Subjective, and far too intrusive. If I want to eat McDonalds once a month (which is actually not even the case for me personally), I shouldn’t be taxed on it. So yes, I’m implying that the frequency of use of a “Poor Choice” item/food/activity could be taxed, but then it gets way too in the weeds to really make it effective and accurate.
As it is, we’re already “taxed” if we skydive for life insurance. So there is SOME level of “taxation” there, via increased premiums, due to the increased risk, which means the insurance company pays more taxes since they receive more money.
Unfortunately, the one form of insurance everyone must have for the privilege of being a live in America is health insurance, per ACA mandate. And those companies are banned from charging difference prices for people’s poor life choices.
The last time I ate at McDonalds or any fast food was over 5 years ago. I pay the same health insurance premium as someone else my age who eats McDonalds once a month, or three times a day.
Perhaps the free market Libertarian version of a “poor choice tax” would be to open up the free market to actually work. I’ve used $0 in healthcare costs to my health insurance over the last 5 years and a large proportion of that is due to good life choices. Yet I pay the same premium as someone who makes horrible life choices. Genetics are a part of it, but life choices are a significant majority contributor.
For some reason, only cigarette smoking can legally be a discriminatory factor in premium cost.
My health insurance premium on a $5k deductible catastrophic policy should be $30 a month and someone who eats at McDonalds daily and doesn’t exercise and drinks soda even one time per day should be $300 a month, but yet we have to average it down to $250 and lump me in ($250 isn’t the middle ground between $30 and $300 but 80% or more of Americans make poor life choices, so on aggregate, the middle ground is higher than halfway)
I make some of those poor life choices you don’t make and I’ve spent a grand total of about $150 on healthcare in the past 5 years (I had strep throat once). So I think I should be paying $30/month too! I agree with your viewpoint and that insurers should be able to discriminate on more things than just tobacco use, but it’s not as simple as how much McDonalds you eat and how much soda you drink. But I trust you were just oversimplifying and we most likely agree.
“No changes to taxation of investment income. The bill calls for the tax rates on capital gains and dividend income (currently 0%, 15% and 20%, depending on income) to remain unchanged. It also makes no changes to the Net Investment Income Tax, the 3.8% surtax on investment income for wealthier filers that is part of the Affordable Care Act. That provision was supposed to have been eliminated as part of the effort to repeal the ACA, which foundered earlier this year. For the time being, at least, the surtax is here to stay.”
Since they’re removing state income tax - and capping property tax to $10K - most of the deductions are meaningless for most people. It’ll be hard to get over $24K of standard deductions.
Overall i like the tax plan - wish the rates were bit lower - being in NJ - we have very high prop tax and state income tax.
Isn’t that entirely the fault of NJ wanting to pay their garbage men $100k+ per year and grant them lifetime pensions after 25 years at age 45? By having a state income tax deduction off federal taxes, we encourage states to become like NJ and be fiscally irresponsible because the true cost of running NJ is being burdened by other, more responsible states.
Every $1 that is deducted off a NJ resident’s federal tax return is $1 greater that another citizen must pay in federal income taxes to run the federal government.
NJ can only charge 10% state income tax and pay their government workers so much because the residents aren’t paying that full amount - it’s being subsidized by the federal government in the form of the state income tax deduction.
If this still isn’t clear, think of the consequence of eliminating the state income tax deduction - many people in NJ have their taxes go up. Why? NJ state income tax is still the same, isn’t it? The reason taxes go up for many NJ residents is because non-NJ residents are no longer subsidizing their state through the state income tax deduction.
Ok now that you’ve said it twice, I would just like to confirm – are garbage workers in NJ state employees? Because most places I know have a contract with a private busniess (like Waste Management, Rainbow Services, etc) and negotiate the cost, but the cost is paid by the residents on a utility bill, not property or state income tax.
Many of them are municipal employees that fall under a city department of public works. It’s my understanding that city and state taxation and spending are entangled heavily through various redistribution means. Such that local property taxes aren’t all that’s paying the city-level garbage workers.
I’m using garbage workers as an example. Everyone who works in the NJ government, state, city, and county level, gets ridiculously amazing generous salaries and pensions. The last decade they’ve had to cut back on that, but all of the legacy retirees still require money coming out of the state coffers for past promises.
Well for every dollar that’s deducted, another citizen must pay a percentage of that dollar for it to be a zero sum. On the converse, the higher cost of living areas pay the majority of federal income tax. There are very few high cost of living / low local income tax areas.
The higher cost of living areas also get more of the benefits from the federal government. For example, military forces are more valuable to an area with higher income than an area with lower income. From a pure economic perspective, is it economically feasible to spend $1B on an aircraft carrier to defend a few huts in Somalia? Or to defend Manhattan?
If the USA was instead 50 separate countries, one per state, then rural Mississippi wouldn’t need as large of a military as currently protects the entire USA because rural Mississippi is not a juicy target for foreign invaders.
The more economic prosperity an area has, the greater military force needed to protect it, all else equal, since the greater economic prosperity will attract more invaders. Thus, if NY, CA, NJ contribute the most federal income taxes due to having the largest economies, I would argue that they are receiving disproportionately high value from the military, and thus it evens out for everyone involved, at least on a military standpoint.
On postal service, it could be argued that the poor areas are more expensive to service due to fewer roads and reduced population density, in which case the wealthy areas of the country are subsidizing the poor. However, if we look at the military budget versus the postal budget, it likely doesn’t matter much.
If you look at where the military is located, the rural communities once again benefit from the high COL areas. Mississippi would be even poorer without ingalls shipbuilding and stennis space center.
I live in NJ although I’d like to move but wife’s job is too good and treating her too well. Anyway, even with the deductions that NJ residents get for SALT, the state still only gets back $0.75 for every $1 we send to feds. The issue is that lots of these states like Mississippi get back way more in benefits so my money is already going to these low cost areas and now it’s proposed that I have to give them even more. TripleB is totally right in that the benefits for government workers are obscene but looks like we’ll be getting a union loving Democrat for governor so that won’t change too much.
I did want to comment on the “healthy choices” thread from a bit ago. Don’t forget that genes play a big part of medical costs. I eat decently well and exercise but I have a genetic birth defect and required back surgery earlier this year (fused 3 vertebrae). It’s nothing I could do to avoid it and I hit my max out of pocket of $7200 back in April. My back will never get better and will actually keep getting worse. Surgeon said in 10-15 years I’ll need to get the next vertebrae fused and then 10-15 years after that the next one will need to be fused. This is what scares me about them trying to remove pre-existing condition protections but that’s another issue outside of taxes.
~1% tax on private university endowments’ investment income (4969)
bad news for NQ deferred comp plans like stock or options, taxable when vested. Ouch. (3801)
bad news for offshore insurance companies, including hedge fund captives (4501)
estate tax/GST exemptions doubled for now and repealed in 6 years, and your heirs still get step up in basis on death. Sweet deal, now try to live til 2023, for their sake (1602)
S corps and rental income subject to self-employment tax
you may lose your student loan deduction (which wasn’t worth much if you had a good job anyway), but now when you find yourself dead or disabled, at least you don’t get taxed on cancellation of debt income.
An argument could be made that the benefit in his case is received by the high COL states because if the low COL states weren’t able to provide cheap labor for the US military, then the military budget would need to be much higher to entice high COL people to volunteer for the military (who otherwise have access to higher paying jobs in the high COL areas).
I think everyone understands the mechanics and the factual basis for the claim that low/no income tax states are subsidizing high income tax states. As you have pointed out before, there are valid arguments on both sides of this question.
As for the high wages of NJ government employees, as I think you’ve pointed out as well, the higher the cost of living, the more states have to pay their employees. Also, the more the NJ government pays their employees, the more the federal government brings in in tax revenue.
If the NJ government decreases worker pay by 35% across the board from e.g. 100k to 65k to account for its loss of revenue, the federal government loses about 40% of that $35,000 or $14,000. The cost of the SALT deduction to the federal government on the whole $100k is maybe $3,500 based on a 10% state income tax rate.
This example wouldn’t apply across the board because the state governments will feel the effect from this more than individuals or businesses, but in terms of government employee pay the logic seems to follow unless someone can point out something I’m missing.
I wouldn’t bother wasting too much time getting into the details of this bill.
Senators have been told by their leadership to look the House bill as nothing more than a “shell”. The Senate intends to release their own bill later this week. And since it has to fit within the Byrd rule…it’ll look a lot different.
Politically, they also have a real challenge…getting Rand Paul and Susan Collins (not to mention Flake, McCain, Corker, etc) all on the same page. Such little margin for error…and a bill that’s going to be a lot “uglier” due to the Byrd rule. I imagine they are going to end up having to make a lot of this stuff temporary.