame for this properly fall on the feds? Can you elaborate your thoughts on this please?
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Simple. The state tax bill does not change. The federal tax bill does. People are paying more federal taxes, not state taxes. Their federal taxes were increased simply because they live in a blue state. No matter how you try to spin it, it is the feds who are asking those tax payers for more money, not their state. You are hoping that those voters will go through a sort of mental gymnastics where they blame their state for their federal tax bill going up because the Republicans in Congress unilaterally removed a deduction that has been in every tax code since the 1850s.
 
CriticalThought said:
Simple. The state tax bill does not change. The federal tax bill does. People are paying more federal taxes, not state taxes. Their federal taxes were increased simply because they live in a blue state. No matter how you try to spin it, it is the feds who are asking those tax payers for more money, not their state. You are hoping that those voters will go through a sort of mental gymnastics where they blame their state for their federal tax bill going up because the Republicans in Congress unilaterally removed a deduction that has been in every tax code since the 1850s.
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True, the feds removed the deduction of state and local taxes from the federal taxes due. Not sure how strong the justification for these deductions were in the first place. Why should the feds deduct state and local taxes? What's the benefit to them to do this?

But the amount of state and local taxes due, isn't something that the feds are responsible for.

Seems to me that the responsibility for, and the amount of, and the spending of, state and local taxes falls to the state and local governments, and not the feeds. If the state and local taxes, and spending, are too high, that's something that the state and local governments are going to have to work out with their constituents.
 
eohrnberger said:
True, the feds removed the deduction of state and local taxes from the federal taxes due. Not sure how strong the justification for these deductions were in the first place. Why should the feds deduct state and local taxes? What's the benefit to them to do this?

But the amount of state and local taxes due, isn't something that the feds are responsible for.

Seems to me that the responsibility for, and the amount of, and the spending of, state and local taxes falls to the state and local governments, and not the feeds. If the state and local taxes, and spending, are too high, that's something that the state and local governments are going to have to work out with their constituents.
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All the state politicians have to say is that the GOP are forcing residents of blue states to subsidize the tax breaks of tax payers in red states. Given that the blue states are effectively already subsidizing the red states, this is poking the bear. Some states may shift from an income and sales tax structure to a property tax structure and they can also blame that on the GOP since they carved out that exception to protect some tax payers in red states.
 
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