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The End of the Federal Tax Subsidy for Blue States





A Democrat is proposing a dubious tax idea — and it’s not Alexandria Ocasio-Cortez


". . . Thirty-year House veteran Nita M. Lowey, from the tony suburbs north of the Big Apple, is touting a bill to restore full federal deductibility of state and local taxes, the so-called SALT break, which President Trump’s 2017 tax bill dramatically shrank.
That provision hit high-income residents of wealthy suburbs, who are more likely to own expensive houses with large property tax bills, to pay top state income tax rates and to itemize deductions on their federal returns.
Fifty-six percent of the benefits from reinstating the SALT break would go to the top 1 percent of households, those making $755,000 or more, according to the Tax Policy Center. It would also resurrect the nontransparent situation whereby residents of low-tax states cross-subsidized their counterparts in high-tax states. . . . "


 
Jack Hays said:




A Democrat is proposing a dubious tax idea — and it’s not Alexandria Ocasio-Cortez


". . . Thirty-year House veteran Nita M. Lowey, from the tony suburbs north of the Big Apple, is touting a bill to restore full federal deductibility of state and local taxes, the so-called SALT break, which President Trump’s 2017 tax bill dramatically shrank.
That provision hit high-income residents of wealthy suburbs, who are more likely to own expensive houses with large property tax bills, to pay top state income tax rates and to itemize deductions on their federal returns.
Fifty-six percent of the benefits from reinstating the SALT break would go to the top 1 percent of households, those making $755,000 or more, according to the Tax Policy Center. It would also resurrect the nontransparent situation whereby residents of low-tax states cross-subsidized their counterparts in high-tax states. . . . "
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Unfortunately way too many people buy the rhetoric and ignore that state and local taxes being deductible from federal taxes hides the true cost of liberal social spending in the states. It also shifts more of the burden to state taxpayers paying higher taxes because they don't have a lot of state and local taxes to deduct which seems to be mostly red states. The false claim that red states are being subsidized by Blue states is destroyed by the link below which shows exactly what states get from the federal taxpayers. The left rhetoric also ignores the the bluest state of them all, California is far and away the leader in getting federal taxpayer dollars.

https://www.nationalpriorities.org/smart/texas/

Simply change the state to your own to see what your state receives in Federal Dollars and for what purpose. Federal mandates aren't state and local responsibilities
 
Conservative said:
Unfortunately way too many people buy the rhetoric and ignore that state and local taxes being deductible from federal taxes hides the true cost of liberal social spending in the states. It also shifts more of the burden to state taxpayers paying higher taxes because they don't have a lot of state and local taxes to deduct which seems to be mostly red states. The false claim that red states are being subsidized by Blue states is destroyed by the link below which shows exactly what states get from the federal taxpayers. The left rhetoric also ignores the the bluest state of them all, California is far and away the leader in getting federal taxpayer dollars.

https://www.nationalpriorities.org/smart/texas/

Simply change the state to your own to see what your state receives in Federal Dollars and for what purpose. Federal mandates aren't state and local responsibilities
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Yawn.. already been debunked multiple times CON.

At the end of the day.. you simply cannot get around the fact that the Blue states DO subsidize the red states.. since.. the blue states... SEND MORE MONEY TO THE FEDERAL GOVERNMENT THAN THEY GET BACK.

Your... "well look at what California gets in federal tax dollars".. is the same as liberal complaining that "well look.. rich people get more in tax cuts".. sure.. because THEY SEND MORE IN THAN THEY GET BACK!.
 
jaeger19 said:
Yawn.. already been debunked multiple times CON.

At the end of the day.. you simply cannot get around the fact that the Blue states DO subsidize the red states.. since.. the blue states... SEND MORE MONEY TO THE FEDERAL GOVERNMENT THAN THEY GET BACK.

Your... "well look at what California gets in federal tax dollars".. is the same as liberal complaining that "well look.. rich people get more in tax cuts".. sure.. because THEY SEND MORE IN THAN THEY GET BACK!.
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No what you are totally apparently incapable of understand is what the federal dollars going to the states funds and it isn't a subsidy if it funds a federal mandate. Further when you deduct state and local taxes from your federal returns you are hiding the true cost of liberal social programs in your state and red states with lower state and local taxes are paying a higher effective rate than the blue states.

My point on California isn't that their federal dollars aren't deserving just that they are being ignored. A lot of blue states then are subsidizing California as well but I don't hear that.

Do you know what a deduction is? When you pay your federal return you are deducting your state and local taxes which for a blue state is significant and that lowers the taxes paid. Seems like logic and common sense doesn't resonate with you
 
Conservative said:
No what you are totally apparently incapable of understand is what the federal dollars going to the states funds and it isn't a subsidy if it funds a federal mandate. Further when you deduct state and local taxes from your federal returns you are hiding the true cost of liberal social programs in your state and red states with lower state and local taxes are paying a higher effective rate than the blue states.

My point on California isn't that their federal dollars aren't deserving just that they are being ignored. A lot of blue states then are subsidizing California as well but I don't hear that.

Do you know what a deduction is? When you pay your federal return you are deducting your state and local taxes which for a blue state is significant and that lowers the taxes paid. Seems like logic and common sense doesn't resonate with you
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You just can't keep your story straight can you? I thought your entire lame point was that we only have a federal spending problem, yet now you are addressing federal taxation.
 
Conservative said:
No what you are totally apparently incapable of understand is what the federal dollars going to the states funds and it isn't a subsidy if it funds a federal mandate. Further when you deduct state and local taxes from your federal returns you are hiding the true cost of liberal social programs in your state and red states with lower state and local taxes are paying a higher effective rate than the blue states.

My point on California isn't that their federal dollars aren't deserving just that they are being ignored. A lot of blue states then are subsidizing California as well but I don't hear that.

Do you know what a deduction is? When you pay your federal return you are deducting your state and local taxes which for a blue state is significant and that lowers the taxes paid. Seems like logic and common sense doesn't resonate with you
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Yawn.. you keep saying that.. and I have debunked your statements multiple times. For example.. Medicaid.. is not a federal mandate.. states choose whether they want to participate in Medicaid. the same with many other programs and grants.
 
jaeger19 said:
not if you are arguing that red states are subsidizing blue states it isn;t.
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Taxpayers in states (mostly red) with low state/local taxes were subsidizing taxpayers and state/local governments in states (mostly blue) with high state/local taxes. That subsidy was capped in 2017.
 
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ttwtt78640 said:
You just can't keep your story straight can you? I thought your entire lame point was that we only have a federal spending problem, yet now you are addressing federal taxation.
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My story is and always has been straight, you seem to have a comprehension problem, there are two issues here, one is federal spending, and second is blue states claiming they are subsidizing red states when the reality is by deducting state and local taxes which are higher in blue states the reverse is true. That is quite different than spending, that is what liberals seem to always do shirk their own tax responsibility while calling on others to increase theirs.
 
jaeger19 said:
Yawn.. you keep saying that.. and I have debunked your statements multiple times. For example.. Medicaid.. is not a federal mandate.. states choose whether they want to participate in Medicaid. the same with many other programs and grants.
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So let me know when states set up the Medicaid program? States have a choice and if they participate they still play by federal rules and because it was a federal established program federal tax dollars support it. My state opted out of Medicaid expansion.
 
Jack Hays said:
Taxpayers in states (mostly red) with low state/local taxes were subsidizing taxpayers and state/local governments in states (mostly blue) with high state/local taxes.
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I don't think some posters here understand what a deduction is and how a deduction reduces taxable income. As we both have stated Blue states are high taxed states and by deducting their taxes from their federal returns they are reducing their taxable income thus paying less in federal taxes because of the higher state and local taxes. You are absolutely correct but the left is incapable of admitting when wrong
 
Conservative said:
My story is and always has been straight, you seem to have a comprehension problem, there are two issues here, one is federal spending, and second is blue states claiming they are subsidizing red states when the reality is by deducting state and local taxes which are higher in blue states the reverse is true. That is quite different than spending, that is what liberals seem to always do shirk their own tax responsibility while calling on others to increase theirs.
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The SALT federal tax deduction should be treated just like the medical care expense deduction is now - only the portion of such expenses which exceed 10% of AGI is deductible.
 
Jack Hays said:
Taxpayers in states (mostly red) with low state/local taxes were subsidizing taxpayers and state/local governments in states (mostly blue) with high state/local taxes. That subsidy was capped in 2017.
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Nope.. Blue states were subsidizing the low state taxes in mostly red states by sending more federal money to the federal government AND taking care of local issues (ie sent in more money to the federal government than they got back).

Red states now can enjoy MORE subsidizing of their states.. as blue states have to kick in even more federal money to support their state (since they take in more federal money than they send out.. which is what subsidizes their low tax rates) because of the cap put in place by the GOP.,.. which surprise surprise.. benefits red states at the expense of blue states.
 
jaeger19 said:
Nope.. Blue states were subsidizing the low state taxes in mostly red states by sending more federal money to the federal government AND taking care of local issues (ie sent in more money to the federal government than they got back).

Red states now can enjoy MORE subsidizing of their states.. as blue states have to kick in even more federal money to support their state (since they take in more federal money than they send out.. which is what subsidizes their low tax rates) because of the cap put in place by the GOP.,.. which surprise surprise.. benefits red states at the expense of blue states.
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Goodbye and good luck. Your post is wrong, and I'm not going to waste time (again) explaining why.
 
Conservative said:
So let me know when states set up the Medicaid program? States have a choice and if they participate they still play by federal rules and because it was a federal established program federal tax dollars support it. My state opted out of Medicaid expansion.
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Face facts.. states CHOOSE whether they want to be in the Medicaid program. Which means that yep.. they play by the rules.. because they choose to play. Your state still participates in Medicaid.
 
Jack Hays said:
Goodbye and good luck. Your post is wrong, and I'm not going to waste time (again) explaining why.
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good luck to you.. your post is completely wrong.. and its obvious to anyone that understands taxes why your post is wrong.
 
jaeger19 said:
Face facts.. states CHOOSE whether they want to be in the Medicaid program. Which means that yep.. they play by the rules.. because they choose to play. Your state still participates in Medicaid.
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Facts are indeed facts, MEDICAID WAS CREATED BY THE FEDERAL GOVT.!! Federal programs are funded by federal taxpayer dollars
 
jaeger19 said:
good luck to you.. your post is completely wrong.. and its obvious to anyone that understands taxes why your post is wrong.
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There certainly is nothing conservative in anything you post especially on this issue. State and Federal Taxes being a deduction from Federal Income taxes reduces the federal tax liability and is something taxpayers in TX cannot do since there is no State Income Taxes here. Amazing how many liberals promote this deduction while calling for those evil rich people to pay more.
 
Conservative said:
There certainly is nothing conservative in anything you post especially on this issue. State and Federal Taxes being a deduction from Federal Income taxes reduces the federal tax liability and is something taxpayers in TX cannot do since there is no State Income Taxes here. Amazing how many liberals promote this deduction while calling for those evil rich people to pay more.
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Yep.. it reduces the federal tax liability. And so according to you.. you think that its a conservative idea to take MORE money away from states... to take care of their own.. and instead its a conservative idea for the states to have to send more money to a federal government? Hmmm... lets see so according to you.. Conservatives believe that federal taxes should be increased and more money taken away from states? Hmmm.. you might want to check on that. :lamo
 
jaeger19 said:
Yep.. it reduces the federal tax liability. And so according to you.. you think that its a conservative idea to take MORE money away from states... to take care of their own.. and instead its a conservative idea for the states to have to send more money to a federal government? Hmmm... lets see so according to you.. Conservatives believe that federal taxes should be increased and more money taken away from states? Hmmm.. you might want to check on that. :lamo
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No, it is putting a price tag on liberalism in the states and would stop people like you from claiming that Blue states subsidize Red states. It isn't about states sending anything it is about states charging their citizens more taxes knowing those taxes are deductible.
 
jaeger19 said:
Hmmm.. you might want to read the article.. it supports my position. not yours.
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Unable to open link but there is no fairness in the tax code that allows high taxed blue states to deduct high state and local income taxes from their federal income taxes vs. Red states that don't have state or local income taxes. This reduces the blue state tax payers liability thus giving Blue state taxpayers larger deductions off their federal return vs. Red States
 
jaeger19 said:
Hmmm.. you might want to read the article.. it supports my position. not yours.
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And that's your basic mistake. Federal payments are part of federal programs, not subsidies to states. They would be (and are) paid anywhere. From the link:


Why money comes back to your state is a little more complicated. Pew has helpfully broken down federal transfers into five categories:

  • Retirement benefits
  • Non-retirement benefits
  • Grants (mostly transportation, education, housing and Medicaid)
  • Government contracts for goods and services
  • Salaries and wages
Most of the transfers do not come from “red state welfare” like agricultural subsidies. They derive from Social Security, Medicare, Medicaid, unemployment insurance, food stamps, welfare, the maintenance of the national highway system, the purchase of goods and services for the federal government, and the operation of federal facilities and lands.
 
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