CBO analysis of new tax bill, $100k+ earner gets big cuts, poorer earner will tax more after bill

[Doc Savage Fan]

Lose $300 under the House plan and over $1500 under the Senate plan. 28 years old, middle class. Thanks Republicans!

What State do you live in?

 

[repoman0]

Cornholio for you! Don't worry, though, because some billionaire can better use the money to upgrade the bath hardware on his Gulfstream...

There are a lot of things I would be okay with paying increased taxes to fund. Fund basic science research, improving infrastructure, fund the park service, expand single payer health care, etc. Wealth transfer from the poor to rich and young to old is not one of them.

For the record, I will end up paying more in taxes and I am ok with this.

Well, I guess the world is full of suckers. Old rich white dudes thank you for your generosity.

 

[repoman0]

What State do you live in?

Massachusetts

 

[Doc Savage Fan]

Massachusetts

Looks like it's the result of the caps on State tax deductions.

 

[repoman0]

Looks like it's the result of the caps on State tax deductions.

That's exactly it, and our taxes are not even that high relative to some other states. We are already a net donor to the federal government, so why should we have to pay even more? By most measures, Mass is a very responsibly run state. We vote to have slightly higher taxes than average but get some of the best schools in the country, a homeowner energy efficiency initiative (it gets cold here, they will come insulate for free and provide nice discounts on efficient furnaces, smart thermostats etc), good public services etc. Seems like this should be rewarded, but instead the model of states like Oklahoma who can only afford to keep schools open four days a week get adopted throughout the Federal government.

 

[fskimospy]

It's interesting (and distressing) to see how laser targeted this tax bill is at attacking states that don't vote Republican. Legislating this way is incredibly dangerous because not only is it economically foolish to take states that are our most productive and are already large net tax contributors and try to soak them more, but it raises the perception that the federal government is now being wielded as a partisan weapon instead of pursuing rational, effective policy. That makes people want to retaliate when the shoe is on the other foot, which undermines the legitimacy of government.

 

[Doc Savage Fan]

That's exactly it, and our taxes are not even that high relative to some other states. We are already a net donor to the federal government, so why should we have to pay even more? By most measures, Mass is a very responsibly run state. We vote to have slightly higher taxes than average but get some of the best schools in the country, a homeowner energy efficiency initiative (it gets cold here, they will come insulate for free and provide nice discounts on efficient furnaces, smart thermostats etc), good public services etc. Seems like this should be rewarded, but instead the model of states like Oklahoma who can only afford to keep schools open four days a week get adopted throughout the Federal government.

I just don't understand why a person's federal taxes are affected by which State they live in. People in your State made a choice for higher taxes and are realizing the benefits in many ways....and this is fine by me. But why should the Federal government be effectively subsidizing your State by reducing your federal tax burden because a State effectively voted for higher State taxes? Seems to me that MA is not paying their "fair share" of the federal tax burden.

 

[fskimospy]

I just don't understand why a person's federal taxes are affected by which State they live in. People in your State made a choice for higher taxes and are realizing the benefits in many ways....and this is fine by me. But why should the Federal government be effectively subsidizing your State by reducing your federal tax burden because they voted for higher State taxes? Seems to me that MA is not paying their "fair share" of the federal tax burden.

Better education and good public services make a state operate better and have a more competitive economy. This in turn increases their tax revenues and reduces dependence on the federal government. It's not exactly a secret that the large majority of the most effective and competitive economies in the world operate on a relatively high tax/high service model.

Basically these states are taking the initiative to ensure they work well instead of being reliant on the feds for help. Why should this be punished, especially considering how much money these states already provide to others? Remember, Massachusetts is subsidizing the rest of the country overall, not the other way around.

 

[K1052]

I just don't understand why a person's federal taxes are affected by which State they live in. People in your State made a choice for higher taxes and are realizing the benefits in many ways....and this is fine by me. But why should the Federal government be effectively subsidizing your State by reducing your federal tax burden because you elected for higher State taxes? Seems to me that MA is not paying their "fair share" of the federal tax burden.

Then maybe the Democrats should even that out in a couple cycles and stipulate that no state can take in more in federal dollars than it contributes in federal taxes.

If we want to be fair and all.

 

[K1052]

McCain has issued a statement that he will vote yes on the tax bill. Odds of passage are now good.

 

[fskimospy]

Then maybe the Democrats should even that out in a couple cycles and stipulate that no state can take in more in federal dollars than it contributes in federal taxes.

If we want to be fair and all.

I think the better argument is that since the federal income tax code is...well...federal it doesn't account for high cost of living areas at all. Someone making $70,000 a year in NYC may have the same standard of living as someone making $40,000 in Arkansas but their federal tax bill would be drastically larger. Does it really make any sense from a public policy perspective to tax that person in NYC more than the person in Arkansas because that's their 'fair share'?

 

[repoman0]

I just don't understand why a person's federal taxes are affected by which State they live in. People in your State made a choice for higher taxes and are realizing the benefits in many ways....and this is fine by me. But why should the Federal government be effectively subsidizing your State by reducing your federal tax burden because a State effectively voted for higher State taxes? Seems to me that MA is not paying their "fair share" of the federal tax burden.

As others have pointed out, we pay out more than we receive in Federal dollars. We are paying our fair share and are in fact subsidizing other states, not the other way around.

 

[Sunburn74]

Then maybe the Democrats should even that out in a couple cycles and stipulate that no state can take in more in federal dollars than it contributes in federal taxes.

If we want to be fair and all.

This would brutalize so many states. Absolutely brutalize them. Honestly the only Republican state that might survive that just Texas.

However honestly perhaps is something that should be done as a means to force people to legislate rationally and ethically as opposed to this partisan BS we currently are dealing with.

 

[s0me0nesmind1]

Where they at with limiting traditional 401k and catch up contributions?

That fell through after all the backlash - but it never was that much of a proposal... it was more of "An idea tossed on the table". It was never officially in any of the plans at any time.

 

[K1052]

This would brutalize so many states. Absolutely brutalize them. Honestly the only Republican state that might survive that just Texas.

The Republicans have named the game. I'm just playing by the rules.

 

[repoman0]

Then maybe the Democrats should even that out in a couple cycles and stipulate that no state can take in more in federal dollars than it contributes in federal taxes.

If we want to be fair and all.

To hell with it. At this point, I'd be okay with this. People need to see who's really subsidizing who.

 

[MomentsofSanity]

Haven't looked closely but is removing the ability to use tax lot ID method when selling stocks still being taken away? Hadn't seen more on that since it was mentioned in here. That's going to make tax time around here suck balls next year.

 

[K1052]

Haven't looked closely but is removing the ability to use tax lot ID method when selling stocks still being taken away? Hadn't seen more on that since it was mentioned in here. That's going to make tax time around here suck balls next year.

Have not seen this broken out yet. But the more detailed provisions of the Senate bill are still in flux and, as I understand it, the legislative text not even written yet.

 

[fskimospy]

Have not seen this broken out yet. But the more detailed provisions of the Senate bill are still in flux and, as I understand it, the legislative text not even written yet.

Glad to see Republicans have decided to support something that hasn't been written yet. Remember how conservatives used to unironically make fun of Pelosi for that 'vote for it to see what's in it' comment? (of course their description of what she said was always a lie, but it's even more hypocritical now)

 

[K1052]

Glad to see Republicans have decided to support something that hasn't been written yet. Remember how conservatives used to unironically make fun of Pelosi for that 'vote for it to see what's in it' comment? (of course their description of what she said was always a lie, but it's even more hypocritical now)

They've done everything they accused the Democrats of and much much worse.

 

[IronWing]

Any word on current proposals for changing HSA contribution limits? They were gone, then down, then way up.

 

[bshole]

I just don't understand why a person's federal taxes are affected by which State they live in. People in your State made a choice for higher taxes and are realizing the benefits in many ways....and this is fine by me. But why should the Federal government be effectively subsidizing your State by reducing your federal tax burden because a State effectively voted for higher State taxes? Seems to me that MA is not paying their "fair share" of the federal tax burden.

You demonstrate complete ignorance that Blue states are already subsidizing Red states.... this after years of it being mentioned on this very forum. This is data not in dispute and readily available.

Instead of going with the "seems to me" bullshit why don't you educate yourself? California and New York are both net givers already.

https://www.theatlantic.com/busines...tates-are-givers-and-which-are-takers/361668/

 

[MomentsofSanity]

I'm amazed this is still being called a "tax bill". This monstrosity is going to reshape every day life in the U.S. Education, health care etc...

 

[s0me0nesmind1]

I don’t support the mortgage interest deduction and have said so many times. It is stupid policy. That being said, the means by which the Republicans are eliminating it is beyond dumb. Other countries that have eliminated it did so gradually over a number of years in order to prevent a sharp, immediate contraction in housing prices and a sudden and sharp increase in monthly housing costs that can lead to defaults on loans, undermine the value of securitized loans (like what caused the housing crisis!), etc.

As for state and local tax deductions I’m fine with eliminating them but in that case they need to be replaced by either significantly larger federal spending in those states or other deductions. The states that benefit from SALT are not being subsidized by you for their high taxes, they are in fact likely subsidizing your presumably low tax state. It is not a coincidence that these high tax, high service states are the most productive in the US and that every state or nearly every state significantly affected by this is a large net donor of federal revenues. Is there any good policy reason to make this disparity far more severe in order to cut taxes on the rich?

So out together you’re talking about tens or hundreds of billions of extra tax dollars being suddenly extracted from our most productive areas overnight. This is very bad economic policy.

Does that clear up why this is stupid?

Heh, I'm not disagreeing with anything you're saying on tax policy... but let's be honest, all those deductions are for the rich working class who sit in offices/cubicles all day. Defending those deductions and acting supreme as a state that is high in those is basically dragging anyone that is blue-collar through the mud

 

[K1052]

I'm amazed this is still being called a "tax bill". This monstrosity is going to reshape every day life in the U.S. Education, health care etc...

In ways the people supposedly writing it can't even conceive of yet. Also the probability that there could be a boatload of unintended consequences from a poorly/hastily written bill that hasn't been fully analyzed is quite high.