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Democrats in High-Tax States Plot to Blunt Impact of New Tax Law

That's simply false.

Scenario 1: person makes 250k in taxable income (excluding SALT), has a $500,000 home & lives in Las Vegas
Scenario 2: person makes 250k in taxable income (excluding SALT), has a $2,000,000 home & lives in SF bay area
(yes, a $500k home in Vegas is roughly comparable to a $2M home in the bay area)

Scenario 1: Since you live in Nevada, you pay $0 in state income taxes & $5000 in property taxes, leaving you with $245,000 income before federal taxes. That results in a $61,400 federal tax liability. Effective tax rate: 61400/245000 = 25.1%

Scenario 2: Since you live in taxable income in California, you pay $20,700 in state income taxes & $20,000 in property taxes, leaving you with $209,300 of income, before federal taxes. That results in a $59,700 federal tax liability. Effective tax rate: 28.5%

Yes the 500k house in Vegas in comparable to the 2M home in San Fran (both are twice the median homes sell prices).

Let me point out to you were you are wrong

Scenario 1: Your calculations are correct except $4,830 on property tax but close enough
Scenario 2: $22,108 state income and $1,149 in CASDI with property tax on a $2M home in San Fran at $13,660. Since this is over the $10k cap their deductions stop at 10. Leaving em with $240,000 fed tax wages which is alot closer to the person in scenario 1 living in Vegas with a taxable income to the feds of $245,000.
This makes people across any state on a more equal playing field since they are all under the same fed government.
 
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Your federal income tax is taken from the same gross salary. You don't get a paycheck where the federal tax is calculated after your state income tax is taken out. In addition, it's not the Federal govts. problem nor fault that the state people live in is highly taxed. That is the states fault/problem.

Also, the 10k cap is income and property combined. Using your example, the Nevada scenario will be getting a deduction of $5000, while the California scenario will be getting a deduction of $10,000.

Why are you focused on a gross salary rather than take-home earnings?

This makes no sense whatsoever since $250,000 is not even the true income of either individual: for the sake of simplicity I eliminated other deductions. The Californian has a higher gross income (before any taxes & deductions) simply because of the mortgage interest deduction. (Presumably the California homeowner has a mortgage)

(and yes, I'm aware that the person from NV only gets a 5000 deduction. That's why he still pays more in federal taxes.)
 
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Yes the 500k house in Vegas in comparable to the 2M home in San Fran (both are twice the median homes sell prices).

Let me point out to you were you are wrong

Scenario 1: Your calculations are correct except $4,830 on property tax but close enough
Scenario 2: $22,108 state income and $1,149 in CASDI with property tax on a $2M home in San Fran at $13,660. Since this is over the $10k cap their deductions stop at 10. Leaving em with $240,000 fed tax wages which is alot closer to the person in scenario 1 living in Vegas with a taxable income to the feds of $245,000.
This makes people across any state on a more equal playing field since they are all under the same fed government.
1. I'm not going to argue semantics. I'm assuming a 1% property tax rate in both scenarios, which is fairly close to accurate.

2. You seem confused.

If the federal income tax was abolished today, how much income would the person in:
scenario 1 have? ($245,000)
scenario 2 have? ($209,300)

That's how one determines their effective tax rate from federal income taxes. This is because state taxes are calculated before federal taxes.
 
Why are you focused on a gross salary rather than take-home earnings?
(and yes, I'm aware that the person from NV only gets a 5000 deduction. That's why he still pays more in federal taxes.)


Because, if you are making 250k, the amount of income tax withheld by the feds is based on that and the amount withheld from the state is based on that as well. The federal tax is not based on what is left after the state takes theirs.
Federal income tax is based on your gross earnings, period. All the deductions, credits, etc. have nothing to do with the amount taken out of your wages.

You might end up with a larger tax bill or lower tax bill, but that is not because of the actual federal tax rate. You could also look at it this way; people were paying less in their federal tax bill by being able to deduct their state income tax. Now everyone is even.

Bottom line - it's not the Feds fault a state taxes their residents income tax. That is solely up to the individual state.
 
1. I'm not going to argue semantics. I'm assuming a 1% property tax rate in both scenarios, which is fairly close to accurate.

2. You seem confused.

If the federal income tax was abolished today, how much income would the person in:
scenario 1 have? ($245,000)
scenario 2 have? ($209,300)

That's how one determines their effective tax rate from federal income taxes. This is because state taxes are calculated before federal taxes.
Wrong one takes their income then subtracts their state income taxes and property taxes as a deduction to figure out their effective tax rate, which under the new tax plan will be capped at $10k.

So how much taxes total (state & fed) someone pays in your scenario will be different cause they live in differnt states. But what we've been trying to show you is that the amount of taxes they pay specifically to the federal government will be close to the same. Is that making sense?
 
Because, if you are making 250k, the amount of income tax withheld by the feds is based on that and the amount withheld from the state is based on that as well. The federal tax is not based on what is left after the state takes theirs.
Federal income tax is based on your gross earnings, period.

I don't know what to tell you. That's completely false.

All the deductions, credits, etc. have nothing to do with the amount taken out of your wages.
Yes, they do. Deductions reduce the amount that is considered "taxable", and thus reduces your tax liability.

Are you confusing federal income tax with FICA taxes? It's FICA taxes that don't care about deductions.

Wrong one takes their income then subtracts their state income taxes and property taxes as a deduction to figure out their effective tax rate, which under the new tax plan will be capped at $10k.
You're talking about deductions. I'm talking about income.

Income is the only thing that matters when considering how much money somebody has earned.

So how much taxes total (state & fed) someone pays in your scenario will be different cause they live in differnt states. But what we've been trying to show you is that the amount of taxes they pay specifically to the federal government will be close to the same. Is that making sense?

I agree! The AMOUNT they pay to the federal government IS close to the same. The problem - the pre-federal tax income they have is NOT the same. As a result, even though the person in scenario 2 pays less in federal taxes, his/her effective tax rate is significantly higher!

So, explain to me why the person with a higher tax burden at the state level should also have a higher tax rate at the federal level, even though his purchasing power is lower (it's lower because rent/housing prices are higher in the bay area than Vegas - which also drives up the prices on other goods & services)

From my perspective, doing away with the SALT deduction is an assault against successful people who live in expensive areas. It's also an assault against states' rights - by attempting to discourage states from implementing their own programs (even though I keep hearing about how it's wrong to do things on the federal level).
 
I don't know what to tell you. That's completely false.

No it is not false.

If your gross is 50,000, your federal withholding is calculated on that (unless you have pre-tax deductions) Your state withholding is based on 50,000 as well.

What your saying is that if your state withholds, lets say, 2,000, then the federal withholding is on the remaining 48,000. And that is incorrect.
 
No it is not false.

If your gross is 50,000, your federal withholding is calculated on that (unless you have pre-tax deductions) Your state withholding is based on 50,000 as well.

What your saying is that if your state withholds, lets say, 2,000, then the federal withholding is on the remaining 48,000. And that is incorrect.

You're the one who made up an argument over withholdings. Withholding is not the same as tax liability.
 
You're the one who made up an argument over withholdings. Withholding is not the same as tax liability.

:doh

I'm done. Have a good night.
 
Found this article quite interesting...

Per NY Times: Democrats in High-Tax States Plot to Blunt Impact of New Tax Law

I found this comment particularly telling:



If the public is in clear support of maintaining various programs, then being up front about the fact that the public has to pay for them shouldn't be an issue. While some of the ideas are intriguing the bottom line appears to be that Democrats at the state level seem to recognize that their taxes are too high when no longer fully subsidized by the Federal government. If the public truly supports these programs as claimed, there shouldn't be a pressing need to figure out a way to "game the system" to try to hide the impact on a person's overall tax bill.

The same Connecticut person follows up with this:



In other words, the argument here is that it is imperative that Democrats retake Congress so that local Democrats don't have to confront their high tax policies now that they will no longer be fully subsidized by the Federal government.

I think NY contributes something like $48 billion more to the Federal Government than they receive. I say make it equal. No subsidy at all.
 
The American Revolution came about due to taxation without representation. Today, we have have taxation with under-representation. The Senate is dominated by red states since all states, regardless of population, receive two Senators. Meanwhile, red states complain about taxation while accepting Medicaid and other programs used by their poor, paid by blue states. West Virginia has a relatively old population, so 22% of its residents are on Medicare, versus 16.7% for the nation as a whole. It’s also a state that has benefited hugely from Obamacare, with the percentage of the population lacking health insurance falling from 14% in 2013 to 6% in 2015; these gains came mainly from a big expansion of Medicaid.

It’s true that the nation as a whole pays for these health care programs with taxes. But an older, poorer state like West Virginia receives much more than it pays in -- and it would have received virtually none of the tax cuts Trumpcare, if it passed, would have lavished on the wealthy. Republicans’ red-state bias may seem like just more of the same. After all, their last big legislative drive — the Senate health bill, Graham-Cassidy, which failed in September — also sought a major transfer of resources from blue states that had done a good job expanding health insurance to red states that hadn’t. Senator Rand Paul, Republican of Kentucky, derided that bill as “petty politics” — “just taking the Obamacare money, keeping it and taking it from Democratic states and giving it to Republican states.”

Novelist Ayn Rand is cherished by Paul Ryan. As Ayn put it, under democracy “one’s work, one’s property, one’s mind, and one’s life are at the mercy of any gang that may muster the vote of a majority.” That gang is the Republican majority which legitimizes this exploitation; itself an engine of injustice.

So, the blue states, that have the smartest tax lawyers and accountants, are responding to the GOP's rushed law that was incompletely thought through. Had there been hearings and time spent going over details, they would have closed the loopholes. Now, blue states will figure out how to shield themselves, resulting is less revenue than anticipated.

The American revolution was initially inspired by greed. Everything that came afterwards was rationalization, attempts to justify that greed.
 
Bandering and labeling high tax states as the result of political leanings is dishonest. This nation recovers approximately 24-25% of the GDP by taxation, making it one of the lowest actualized tax rates in the world. The so-called high tax states are the source of more than 65-70% of the US GDP, but represent less than 8% of all the states. In other words, their higher self taxing is because of their higher needs to produce their shares of the GDP. Those higher taxes are subsidizing the rest of the nation. A talking point those who denigrate the high tax states refuse to recognize as they falsely claim they are supporting those high tax states. Just more political BS.
 
The American revolution was initially inspired by greed. Everything that came afterwards was rationalization, attempts to justify that greed.

Oh my God. I need a shower after reading that garbage.
 
No it is not false.

If your gross is 50,000, your federal withholding is calculated on that (unless you have pre-tax deductions) Your state withholding is based on 50,000 as well.

What your saying is that if your state withholds, lets say, 2,000, then the federal withholding is on the remaining 48,000. And that is incorrect.

Withholding is merely an estimate of your total tax due for the entire year. You can adjust it with your employer based on personal circumstances. The idea is you pay ratably over the year. It has nothing to do with how the tax you owe is calculated. Just how you pay it. If you owe more than a certain amount when filing your return it means your withholding was too low and there could be penalties and interest due. Myself I purposely keep it high so I get a nice refund. It also helps if you get a windfall of some kind.
 
You're talking about deductions. I'm talking about income.

Income is the only thing that matters when considering how much money somebody has earned.



I agree! The AMOUNT they pay to the federal government IS close to the same. The problem - the pre-federal tax income they have is NOT the same. As a result, even though the person in scenario 2 pays less in federal taxes, his/her effective tax rate is significantly higher!

So, explain to me why the person with a higher tax burden at the state level should also have a higher tax rate at the federal level, even though his purchasing power is lower (it's lower because rent/housing prices are higher in the bay area than Vegas - which also drives up the prices on other goods & services)

From my perspective, doing away with the SALT deduction is an assault against successful people who live in expensive areas. It's also an assault against states' rights - by attempting to discourage states from implementing their own programs (even though I keep hearing about how it's wrong to do things on the federal level).

We've already determined the persons gross (pre-taxed) income in both scenerios as being the same $250k
Now we've determined there state income taxes & property tax liabilites and then the we determined their federal tax liabilites. As you can see their feds tax amount was close to the same but their property taxes and state income taxes were different. Its the state and localities that determined what amount of tax that person should pay. If the person doesnt like amount of money they pay to the state then they can vote people in office that feel the same way.
People have a choice on where they live and where they work. Making 250k is vegas is pretty good but doing 250k in san fran is mediocer. People have the ability to move to a different city to make their living if they dont like the taxes where they are or they can vote someone else into office to change the taxes. Also if housing cost is to high in a certain area their not forced to live there they can live somewhere else or make the decision to move to vegas cause the housing is better.
Tax burden will always be different state to state so purchasing power to the federal government is irrelevant. The fed gov new tax plan love it or hate for other reasons is at least easier for the majority of people and more equal in tax liability to the feds.
 
Withholding is merely an estimate of your total tax due for the entire year. You can adjust it with your employer based on personal circumstances. The idea is you pay ratably over the year. It has nothing to do with how the tax you owe is calculated. Just how you pay it. If you owe more than a certain amount when filing your return it means your withholding was too low and there could be penalties and interest due. Myself I purposely keep it high so I get a nice refund. It also helps if you get a windfall of some kind.

Sounds like you and holbritter are saying the same thing.
 
We've already determined the persons gross (pre-taxed) income in both scenerios as being the same $250k
This is not true. I clearly stated that the $250k was after all deductions were calculated, with the exception of SALT. I did this for the purpose of simplicity.

Its the state and localities that determined what amount of tax that person should pay. If the person doesnt like amount of money they pay to the state then they can vote people in office that feel the same way.

In other words, you're expressing the opinion that the federal government should infringe upon state's rights by discouraging them from charging state & local taxes.

People have a choice on where they live and where they work. Making 250k is vegas is pretty good but doing 250k in san fran is mediocer. People have the ability to move to a different city to make their living if they dont like the taxes where they are or they can vote someone else into office to change the taxes.

That's exactly my point. This tax bill is designed to punish people who choose to live in high tax states.

Also if housing cost is to high in a certain area their not forced to live there they can live somewhere else or make the decision to move to vegas cause the housing is better.
Rest assured: People who make $250,000 can afford to live in the bay area. It's not a question of whether they can afford to, it's an issue of taking away purchasing power from people.

Tax burden will always be different state to state so purchasing power to the federal government is irrelevant. The fed gov new tax plan love it or hate for other reasons is at least easier for the majority of people and more equal in tax liability to the feds.

In what way is this tax plan easier for the majority of people?

And no: this tax plan, as stated before, results in people having an effective federal income tax rate that is higher if they live in a high tax state than in a low tax state. That makes no sense unless your primary objective is to punish the people who didn't vote for Republicans.
 
This is not true. I clearly stated that the $250k was after all deductions were calculated, with the exception of SALT. I did this for the purpose of simplicity.



In other words, you're expressing the opinion that the federal government should infringe upon state's rights by discouraging them from charging state & local taxes.



That's exactly my point. This tax bill is designed to punish people who choose to live in high tax states.


Rest assured: People who make $250,000 can afford to live in the bay area. It's not a question of whether they can afford to, it's an issue of taking away purchasing power from people.



In what way is this tax plan easier for the majority of people?

And no: this tax plan, as stated before, results in people having an effective federal income tax rate that is higher if they live in a high tax state than in a low tax state. That makes no sense unless your primary objective is to punish the people who didn't vote for Republicans.

You are so confused on taxes and im sorry i couldnt help you learn it. Please do more reseach on your own, i have grown tired of trying to explain it so i will say good day.
I will leave you with that if the people in a preticular state decided they want to increase their taxes to fund something the state wants to do thats their right to go ahead and do so. And should not come at the cost of the federal governments revenue. Good day to you sir
 
You are so confused on taxes and im sorry i couldnt help you learn it. Please do more reseach on your own, i have grown tired of trying to explain it so i will say good day.
I will leave you with that if the people in a preticular state decided they want to increase their taxes to fund something the state wants to do thats their right to go ahead and do so. And should not come at the cost of the federal governments revenue. Good day to you sir

Thank you for confirming that you support federal govt rights over state's rights.
 
Withholding is merely an estimate of your total tax due for the entire year. You can adjust it with your employer based on personal circumstances. The idea is you pay ratably over the year. It has nothing to do with how the tax you owe is calculated. Just how you pay it. If you owe more than a certain amount when filing your return it means your withholding was too low and there could be penalties and interest due. Myself I purposely keep it high so I get a nice refund. It also helps if you get a windfall of some kind.

I claim single, zero for the year to avoid having to pay anything for state, and yeah, it's a nice refund. :)
 
You are just reciting the way things are, regarding Senate representation. I am saying that it is fundamentally unfair that one state has equal power to another state with dozens of more people.

Not if you understand federalism, sovereignty, and how the system is supposed to work, it isn't.
 
I don't actually have a problem with that if we can get more people to work, and stop importing peasants into our high tech economy. We need to incentivize hiring citizens and penalize hiring green cards or illegals. And we need to find a way to get blacks out of the ghettos and onto the worksites where they can learn a trade.

Blacks aren't the only ones living in ghettos. There are 2 trailer parks in my rural town that are full of white people earning poverty wages.
 
Blacks aren't the only ones living in ghettos. There are 2 trailer parks in my rural town that are full of white people earning poverty wages.

Them too, but I’m more concerned with blacks in generational poverty. The bottom line is we don’t need to import cheap labor when we have labor collecting welfare or other benefits.

You can’t sit around like a “cargo cult” waiting for a job to drop out of the sky.
 
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