So government-run healthcare that I have to pay for? That sounds like the worst of both worlds.
2 Likes
Just like roads we have to pay for, and fire departments we have to pay for. Yes, certain things donāt operate well for-profit.
1 Like
The invisible hand got some private firefighters out there protecting the expensive and well insured homes in CA recently.
As Wildfires Raged, Insurers Sent in Private Firefighters to Protect Homes of the Wealthy - WSJ
3 Likes
People living in low income tax states with otherwise identical tax characteristics may pay more in federal income taxes.
Good point and thanks for the reminder that single stock futures and futures on ETFs exist.
According to your wikipedia link, CA sends $200 more per capita, or 2% more per capita than TX and only $150 more per capita or 1.5% more than Washington State. Thatās a rounding error.
More importantly youāre ignoring that these per capita tax revenue figures include corporate income taxes. California has a lot of huge businesses paying corporate taxes. If we removed corporate taxes and looked just at personal taxes, I imagine per capita, individual income taxes is heavily skewed such that Washington State and Texas are paying far more, per person, than California. Unless you think Texas or Washington have more corporate revenue than California?
If thatās true, then on an individual basis, people from low tax states are subsidizing the people from high tax states.
Just for funsies I found this:
In 2016, California collected $48B in corporate income taxes
Texas collected $19B and Washington State $5B
Of course, those numbers are not adjusted per capita. Letās look at these same numbers and it appears to show individual tax collection by state, for individual income taxes only:
CA: $365B
TX: $219B
WA: $70B
And according to Google, the populations per state in 2016:
CA: 39M
TX: 28M
WA: 7M
Dividing the two to calculate per capital personal income tax collected:
CA $9,358
TX: $7,821
WA: $10,000
Letās add in NY and NJ to the mix:
NY = $232B / 20M people = $11,600
NJ = $115B / 9M people = $12,800
So if the high state income tax states are paying more per capita than the low income tax states, which it does appear to be true to some degree at least, the question then becomes, how much āvalueā are the states getting in return from the federal government. Iād have to see numbers for federal welfare benefits per state and then net them out. For example, suppose California has a large poor population and receives $5k in federal benefits per capita - because maybe 1 in 3 people receive $15k per year worth of welfare benefits. And suppose Washington state only had a $1k per capital federal expenditure towards welfare, then itās only fair to net those numbers out from gross personal income tax revenue per capita from each state.
Itās very possible that the poorer states receive more in federal welfare. I wasnāt able to quickly find the numbers broken down by state.
I think the SALT removal makes a lot of sense. A big state government claims to provide good roads, schools, social services, etc, that are available to residents for their taxes, while a smaller state government might offer more limited services and if you wanted some/more, youād had to pay extra yourself (think toll roads, private schools if you wanted a good one, etc). Since private schools and toll roads and the like arenāt tax deductible to individuals in a small government state, why should the same services provided become deductible via SALT to individuals in a high tax state just because they were indirectly paid for and done by the government?
6 Likes
1 Like
these state-centric summaries of āare we getting our moneyās worth from the Fedsā often come with the implication that states that pay more are getting a bad deal. Also, the states that pay more tend to be more liberal leaning states.
I find this amusing since the states that pay more in federal income tax do so because they have higher incomes on average, and we know that the liberal view of Federal taxes is clear that people who make more income should definitely pay more, probably a lot more, in federal tax. So they should be happy to pay more to help out those poor downtrodden folks in LA, MI, AL, etc, right?
3 Likes
And the people in red states dislike government welfare and they should be happy to take care of themselves and simply opt out of getting any social aid from the feds.
10 Likes
So, as usual, both side are full of s***!
4 Likes
Iāve often wondered whether correlation equals causation. Are liberal-leaning metropolitan areas more economically prosperous because they are liberally leaning? SF, LA, Seattle, Portland, NYC, NJ, etc
Or are these areas prosperous due to no cause of liberalism, perhaps distance to a water-port which made them economically more prosperous 100 to 200 years ago, and have maintained that momentum ever since.
And subsequent to the economic prosperity, poor people flocked there to get free stuff. And the people who live in those cities saw all the poor people and decided liberalism was the way to go to help those people.
Iād be fascinated to read a comprehensive analysis of why economically prosperous areas of the USA tend to be more liberal.
To make a broad generalization :
Liberals like big cities. Conservatives prefer small towns. Most people in big cities are liberal and most of the people in rural areas are conservative.
Maybe thats the simple answer / explanation.
How are you defining āprosperousā? This is something that goes up and down with time and its not as if SF and NY are always better off than anywhere else. Theyāreā just plain big with entrenched economies and industries.
5 Likes
I think some of that is backwards, at least cause and effect. One theory isā¦ As rural people move to the city, they are exposed to many more people/cultures, and start to see them as part of a collective community, so government redistribution of wealth is more tangible and acceptable. vs. rural communities being more homogenous and seeing government wealth redistribution going to help strangers that arenāt part of their community, and prefer aid via the private sector to people they know,
7 Likes
āIt aināt over yet,ā said Sen. Johnny Isakson (R., Ga.), who sits on the tax-writing Senate Finance Committee, which is expected to release its bill tomorrow."
Emphasis mine, posted at Nov 8, 2017 at 3:29 pm ET
rascott - yes i think i calculate the tax rates correctly. The issue for me is losing $20K or so in itemized deduction - at rate of 25% is like $5K extra in taxes ā¦ the lower tax rate obviously donāt make up for it.
What i think in your situation helping you out is the 2 child tax credit of $1,600 each. My kid will be 17 before tax year next year, so wont qualify due to age - so will only get $300. The other bad thing is the $4K exemption per person is gone ā¦ at 25% tax rate, thatās like extra $1K tax in exchange for $300 credit.
I like the overall concept of the bill ā¦ hope the tax rate goes down a bit more with Senate bill and/or they allow state tax etc deduction upto certain income limit.
Wonder if the corporate tax rate will inch up a bit to compensate. Currently, almost all of the 1.5T deficit is consumes by the 15 point cut to corporate taxes.
Not too sad to see these random deductions go - if it means weāll all pay slightly less year after year to compensate. Right now, it doesnāt seem like it.
Current mortgages get grandfathered in, so thatās a sweet deal too.
I canāt find the senate bill. Have they actually released it yet? All I can find is news stories about it.
Same here. Here are a couple of articles that highlight some major differences: