Four Blue States Sue Over Tax Reform. Dumbest 'Resistance' Lawsuit Yet?

Here is Guy Benson's take:

Several state-level Obamacare lawsuits were built on fairly solid constitutional claims, eventually worming their way up to a closely-divided Supreme Court. Likewise, a number of state-based challenges to Trump policies, including the original travel ban, resulted in challenges, injunctions and mandated alterations. This farce, however, is headed nowhere....

….The point is to appease a political constituency that wants to see "progressive" politicians doing something, no matter now frivolous or dumb. Ironically, what New York et al are attempting in this case is a demanding an effective tax cut for the rich. https://townhall.com/tipsheet/guybenson/2018/07/19/ny-ag-tax-reform-lawsuit-n2501426

Disclaimer: I'm not a tax/government spending expert and simply found this article's questions interesting. Why would Democrats from New York, New Jersey, Connecticut and Maryland "[insist] that rich people in their states get special treatment"? Are they? Are they "jeopardizing middle class tax relief to help the wealthiest"?

nota bene said:

Here is Guy Benson's take:

Several state-level Obamacare lawsuits were built on fairly solid constitutional claims, eventually worming their way up to a closely-divided Supreme Court. Likewise, a number of state-based challenges to Trump policies, including the original travel ban, resulted in challenges, injunctions and mandated alterations. This farce, however, is headed nowhere....

….The point is to appease a political constituency that wants to see "progressive" politicians doing something, no matter now frivolous or dumb. Ironically, what New York et al are attempting in this case is a demanding an effective tax cut for the rich. https://townhall.com/tipsheet/guybenson/2018/07/19/ny-ag-tax-reform-lawsuit-n2501426

Disclaimer: I'm not a tax/government spending expert and simply found this article's questions interesting. Why would Democrats from New York, New Jersey, Connecticut and Maryland "[insist] that rich people in their states get special treatment"? Are they? Are they "jeopardizing middle class tax relief to help the wealthiest"?

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I would guess it's because the Democrats are far more the party of the rich, urban elite than they like to think, and also because they don't want the rich people to leave for other states, yet they do not wish to change to their own tax codes.

nota bene said:

Here is Guy Benson's take:

Several state-level Obamacare lawsuits were built on fairly solid constitutional claims, eventually worming their way up to a closely-divided Supreme Court. Likewise, a number of state-based challenges to Trump policies, including the original travel ban, resulted in challenges, injunctions and mandated alterations. This farce, however, is headed nowhere....

….The point is to appease a political constituency that wants to see "progressive" politicians doing something, no matter now frivolous or dumb. Ironically, what New York et al are attempting in this case is a demanding an effective tax cut for the rich. https://townhall.com/tipsheet/guybenson/2018/07/19/ny-ag-tax-reform-lawsuit-n2501426

Disclaimer: I'm not a tax/government spending expert and simply found this article's questions interesting. Why would Democrats from New York, New Jersey, Connecticut and Maryland "[insist] that rich people in their states get special treatment"? Are they? Are they "jeopardizing middle class tax relief to help the wealthiest"?

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New York can simply get around it and lower it's marginal tax rates, which it doesn't want to do.

nota bene said:

Why would Democrats from New York, New Jersey, Connecticut and Maryland "[insist] that rich people in their states get special treatment"? Are they? Are they "jeopardizing middle-class tax relief to help the wealthiest"?

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They're not. The rich people in their states are already paying income taxes to the states. As a result, the Federal government doesn't need to help those states out financially as much.

You see one of the biggest reason why we have the high federal income taxes that we have is to ensure that wealthy people can't escape those taxes by moving to states without them. If they could it would make it virtually impossible for states that want to properly fund education to do so. But so long as a state is collecting enough of its own tax to cover it's own education and infrastructure spending there's no reason for the Federal government to collect more on top of that.

Hedgology said:

New York can simply get around it and lower it's marginal tax rates, which it doesn't want to do.

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Because then it would have to rely more heavily on the Federal Government for education funding, infrastructure funding, and health care funding which they know they can't under the Trump administration.

MrWonka said:

They're not. The rich people in their states are already paying income taxes to the states. As a result, the Federal government doesn't need to help those states out financially as much.

You see one of the biggest reason why we have the high federal income taxes that we have is to ensure that wealthy people can't escape those taxes by moving to states without them.

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You're mistaken; the Alternative Minimum Tax ensures that. People can, and do, leave high tax states (such as New York) for states with no income tax (such as Washington State). This is common.

If they could it would make it virtually impossible for states that want to properly fund education to do so. But so long as a state is collecting enough of its own tax to cover it's own education and infrastructure spending there's no reason for the Federal government to collect more on top of that.

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You haven't provided a rational why the Federal Government should be able to collect whatever taxes it could under the law.

Harshaw said:

I would guess it's because the Democrats are far more the party of the rich, urban elite than they like to think

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No, actually we're far more the party of the rich than Republicans like to think.

Stupid rural Republicans want to convince themselves that liberals are using their hard-earned tax dollars to pay for our mistakes, but in reality, we're asking you to take some of our tax dollars to help solve our problems. It's just that so long as there are poor people in our home states that need help we'd like to focus on helping them first.

MrWonka said:

Because then it would have to rely more heavily on the Federal Government for education funding, infrastructure funding, and health care funding which they know they can't under the Trump administration.

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They can't do that under any administration; the state consistently runs deficits and relies on the wealthy to foot most of the bill, which is what should happen.

Hedgology said:

You're mistaken; the Alternative Minimum Tax ensures that. People can, and do, leave high tax states (such as New York) for states with no income tax (such as Washington State). This is common.

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False.

https://www.cbpp.org/research/state-budget-and-tax/tax-flight-is-a-myth?fa=view&id=3556

Also, you really don't seem to know what the AMT actually is. It would have the opposite effect if anything.

Hedgology said:

You haven't provided a rationale why the Federal Government should be able to collect whatever taxes it could under the law.

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It's in the constitution...

Section 8. Clause 1. The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.

Hedgology said:

They can't do that under any administration;

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Sure they can. In fact, a large part of Obama's stimulus package was designed to provide education funding so that States didn't have to cut their education budgets and lay off teachers to do budget shortfalls.

MrWonka said:

False.

https://www.cbpp.org/research/state-budget-and-tax/tax-flight-is-a-myth?fa=view&id=3556

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Maybe not individuals; but firms do it all the time.

https://www.usnews.com/news/best-states/articles/2018-03-15/companies-want-out-of-illinois

It's in the constitution...

Section 8. Clause 1. The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.

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So there is no issue with the SALT cap.

MrWonka said:

Sure they can. In fact, a large part of Obama's stimulus package was designed to provide education funding so that States didn't have to cut their education budgets and lay off teachers to do budget shortfalls.

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New York's state rate of school funding is less than it was before the recession occurred. That goes for most public schools across the country.

Hedgology said:

Maybe not individuals; but firms do it all the time.

https://www.usnews.com/news/best-states/articles/2018-03-15/companies-want-out-of-illinois

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Really? That's weird because although your news article only seems to want to talk about one state(Illinois) with many problems above and beyond taxes. This other news article seems to paint a very different picture..

https://www.usnews.com/news/best-states/rankings/economy

According to this Illinois, economy ranks 39th which is not good, but that puts it ahead of Arkansas, Kansas, Louisiana, Kentucky, Wyoming, Mississippi, West Virginia, and Alaska all of which who voted for Trump and have more conservative economic policies. California and Washington by the way who also have very high tax rates ranked 4th and 5th.

In fact, when you sort the list by "business environment" Illinois was ranked 17th which puts it in the top half of the country. California, by the way, is ranked 1st on that list.

You see in reality taxes alone are not actually causing many businesses or people to leave the state. I think you'll find that infrastructure problems, and other government disfunctions have hurt Illinois a little bit, but overall it's doing just fine.

Hedgology said:

So there is no issue with the SALT cap.

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Based on the constitution alone there likely wouldn't be, but I believe their lawsuit is based upon other legal grounds. My argument wasn't so much about legalities however it's about common sense. If these states are willing to put in place reasonable tax rates of their own to make sure they can cover their own infrastructure and educational spending then there's no rational reason for the federal government to punish them.

If as you claim state taxes are driving people out of states like Illinois and into conservative states like Tennessee why would a conservative like Trump want to stop that by forcing liberal states to lower their taxes?

Hedgology said:

New York's state rate of school funding is less than it was before the recession occurred. That goes for most public schools across the country.

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Right, that's kind of the point. The states had little choice, but to cut education funding so the Obama administration tried to supplement that with federal aid.

MrWonka said:

Really? That's weird because although your news article only seems to want to talk about one state(Illinois) with many problems above and beyond taxes. This other news article seems to paint a very different picture..

https://www.usnews.com/news/best-states/rankings/economy

According to this Illinois, economy ranks 39th which is not good, but that puts it ahead of Arkansas, Kansas, Louisiana, Kentucky, Wyoming, Mississippi, West Virginia, and Alaska all of which who voted for Trump and have more conservative economic policies. California and Washington by the way who also have very high tax rates ranked 4th and 5th.

In fact, when you sort the list by "business environment" Illinois was ranked 17th which puts it in the top half of the country. California, by the way, is ranked 1st on that list.

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I don't agree with this analysis. Sure, it's Illinois is in the upper median, but it's clearly not one of the best places to do business. When it comes to Business Environment, they're in like the 30th percentile. As I've stated, Washington is a very good place to move for business due to the overall tax burden.

Also, I can only think of no other why California is ranked #1 because of all of the venture capitalist, fintech start-ups and silicon valley types that are based there, which already get huge subsidies from the state. The business friendly methodology uses "entrepreneurship and patent creation" as a metric of measuring business environment. If we accept that as a valid metric for measuring how business-friendly a state is, then I guess California is a "business friendly" state, despite constantly being always ranked among the worst states for business.

You see in reality taxes alone are not actually causing many businesses or people to leave the state. I think you'll find that infrastructure problems, and other government disfunctions have hurt Illinois a little bit, but overall it's doing just fine.

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Maybe, but taxes are a huge component of business. There is a reason why so many Corporations leverage themselves up; because interest expense is tax deductible.

Based on the constitution alone there likely wouldn't be, but I believe their lawsuit is based upon other legal grounds. My argument wasn't so much about legalities however it's about common sense. If these states are willing to put in place reasonable tax rates of their own to make sure they can cover their own infrastructure and educational spending then there's no rational reason for the federal government to punish them.

If as you claim state taxes are driving people out of states like Illinois and into conservative states like Tennessee why would a conservative like Trump want to stop that by forcing liberal states to lower their taxes?

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It's not necessarily about the people, but the people who employ them.

nota bene said:

Here is Guy Benson's take:

Several state-level Obamacare lawsuits were built on fairly solid constitutional claims, eventually worming their way up to a closely-divided Supreme Court. Likewise, a number of state-based challenges to Trump policies, including the original travel ban, resulted in challenges, injunctions and mandated alterations. This farce, however, is headed nowhere....

….The point is to appease a political constituency that wants to see "progressive" politicians doing something, no matter now frivolous or dumb. Ironically, what New York et al are attempting in this case is a demanding an effective tax cut for the rich. https://townhall.com/tipsheet/guybenson/2018/07/19/ny-ag-tax-reform-lawsuit-n2501426

Disclaimer: I'm not a tax/government spending expert and simply found this article's questions interesting. Why would Democrats from New York, New Jersey, Connecticut and Maryland "[insist] that rich people in their states get special treatment"? Are they? Are they "jeopardizing middle class tax relief to help the wealthiest"?

Click to expand...

Your mistake is to get your news from Townhall.com, which completely mis-characterizes the basis and marginalizes the merits of the lawsuit.

Better sources are established and reliable news organizations. This is an example: https://www.nytimes.com/2018/07/17/nyregion/salt-taxes-deduction-lawsuit-trump-cuomo.html

The legal argument leans on interpretations of the 10th amendment — states’ rights — and the 16th, which established federal powers of income taxation, arguing that the new law effectively overturns longstanding precedent that “the federal government’s income tax power was and would remain subject to federalism constraints,” according to the suit.
It also argues that the limits on the deduction, and the potential economic damage as a result of its implementation, “deliberately seeks to compel certain states to reduce their public spending.”

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The result of the suit does rest on the fact that conservatives put their finger on the scales of justice but we can never know how each justice will vote. In any case, the legal argument is compelling.

Hedgology said:

New York's state rate of school funding is less than it was before the recession occurred. That goes for most public schools across the country.

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First, that chart is "state and local" (e.g. all states) not just New York.
Second, it clearly shows that school funding increased after the recession.
Third, instead of looking a "change from previous year," look at the actual expenditures.


If we can agree that the number of teachers is a proxy for school expenditures, since 75% of expenditures are salaries, we can get an idea about NY school funding with this chart:

Historically, We know conservative justices will usually vote according to the law.

Historically, we know the liberal justices will usually vote according to desired result, then backfill with some laughable legal argument.

( For removal of doubt about that , just check the recent ruling on the travel ban)

So this one puts the liberals in a quandary. It's a tax on the rich, which they love.
But it's also proposed by Trump, who they hate.

So what wins out?

Decisions, decisions.

MrWonka said:

False.

https://www.cbpp.org/research/state-budget-and-tax/tax-flight-is-a-myth?fa=view&id=3556

Also, you really don't seem to know what the AMT actually is. It would have the opposite effect if anything.



It's in the constitution...

Section 8. Clause 1. The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.

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which is why their lawsuit goes down the drain.

ludin said:

which is why their lawsuit goes down the drain.

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it does go down the drain!

trying to tell the federal government they can cut federal taxes and deductions

Thinking about what I wrote above, it is very likely that there several liberal judges whose hatred for Trmp will rule out even over taxing the rich.

You can bet they will shop around for a liberal judge who will rule in their favor.
the lawsuit is laughable on merits, but since when has that ever mattered to a lw judge?

Master PO said:

it does go down the drain!

trying to tell the federal government they can cut federal taxes and deductions

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didn't they just do that?

MTAtech said:

Your mistake is to get your news from Townhall.com, which completely mis-characterizes the basis and marginalizes the merits of the lawsuit.

Better sources are established and reliable news organizations. This is an example: https://www.nytimes.com/2018/07/17/nyregion/salt-taxes-deduction-lawsuit-trump-cuomo.html

The result of the suit does rest on the fact that conservatives put their finger on the scales of justice but we can never know how each justice will vote. In any case, the legal argument is compelling.

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They can argue what they want but the federal government has the power to determine tax law.
The tax law doesn't target anyone in any specific state.

It set a criteria of a set money amount that amount applies to everyone equally.
This should get tossed with the first judge.

Liberals should have no problem with this. states get their taxes still the federal government gets more taxes from rich people.
so they should be ok with it.

i don't understand all the crying from the their fair share crowd.

ludin said:

They can argue what they want but the federal government has the power to determine tax law.
The tax law doesn't target anyone in any specific state.

It set a criteria of a set money amount that amount applies to everyone equally.
This should get tossed with the first judge.

Liberals should have no problem with this. states get their taxes still the federal government gets more taxes from rich people.
so they should be ok with it.

i don't understand all the crying from the their fair share crowd.

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Except that one can right an "objective" law that is arbitrary. e.g. "we shall tax any state x% that has at least one building over 1,776 ft tall." It's clear that the Congress was targeting blue states. Fine, we'll target blue state Republicans, that voted for this, in elections.

MTAtech said:

Except that one can right an "objective" law that is arbitrary. e.g. "we shall tax any state x% that has at least one building over 1,776 ft tall." It's clear that the Congress was targeting blue states. Fine, we'll target blue state Republicans, that voted for this, in elections.

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lol it doesn't matter if you live in a blue state or a red state. your capped at the same amount
that means there is no targeting.

You should be happy aren't you guys always saying federal government should get more money.
here is your chance to practice what you preach.