Just to confirm, are you saying that the cost basis to be used for rental property depreciation after the primary-to-rental conversion = original cost basis + improvements?
Itās funny, but also sad that such blue blobs exist.
Correct. The cost basis used for depreciation for your investment property is either the adjusted cost basis of the property (purchase price plus improvements), or the fair market value at the time it changed from your personal residence to an investment property - whichever number is SMALLER.
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Whoa! Basically and immediate/immediately? Really? Basically is nebulous and immediate is specific. Combining them may sound good, but means nothing. I want to be surprised.
Since you quoted my post, I presume, but am surprised, that you donāt know the difference between income taxes and payroll taxes. There is a difference.
Just to be fair, following your definition of income taxes, how did this country pay for āsocial security, Medicare, Medicaid, defense and homeland safety, unemployment benefits, education spending, veteran benefits, etcā before the Civil War and during the time between the end of the Civil War and the introduction of the ?? amendment which allowed the legal collection of income taxes?
So? Iām not sure of your point with this statement, unless itās to say that the government needs more ways to confiscate citizensā private property and feed the ever growing and rotting swamp. No offense to any swampers.
Yeah, and there may be:
birthing fathers. 
a snowball in HE-double hockey sticks.
etc.
Wow! I can go six ways to Sunday on this but will stay with one. Youāre really stepping out on a limb with those specific possibilities. 
Why do you call it a bitter pill if itās revenue neutral? I compliment your incredibly wide description of possible scenarios, but disagree in the order you listed them, unless the last one was included as an afterthought or to diminish itās likelihood / necessity. I suspect that the boot-on-the-throat method is what most likely accompanied the ābitter pill.ā
Yowzer! You should be a network analyst who says the truth about what politiciansā mean when theyāre spewing word salads. I disagree with your viewpoint and do not think the federal government or almost any government needs additional ways to confiscate citizensā private property.
I was about to ask what this has to do with the price of tea in China, when I optimistically presumed that youāre saying do away with federal taxes and benefits and let the states handle things as they see fit. I agree 100%. Welcome to the land of the free and the home of the brave! 
I disagree wholeheartedly. First, a lever is a pry bar. A pry bar is great for lifting or moving heavy things, but is it really necessary and a good thing when it applies to taking assets that a citizen has earned? I think not, and that it would be better to find a way to acquire those assets without a pry bar,
First, I admire your use of itād, since I know youāre not a native American. It sounds like you would be happy to have the majority of our citizens agree to vote on tax rates. As long as they are verified (better than our presidential elections), I think that would be a great thing ā¦ at least for the next five to ten years.
Again, committing to, and saying nothing. Why now say what you think?
Yeah, that really defined it.
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What? Donāt you believe in diversity? :)))
How long do we have? Iād want more fiscal responsibility. I can tolerate operating at a deficit during a COVID-type 2020-2021 national crisis. Iād prefer having built up surplus in preparation for such events like I personally have an emergency fund in case shit happens.
In general, Iād have less total spending but more investment spending than remedy spending. So more infrastructure, education, and things that pay out more dividends in the long run than they cost, and less welfare with no strings attached.
Less defense spending: we donāt have to police the world and would not need our current budget if it were to only protect ourselves. We have too many allies who are over-dependent on our military budget to maintain their peace including Ukraine, Europe, Israel, etc. Leading by example and soft diplomacy would cost much less while maintaining homeland security.
A VAT to tax consumption with tiered rebates for low-incomes. With no VAT tax on food but gradually higher tax rate for certain categories up to a āluxury goodsā level.
All investment income (in taxable accounts) counted as ordinary income so that all passive income is taxed at the same rate as income from active work. No tax on tips but same minimum wage for tip workers either. No more $3/hr wages + tips when minimum wage in the same state is $10-15/hr. Tips should be a cherry on top for extraordinary service, not a main compensation source.
No more free step-up basis on death for any assets, especially stocks.
Medicare operated closer to a for-profit health insurer. Right now, itās not sustainable to continue wanting to have your cake (low premiums, low contributions) and eat it too (comprehensive coverage). More aggressive negotiation for drugs. No reason to pay more than in other developed countries.
Social security ceiling raised above the current max income ($170k) with same or lower payout beyond current level (15% of AIME beyond $7k). Expansion of IRA/HSA limits to make up for possible lower social security future payouts. Social security trust fund invested in broad near zero-cost index funds/ETFs say with a stock/bond/cash allocation of 60/30/10 not 100% treasuries like it is now.
Iād also be in favor of temporarily higher taxes until our debt is say about half our current debt to GDP ratio, so that interest on debt is a manageable burden regardless of population fluctuations. But add a constitutional amendment to mandate balanced budgets with specific guardrails (a bit like the Guyton-Klinger Rule for withdrawal rates in retirement: in years after budget surpluses, defined infrastructure investments and/or debt reduction measures kicking in; or in years after budget deficits, specific spending cuts and/or tax hikes).
Privatize FEMA insurance completely. Itās a wasteful money pit insuring uninsurable properties over and over like a private insurer never would.
Iām sure I missed tons of issues. But ultimately my opinion of a fair system is pretty irrelevant since majority rules in that regard. Thatās why I didnāt see why Iād give an extensive tax platform for my population of 1 LOL.
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Than
Thank you for taking the time to make such a thorough and thoughtful reply to one line of my post. I appreciate it, and was surprised at a lot of it.
hard to believe this was 24 years ago
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I donāt remember this dude, who does a fair imitation, but I still remember Algore and that damnable lockbox. Thanks for the reminder and the laugh.
ETA: I hope the new gig is going well.
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Thanks! It is. Not really new anymore, of course.
I found I spend too much time on other social media and was thinking to myself, āIf you are going to waste time, might as well talk to smart people at Fragile Deal than dumb people on Facebook and Twitter.ā So Iām trying to wean myself off of that by coming here instead. Key word there is INSTEAD. I need to make sure Iām not doing both!
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Summary of Kamalaās ever changing high tax proposals based on how the wind is blowing. I assume she plans for the worst of them, but is just backing off some when the left media and big donors call her insane.
- Harris had stated she wanted to raise capital gains taxes to 44.6% prior to her new plan. I panned that as a moronic idea that is bad for growth and investment. Harris unveiled her new and improved plan on Wednesday suggesting a top rate of 28% on long-term capital gains with annual income of $1mm or more. The current long-term capital gains rate is 20%. The 28% is an improvement from the prior idiocy. Last I checked, her unrealized capital gains tax of 25% on Americans with a net worth of $100mm or more remained intact. Despite the fact that it would only impact 10,000 Americans, I believe this is one of the more idiotic tax proposals I have ever seen and would do far more harm than good. How do you value illiquid assets such as real estate, art, private equity, and venture? Goldman suggests Harrisā tax plan may cut corporate profits by 5%. Trump and Vance want to cut taxes and, although I prefer to pay less than more, I do not feel aggressive tax cuts are warranted given $35 trillion in debt and $2 trillion in deficits in perpetuity. We need to keep taxes as is or slightly raise them AND significantly reduce spending in my opinion. I believe 2028 will be all about the deficit, debt and entitlements.
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- Long-term capital gains at 28% for those making over $1M/yr sounds ok to me. It is a bump from 20% but not overly so and would affect mostly people who can afford. Making long-term capital gain taxes a bit more progressive than currently is a good idea.
- Any tax on unrealized gains is gonna be very hard to implement and enforce. I agree with the comments but I think this is just for show in her tax platform. Even if the senate passes a compromise tax reform bill, I cannot see this part surviving the negotiations.
- I also echo the sentiment that we need to at least keep tax revenues as is or even increase them overall. Harrisā proposed tax cut are not great but Trumpās are way worse. How would social security exemption boost GDP so much that itād pay for itself? Same with the $5k child tax credit? If it were tax cuts for small businesses, I could see a case to be made but aside from lowering corporate taxes to 15%, none of the others would boost GDP significantly.
Overall, itās quite frustrating for me that my choices for fiscal responsibility are between bad and worse in this coming election. Unlike with entitlements where both parties are happy to just kick the can until itās someone elseās problem to deal with - I assume around 2035 -, with fiscal policy, weāre heading to a cliff and just stepping on the gas gleefully.
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Are those numbers significant? I canāt tell, since they donāt show the number of such households that stayed put.
I donāt see all the data, but here are the sources.
https://www.wsj.com/opinion/the-high-tax-state-brain-drain-income-moving-ff80d185
Delaware (6.4%) and Illinois (4%) lost the largest share of their young, higher-earning households.
Damage to high-tax state economies will compound as more young, upwardly mobile people leave. Local businesses and their workers will lose customers. On the other hand, lower-tax states will benefit from the influx of high-earning young professionals who will grow wealthier as they get older. Newcomers may also start families and businesses.
According to the study, the average adjusted gross income for California households in the āyoung and richā demographic is $480,776. These folks pay a top marginal tax rate of at least 9.3%, and those making more than $1 million pay 13.3%. Their flight will result in billions of dollars in less tax revenue for the state as their incomes climb.
The worst part of this policy driven ābrain drainā is that those left behind are more likely to be suckered by the politicians who created and continue to perpetuate these messes.
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The smartasset article does show the total for each state, which is more telling. On that first graph you posted, California is shown at the top with 3226 households lost, but thatās 1.75% of all such households. As opposed to 3.4% lost by IL and MA.
Is that significant for one year? Maybe. Gotta look at multi-year trends. I heard lots of people moved during the pandemic, then realized how shitty Florida and Texas are, and are now moving back 
.
Would also be more interesting to use median income instead of average, to get rid of outliers.
Also of significance is whether the $200k HHI income is before or after the migration. $200k HHI in DC (77%) or MA (80%) is not the same income percentile than $200k HHI in WV (94%). Itās not a given theyāll retain their income level after moving either. Our daughter just moved from Tampa to Boston and her salary went up 45% (sadly not yet above $200k). Overall that was still a gain in income percentile for her despite the higher COLA in Boston. And employers definitely adjust compensation based on location. Neighbor working remotely for a CA-based company has a -20% COLA adjustment to her salary because of living here.
Still, in general, Iād imagine itās a little bit easier to move to a state with lower COLA than to one with higher COLA. Other consideration is whether migration is motivated by taxation level or by grossly overpriced housing markets.
Iām also not sure about an actual brain drain. This data does not take into account immigration. Certain state are definitely more attractive to skilled immigrants than others in terms of job opportunities. Whatās the map for states with the most H1B visa recipients?
And youād think a brain drain and exodus of higher income earners would result in decreasing populations. Is the population of CA or MA dropping dramatically? If so then, why are housing markets still so out of control there? Youād assume decreasing population would cause a drop in housing prices if enough people fled these states. Yet, Iāve not seen evidence of these markets cooling down lately.
At the end of the day, if one is concerned about impact of state tax schemes, all that really matters is total tax revenue changes over time. So I think a multi-year moving average of state tax revenues compared to state liabilities would likely be more informative.
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I think mean is the right choice, not median, since
- for taxes, the very high incomes count even more than the kinda high ones, and
- itās what the departing state loses, regardless of if the receiving state gains as much
So from a brain drain state perspective, this is exactly what you should be worrying about. Sure maybe your remote job manages to dock your COLA a little for TX vs CA, but when youāre making around $400k average, the receiving state will be happy to have you regardless.
This is 2021-2022 data, and if you think these trends continue, things continue to get worse for those high tax, less desirable state budgets over the last 2 years too, they just havenāt reported it yet. Hereās 2023 moving company data and everyoneās leaving IL and CA still
Like those entrepreneurial Venezuelan hoteliers in Texas and Colorado? It used to be the average immigrant was legal and skilled, but that seems unlikely to be the case anymore. When the blue cities like NYC, Chicago, Boston are crying about how the comparatively small fraction of illegals there are blowing a hole in their budgets, you know itās not the H1B computer guys weāre getting.
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All I read was:
āTo determine where the young and rich are moving, SmartAsset examined the latest IRS data, which comes from the 2021 and 2022 tax years. Rich households are those with adjusted gross incomes of $200,000 or more. Only applicable tax returns filed for households aged 26 to 35 were considered.ā
Doesnāt that imply that, in each state, they compared the numbers of returns with AGI > $200k in 2022 vs 2021, for filers in the 26-35 age range? Thatād be different from actually tracking filers specifically.
If they just compared the numbers of $200k filers from 2021 to 2022, could variations also be due to changes in incomes within a state? Say if it gained more people earning over $200k than it lost, maybe due to changes in unemployment/industrial activity, number of high paying jobs, differences in investment returns, etc.