Drudge Retort: The Other Side of the News
Monday, January 08, 2018

Last month we talked about a paper by some tax lawyers looking for loopholes and glitches in the new tax plan. I described one glitch: States should solicit charitable donations to pay for roads and schools, and make those donations fully creditable against state taxes. The rough idea is that if you have $50,000 of state tax liability, that is no longer deductible from your federal taxes -- but if you instead donate $50,000 to the state, that is deductible from your federal taxes as a charitable donation, and if the state reduces your taxes by the $50,000 donation then you come out ahead. This is the simplest and clearest of all regulatory arbitrages: Giving money to the state as taxes, and giving money to the state as a donation, are economically equivalent, but they will be treated differently by the federal tax code and so there will be incentives to shift from one to another.

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The amazing news is that it might actually happen! Here is an article in the New York Times about state lawmakers who are considering 100 percent tax credits for donations to the state: The donations would be deductible from federal taxes as charitable gifts, and would reduce state taxes dollar-for-dollar, making them effectively a more federal-tax-efficient way to pay your state taxes.

In one sense, I mean: obviously. If you can arrange your affairs in a tax-efficient way, it is downright negligent not to. If state leaders want to attract residents and companies, then making their state tax system as federal-tax-efficient as possible is a no-brainer way to do it: It costs the state nothing, and improves the residents' and companies' position.

Comments

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Lede-in words from the brilliant Matt Levine: www.bloomberg.com

#1 | Posted by GOnoles92 at 2018-01-07 01:58 PM | Reply

Borrow and spend goppers will use any sleazy scheme to help their donors avoid paying taxes.

#3 | Posted by bored at 2018-01-07 02:49 PM | Reply | Funny: 1 | Newsworthy 4

I like this idea.....

Even more savings!!!!

It's goin to be a YUUUGE boat!

#5 | Posted by AndreaMackris at 2018-01-07 05:52 PM | Reply

Just pay your fair share.

#6 | Posted by visitor_ at 2018-01-07 05:58 PM | Reply

Rwingers celebrating the Trumpiblican tax plan.

Roads and schools? They don' need no stinkin' roads and schools!

#8 | Posted by Corky at 2018-01-07 06:33 PM | Reply | Newsworthy 1

Roads and schools are primarily paid for with state and local taxes. Roads and schools are among the least objectionable things on which my tax dollars are spent.

You are supporting tax breaks for the wealthy when you support this kind of subversion.

#9 | Posted by visitor_ at 2018-01-07 07:37 PM | Reply

#9 |

Cleans wealthy men's small round white golf accessories every time he votes.

#10 | Posted by Corky at 2018-01-07 08:57 PM | Reply

Blue states creating the equivalent of shell offshore companies to evade paying federal taxes? Color me shocked.

#11 | Posted by JeffJ at 2018-01-07 10:24 PM | Reply | Funny: 1

- the equivalent of shell offshore companies

Is schools and roads?

The things one can learn around here!

#12 | Posted by Corky at 2018-01-07 10:51 PM | Reply | Funny: 1

This is brilliant. Trump admitted the tax plan penalized voters in blue states and raises the tax burden on some of those states. I fully support those states turning around and taking action that reverses the Trump tax hike on their residents.

#13 | Posted by johnny_hotsauce at 2018-01-08 01:11 AM | Reply | Newsworthy 1

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If states go this route it is a perfectly demonstrates how inept gop officials in congress are.

#14 | Posted by johnny_hotsauce at 2018-01-08 01:14 AM | Reply

This is brilliant. Trump admitted the tax plan penalized voters in blue states and raises the tax burden on some of those states. I fully support those states turning around and taking action that reverses the Trump tax hike on their residents.

#13 | POSTED BY JOHNNY_HOTSAUCE

Never mind the fact that the new tax law simply levels the playing field a bit between states with excessive state and local taxes compared with states with more competitive taxes. But hey! As long was wealthy blue state residents can avoid paying their fair share, it's all good,

#15 | Posted by JeffJ at 2018-01-08 01:25 AM | Reply | Newsworthy 1

A person earning $800K in Florida should have the same federal tax burden as a person earning $800k in California. I love watching progressives and some liberals trying to argue against this fairness.

#16 | Posted by JeffJ at 2018-01-08 01:28 AM | Reply | Funny: 1

"A person earning $800K in Florida should have the same federal tax burden as a person earning $800k in California. "

They do.

"I love watching progressives and some liberals trying to argue against this fairness."

Argue for blue states, in general, supporting red states, at a much greater monetary amount than any current perceived "unfairness". Then argue for four states to pay billions more, while 46 states pay billions less.

This should be good.

#17 | Posted by Danforth at 2018-01-08 01:37 AM | Reply | Newsworthy 1

Do you think someone earning a 800k salary should pay the same taxes as someone earning 800k from investments?
Do you think states should get roughly the same federal spending as the fed taxes collected?
I do.
If not your fairness argument is rubbish.

#18 | Posted by bored at 2018-01-08 01:42 AM | Reply | Newsworthy 2

#17 | POSTED BY DANFORTH

I'm all for equalizing the tax code. I'm all for equalizing the recipients within red and blue states. Look at "Blue" Michigan. Go ahead and equalize (make fair) the tax code, redistribution, etc between Detroit and Bloomfield Hills. The blue/red narrative breaks down when we analyze Bloomfield Hills and Detroit. But hey, the narrative rules the roost

#19 | Posted by JeffJ at 2018-01-08 01:46 AM | Reply

I LOVE watching liberals and progressives argue that a rich person earning $1 million in income should pay less in federal income taxes if she lives in California as opposed to if she lives in Texas.

#20 | Posted by JeffJ at 2018-01-08 01:49 AM | Reply

Gotta protect those tax havens for the uber-rich!

#21 | Posted by JeffJ at 2018-01-08 01:50 AM | Reply

Danforth,

Sorry for the snark.

Personally, I think the SALT cap is awesome. But I don't want to gloat about it. I am very interested to read/listen to your take on this.

#22 | Posted by JeffJ at 2018-01-08 02:01 AM | Reply

"I'm all for equalizing the tax code."

If that's truly the case, you're voting for the wrong bunch.

"The blue/red narrative breaks down when we analyze Bloomfield Hills and Detroit"

Well sure, if you want to redefine the parameters completely.

"I'm all for equalizing the recipients within red and blue states."

Currently, blue states, in general, support red states. Why should the new tax code exacerbate that problem?

"I LOVE watching liberals and progressives argue that a rich person earning $1 million in income should pay less in federal income taxes if she lives in California as opposed to if she lives in Texas."

That's not the argument at all. Nor is it the fact: Texans are subject to the same tax code as Californians. The basic concept, however, goes back to the inception of the income tax code itself: you don't pay taxes on taxes paid.

#23 | Posted by Danforth at 2018-01-08 02:07 AM | Reply | Newsworthy 6

"I am very interested to read/listen to your take on this."

It was specifically written to hurt blue states, and "blue" causes. My first reaction was "This is surgical".

Then, advisor Steven Moore gave up the game: www.vanityfair.com

#24 | Posted by Danforth at 2018-01-08 02:13 AM | Reply | Newsworthy 5

There are arenas of government that must not be invaded by other governments.

The SALT deduction is a federalist issue, something that conservatives SHOULD embrace. Removing the SALT deduction will result in less money for local and state governments and as a result lessens their ability to act independently of the federal government. Ironically, the SALT deduction removal will result in a more powerful federal government.

It's also double taxation. I have been taxed by the local and state governments on the income that is paid at the local and state level. Now I will also have to pay federal taxes on that same income-double taxation. Again something contrary to the conservatives approach to taxation of dividends.

BTW double taxation was deemed unconstitutional by the 2015 Supreme Court so the removal of the SALT deduction should likewise be unconstitutional-if the conservative court is consistent, which I have my doubts over.

#25 | Posted by truthhurts at 2018-01-08 02:14 AM | Reply | Newsworthy 2

Personally, I think the SALT cap is awesome. But I don't want to gloat about it. I am very interested to read/listen to your take on this.
#22 | Posted by JeffJ

BTW keep in mind that the SALT deduction limit is not subject to inflation so in a few years this could impact you. i will smile on that day

#26 | Posted by truthhurts at 2018-01-08 02:20 AM | Reply | Funny: 1

god i hate republicans

#27 | Posted by truthhurts at 2018-01-08 02:29 AM | Reply | Newsworthy 1

#4 | Posted by nullifidian at 2018-01-07 05:16 PM | Reply | Flag:

Easy fix for that is to set an upper limit to the tax credit.

#28 | Posted by 726 at 2018-01-08 08:11 AM | Reply | Newsworthy 1

But hey! As long was wealthy blue state residents can avoid paying their fair share, it's all good,

#15 | POSTED BY JEFFJ

If you were really concerned about "fair share" then you would be talking about lowering the tax burden on people who live in the states that pay out more in federal taxes than their state takes in.

Let it be noted that Jeff supports double taxation on income.

#29 | Posted by johnny_hotsauce at 2018-01-08 08:52 AM | Reply | Newsworthy 2

"Let it be noted that Jeff supports double taxation on income."

Let it also be noted Jeff owes us all about four hundred "rammed it down our throats" about the new tax code. He certainly used that phrase constantly when talking about the ~20-hearing ACA.
newrepublic.com

#30 | Posted by Danforth at 2018-01-08 09:11 AM | Reply | Newsworthy 2

Republicans proved "Ramming it down throats" is politically wonderful as long as they do the ramming. They went much farther than any Congress in modern history to punish particular States via Federal Tax policy.

I believe those "closed-door hearings" constitute the new "Taxation without representation" system.

To see all you 'closed-door, no hearing' fans to get all sand-in-the-vag over defensive measures taken by States who were targeted for higher taxes because they did not support Trump, and were literally locked-out of the right of normal legislative input to this tax bill (as well as Health Care Bills) this size is scandalous.

For all you Republican fans of throat-ramming' to be so tender about States defending against republican Taxation without normal legislative representation, is just adorbs.

#31 | Posted by oldwhiskeysour at 2018-01-08 10:33 AM | Reply | Newsworthy 3

Let it also be noted Jeff owes us all about four hundred "rammed it down our throats" about the new tax code. He certainly used that phrase constantly when talking about the ~20-hearing ACA.
newrepublic.com

#30 | POSTED BY DANFORTH

Yep. The GOP went alone and thus they wholly own this tax law, just like the Dems wholly owned ACA. If this law proves unpopular (I think it will poll positively) then they will pay a hefty price at the ballot box.

#32 | Posted by JeffJ at 2018-01-08 10:50 AM | Reply

SALT is tax-heavy blue states wanting their cake and eating it too. The only people affected are rich people in blue states. I find it interesting that so many on the left are so opposed to rich people paying more taxes.

#33 | Posted by JeffJ at 2018-01-08 10:52 AM | Reply | Newsworthy 1

"The blue/red narrative breaks down when we analyze Bloomfield Hills and Detroit"
Well sure, if you want to redefine the parameters completely.

It makes no sense to characterize a state that is 47% red as a "blue state", especially when benefit recipients vote blue far more than they vote red.

#34 | Posted by JeffJ at 2018-01-08 10:54 AM | Reply

"A person earning $800K in Florida should have the same federal tax burden as a person earning $800k in California." - #16 | Posted by JeffJ at 2018-01-08 01:28 AM

Then you must be in favor of removing all child tax credits.

#35 | Posted by Hans at 2018-01-08 10:56 AM | Reply

Then you must be in favor of removing all child tax credits.

#35 | POSTED BY HANS

Nope. I have 2 kids. :-)

#36 | Posted by JeffJ at 2018-01-08 10:58 AM | Reply

Although my oldest is 17 so we can't claim a deduction on him any more.

#37 | Posted by JeffJ at 2018-01-08 10:58 AM | Reply

"Nope. I have 2 kids." - #36 | Posted by JeffJ at 2018-01-08 10:58 AM

Then why should a person earning $800K in Florida with 10 under-17 aged kids to claim have a different federal tax burden than a person in California with no children earning the same $800k?

#38 | Posted by Hans at 2018-01-08 11:02 AM | Reply

It's a fair question. The answer would be a person with 2 kids under 17 in Florida claim the exact same exemption as a person with 2 kids under 17 in California.

#39 | Posted by JeffJ at 2018-01-08 11:04 AM | Reply

"The answer would be ..." - #39 | Posted by JeffJ at 2018-01-08 11:04 AM

That doesn't answer the question. You merely equalized it between Florida and California.

So, once again, why should a person earning $800K in Florida with 10 under-17 aged kids to claim have a different federal tax burden than a person in California with no children earning the same $800k?

If allowing SALT taxes to be deductible against their federal taxes is, according to you, "unfair," then so is allowing people with children to have a smaller federal tax burden than people with no children.

#41 | Posted by Hans at 2018-01-08 11:09 AM | Reply

"Yep. The GOP went alone and thus they wholly own this tax law, just like the Dems wholly owned ACA."

We did until the Republicans decided to destroy the insurance markets by undermining the law in as many ways as possible with the open intention of destroying the law. So now, the failures caused by them make most of the problems of the ACA their fault.

#42 | Posted by danni at 2018-01-08 11:26 AM | Reply

Hans,

It has long been argued that child tax credits are unfair.

From a purely logical standpoint, I cannot make the case that they are anything but unfair. I can justify child tax credits on a number of grounds, but not from a standpoint of pure logic.

#43 | Posted by JeffJ at 2018-01-08 11:56 AM | Reply | Newsworthy 1

#4 | POSTED BY NULLIFIDIAN

I feel sorry for you. It's got to be hard flip flopping and saying ridiculous things so often to defend Trump.

Like calling this a loophole for the rich when its a loophole for literally EVERYONE who pays state taxes.

You're actually kind of pathetic. We used to laugh at you. Now we just feel bad for you. You should have quit when you were only a little behind.

#44 | Posted by Sycophant at 2018-01-08 12:00 PM | Reply | Newsworthy 3

#43 | Posted by JeffJ at 2018-01-08 11:56 AM

Fair enough, JeffJ.

#45 | Posted by Hans at 2018-01-08 12:08 PM | Reply

$10K a year in the Northeast or CA is not what it is in MS or Alabama. Many middle class tax payers are hit with that much taxes.

But hey in 10 years when inflation has raised your SALT taxes that high, this law will cost you too. That is why the elimination of the deduction will result in more federal dollars as time goes by. So IOW you will be hit with that too and on that day I will laugh at you.

And again double taxation is unconstitutional, per the 2015 Supreme Court.

#47 | Posted by truthhurts at 2018-01-08 12:21 PM | Reply

Republicans rushed a tax law through to beat 2018. A lawyers windfall.

#48 | Posted by bayviking at 2018-01-08 12:57 PM | Reply

- Democrats evolving into the party of the rich.

What a joke you've become...

www.rollingstone.com

What Dems are in favor of is money for schools and roads.

"I described one glitch: States should solicit charitable donations to pay for roads and schools, and make those donations fully creditable against state taxes."

Your Leftier Than Thou efforts have made you full circle into a rwing Trump Tool.

#50 | Posted by Corky at 2018-01-08 01:24 PM | Reply | Newsworthy 1

"How Did the Democrats Become Favorites of the Rich?"

Citizens United?

#52 | Posted by snoofy at 2018-01-08 02:16 PM | Reply

"Democrats represent a majority of the richest congressional districts"

But back in 2000, Republicans represented 7 of the 10 richest Congressional districts: uselectionatlas.org

What happened?

#53 | Posted by snoofy at 2018-01-08 02:23 PM | Reply

#54 | POSTED BY NULLIFIDIAN

Yeah, those Democrats giving huge tax breaks to the rich and to Wall Street...

Oh look, its written by Steven F. Hayward, a Reagonite. Not surprised.

#55 | Posted by Sycophant at 2018-01-08 03:15 PM | Reply | Newsworthy 1

www.forbes.com

I can't get Nulli's link to open. Here it is.

#56 | Posted by eberly at 2018-01-08 03:24 PM | Reply

#31
AMEN

#57 | Posted by ichiro at 2018-01-08 03:33 PM | Reply

SALT is tax-heavy blue states wanting their cake and eating it too. The only people affected are rich people in blue states. I find it interesting that so many on the left are so opposed to rich people paying more taxes.

#33 | POSTED BY JEFFJ AT 2018-01-08 10:52 AM | FLAG:

That's got to be close to the most ignorant thing said on DR in a while. SALT caps will directly hurt middle/upper middle class tax payers in those 4 states.

#58 | Posted by Reagan58 at 2018-01-08 03:57 PM | Reply | Newsworthy 1

#54 | POSTED BY NULLIFIDIAN

There are rich democrats and rich republicans.

But rich republicans are the ones cutting healthcare for kids so some billionaires can have a tax break.

#59 | Posted by ClownShack at 2018-01-08 03:57 PM | Reply | Funny: 1 | Newsworthy 1

Trumpifidian sure needs some hemorrhoid cream. Can you show us on the doll where a Democrat touched you?

BTW, you should wipe that Cheeto dust from your chin.

#60 | Posted by Reagan58 at 2018-01-08 03:59 PM | Reply | Newsworthy 1

I LOVE watching liberals and progressives argue that a rich person earning $1 million in income should pay less in federal income taxes if she lives in California as opposed to if she lives in Texas.

#20 | POSTED BY JEFFJ

I love watching Conservatives forget that Blue states pay for Red states who refuse to tax their state and pay for their expenses.

Level that playing field then we can talk.

#61 | Posted by Sycophant at 2018-01-08 04:01 PM | Reply | Newsworthy 2

#54 | POSTED BY NULLIFIDIAN

Well, at times it is "a" party of the rich...meaning it's one of 2 that are quite friendly to the rich.

depends on which party is in control, of course.

#63 | Posted by eberly at 2018-01-08 04:14 PM | Reply

The GOP Tax Bill Was a Deliberate Attack on Blue States

There's a political poison pill at the heart of the GOP tax legislation: In restructuring vital deductions, Trump and his Congressional enablers are gambling that electorates in blue states will demand that their state and local governments scale back taxation and local expenditures so as to minimize the cost of the federal changes. If the GOP gamble succeeds, it will strangle blue state efforts to protect, and in some cases expand, vital New Deal and Great Society programs. The goal is to impose a Kansas-like low-tax, low-services model countrywide.

www.thenation.com

#64 | Posted by Gal_Tuesday at 2018-01-08 04:28 PM | Reply

"If the rich don't want to pay taxes in Cali, they should demand that Moonbeam and the space cadets reduce state spending on nonsense and start fixing the roads and dams. Or they can leave the state."

If the rich don't want to pay taxes to D.C., you mean.

#66 | Posted by snoofy at 2018-01-08 04:39 PM | Reply | Newsworthy 2

"The goal is to impose a Kansas-like low-tax, low-services model countrywide. "

Someone should inform those farking idiots how Kansas turned out: a downward spiral, a selloff of state assets, a downgrading of roads, and missed payments to pension funds, all followed by a Republican mutiny.

Or as the Kobachs of the world call it, The Kansas Miracle™.

#67 | Posted by Danforth at 2018-01-08 04:46 PM | Reply | Newsworthy 2

#51 | POSTED BY NULLIFIDIAN

Hates schools and roads.

#68 | Posted by Corky at 2018-01-08 04:51 PM | Reply | Newsworthy 1

#61 | POSTED BY SYCOPHANT

A disparity so small only partisans would quibble. Red state GDP is 34.20% of the states combined GDP and receives 35.92% of the tax benefits. Red states contribute 14.75% of their GSP vs 16.83% for blue states. The average federal expenditures per capita is actually $10,183.04 for blue states, and a slightly less $9,858.64 for red states. But hey, it's a great political talking point...if not lacking quite a bit of perspective.

#69 | Posted by gavaster at 2018-01-08 05:02 PM | Reply | Newsworthy 2

#65 | POSTED BY NULLIFIDIAN

The problem isn't state taxes; the problem is our federal taxes going straight to subsidizing inbred red states with no return for us at all. We need to end federal handouts to economic drags like Mississippi.

#70 | Posted by IndianaJones at 2018-01-08 05:18 PM | Reply | Newsworthy 1

the problem is our federal taxes going straight to subsidizing inbred red states with no return for us at all. We need to end federal handouts to economic drags like Mississippi.

So, you hate the poor I see. Duly noted.

#71 | Posted by Daniel at 2018-01-08 06:19 PM | Reply | Newsworthy 2

"Red state GDP is 34.20% of the states combined GDP and receives 35.92% of the tax benefits."

Oh, so only thirty billion a year then.

#72 | Posted by snoofy at 2018-01-08 06:43 PM | Reply

I think you mean rich people clearly hate paying for schools and roads:

The 11 countries with the best infrastructure around the world
www.businessinsider.com

World education rankings: which country does best at reading, maths and science?
www.theguardian.com

#74 | Posted by SpeakSoftly at 2018-01-08 07:09 PM | Reply

#73

Clearly doesn't understand the Dem proposal. So, same stupid, different day.

#75 | Posted by Corky at 2018-01-08 07:40 PM | Reply

#76 | POSTED BY NULLIFIDIAN

The democrats are bad, but to call them the "party of mass inequality" while the GOP exists showcases your ignorance.

#77 | Posted by IndianaJones at 2018-01-08 07:57 PM | Reply | Newsworthy 1

Oh, so only thirty billion a year then.

#72 | POSTED BY SNOOFY

Oh. You don't know? Silence is your friend.

#78 | Posted by gavaster at 2018-01-08 08:04 PM | Reply

Nulli likes capitalism because it allows for individuals to pursue their own economic interests, resulting in... massive inequality.

Nulli dislikes Democrats because they are the party of... massive inequality.

#79 | Posted by snoofy at 2018-01-08 08:10 PM | Reply | Newsworthy 1

"Oh. You don't know?"

I know last year you wanted to kill PBS to save $62M, and this year you say $30,000M isn't that much money.

You must be one of those "Never Trump" guys like JeffJ.

#80 | Posted by snoofy at 2018-01-08 08:14 PM | Reply | Newsworthy 1

"The State should not be funding broadcasters."

Then why does every nation in the world fund broadcasters?

#82 | Posted by snoofy at 2018-01-08 08:27 PM | Reply

The problem isn't state taxes; the problem is our federal taxes going straight to subsidizing inbred red states with no return for us at all. We need to end federal handouts to economic drags like Mississippi.

I love it when the DRTards start spouting this tired meme, if you look at Federal Spending after taking out DOD spending for military bases and Federal spending for facilities and employees the Blue States are the bigger recipients of "handouts" per capita than the Red States. That inconvenient fact doesn't stop the Lefty Sheep from bleating, however.

California used to be the biggest "taker" State until 22 military bases were closed between 1980 and 1994, then all of a sudden it became the poster child for the Blue States in this retarded narrative.

#83 | Posted by Rightocenter at 2018-01-08 08:35 PM | Reply

Lower taxes, raise efficiency, lower the drama, Trump = Obama

#84 | Posted by HeuristicGratis at 2018-01-08 11:53 PM | Reply

#33

www.gfoa.org

Do you ever tire of smelling your own farts?

#85 | Posted by jpw at 2018-01-09 01:17 AM | Reply

#83 I see you're still pushing your retarded slice and dice narrative.

Just take out the inconvenient parts and presto, it's the exact narrative I want it to be!

Idiot.

#86 | Posted by jpw at 2018-01-09 01:24 AM | Reply | Newsworthy 3

I think the one problem I can think of is that IRS regulations on deductibility of charitable donations is that you must not get anything of value in return for the donation (or you must subtract that value received). So if a person gets a $1 credit towards their state tax for every $1 of donation then according to the IRS you can deduct $0.

Nevertheless this is double taxation that the tax reform has created.

#87 | Posted by rosemountbomber at 2018-01-09 09:39 AM | Reply

#80 | POSTED BY SNOOFY

Yes...and corn subsidies, oil subsidies, the vast majority of military spending, and the Hawaiian Chocolate Festival. Those don't fit your narrative though due they?

And the reason I said "You don't know" is because the disparity isn't $30B. Go do your homework.

Pick one. Higher taxes on the rich OR red states pay the same per capita as blue states. You can't have both.

#88 | Posted by gavaster at 2018-01-09 10:39 AM | Reply

#87 | ROSEMOUNTBOMBER

No, it's not double taxation.

www.investopedia.com

#89 | Posted by gavaster at 2018-01-09 10:41 AM | Reply | Newsworthy 1

#61 | POSTED BY SYCOPHANT
A disparity so small only partisans would quibble. Red state GDP is 34.20% of the states combined GDP and receives 35.92% of the tax benefits. Red states contribute 14.75% of their GSP vs 16.83% for blue states. The average federal expenditures per capita is actually $10,183.04 for blue states, and a slightly less $9,858.64 for red states. But hey, it's a great political talking point...if not lacking quite a bit of perspective.

#69 | POSTED BY GAVASTER

Fantastic. So you are all fine with tripling Welfare then right? I mean it's only a couple percentage points of the overall federal budget, right?

No? Tens of billions of dollars suddenly matter again? Who would have thought...

#90 | Posted by Sycophant at 2018-01-09 11:23 AM | Reply

So, you hate the poor I see. Duly noted.

#71 | POSTED BY DANIEL

Why is Mississippi still poor? Shouldn't supply side economics have pulled them out of poverty by now?

#91 | Posted by Whatsleft at 2018-01-09 11:36 AM | Reply

#90 - sycophant

The narrative is that red states are sucking the life out of blue states. It's a narrative that, as I said, only partisans would quibble over. It's like saying Bama demolished Georgia last night when really it was a tie game that went to OT. Yes, blue states pay more than red states, but when you look at the numbers it's really just a partisan talking point. So yeah, big freaking deal. I'm not going to be writing my congressman over it.

And define welfare. Is that like SS where the government taxes my income and then gives me half of it back when I retire? Capping SS contributions every year the government takes in $595,944 from 21-66. Retiring at 66 and living the average life expectancy of 78.75 years the government gives you back $361,998. Or a -39% return on investment. An average Joe making $40k? Yeah. You get a whopping -19% return on your investment! SS is a fail. So no, I'm not keen on tripling 'welfare'.

It's tough huh? Actually discussing finances with a fiscal conservative. I guess the biggest ----- in my armor is my love for flying private jets. That's one government 'waste' program I support. :)

#92 | Posted by gavaster at 2018-01-09 11:45 AM | Reply

Also, when looking at how much red states "take" defense contract spending gets lumped in along with other government expenditures that have nothing to do with the redistribution of wealth. Further, who are the actual recipients of safety net services in red and blue states? Do these recipients vote more for Dems or more for GOP? I know how recipients in Detroit vote.

#93 | Posted by JeffJ at 2018-01-09 11:51 AM | Reply

#90 - sycophant
The narrative is that red states are sucking the life out of blue states. It's a narrative that, as I said, only partisans would quibble over. It's like saying Bama demolished Georgia last night when really it was a tie game that went to OT. Yes, blue states pay more than red states, but when you look at the numbers it's really just a partisan talking point. So yeah, big freaking deal. I'm not going to be writing my congressman over it.
And define welfare. Is that like SS where the government taxes my income and then gives me half of it back when I retire? Capping SS contributions every year the government takes in $595,944 from 21-66. Retiring at 66 and living the average life expectancy of 78.75 years the government gives you back $361,998. Or a -39% return on investment. An average Joe making $40k? Yeah. You get a whopping -19% return on your investment! SS is a fail. So no, I'm not keen on tripling 'welfare'.
It's tough huh? Actually discussing finances with a fiscal conservative. I guess the biggest ----- in my armor is my love for flying private jets. That's one government 'waste' program I support. :)

#92 | POSTED BY GAVASTER

The narrative is that red states whine about takers but are themselves takers. And it is virtually across the board.

And the actual reason is far more simple. Blue states taxed their residents and better invested in their states' futures over the years. Hence they have far better economies and income to tax. On the other hand, only Red states with oil tend to pay more in than they get.

And the SS thing is cute. But here's the issue... If you live much much longer than 78.75 years, the Social Security is STILL there. That's the SECURITY part. It's what a 401K doesn't do: i.e. run out.

#94 | Posted by Sycophant at 2018-01-09 12:01 PM | Reply

Jeff,

Are you claiming only Dems use welfare? That welfare recipients in red states are Dems?

#95 | Posted by jpw at 2018-01-09 12:05 PM | Reply

" when looking at how much red states "take" defense contract spending gets lumped in along with other government expenditures that have nothing to do with the redistribution of wealth"

Nonsense; they absolutely do; to the recipients of those paychecks, and the businesses they frequent.

#96 | Posted by Danforth at 2018-01-09 12:10 PM | Reply | Newsworthy 1

"Capping SS contributions every year the government takes in $595,944 from 21-66"

Please show your math.

#97 | Posted by Danforth at 2018-01-09 12:11 PM | Reply

"other government expenditures that have nothing to do with the redistribution of wealth."

How is it that those government expenditures are not a redistribution of wealth?
The money the government spends has to come from somewhere.
Doesn't that make all government spending redistribution? Kinda by definition?

#98 | Posted by snoofy at 2018-01-09 12:17 PM | Reply | Newsworthy 1

#94 | POSTED BY SYCOPHANT

Considering you could live until you're 85 and still come out ahead by having put the money in your mattress, SS is still a fail. SS needs to be re-worked. I see a universal income on the horizon, but that's a different topic for another day.

The vast majority of the income for blue states, 34% of it actually, comes from NYC and Cali. I'm not quite so sure state investments were major factors creating the financial hub of NYC or the tech industry in Cali. Interesting theory though.

#99 | Posted by gavaster at 2018-01-09 12:22 PM | Reply

"Considering you could live until you're 85 and still come out ahead by having put the money in your mattress..."

STOP. Your math is bad. To start, it assumes the cap has always been where it's been, and the rates have been the same.

#100 | Posted by Danforth at 2018-01-09 12:24 PM | Reply

#97 | POSTED BY DANFORTH

Average life expectancy - 78.75 years
Retirement age - 66
Starting contributions age - 21
Average SS benefit - $1,180.80
Max SS benefit - $2,366
Max taxable by SS - $106,800
Average Joe Salary - $40,000
SS Contribution - 12.4%

Making max taxable income of $106,800 from 21 to 66 is $4,806,000 at 12.4% SS rate results in $595,544 in contributions.
Retiring at 66 and living til you're 78.75 the max SS payout is $361,998, which is 60.7% of what was contributed.

Making average Joe's income of $40,000 from 21 to 66 is $1,800,000 at 12.4% SS rate results in $223,200 in contributions.
Retiring at 66 and living til you're 78.75 the average payout, at $1,180.80, is $180,540, which is 80.8% of what was contributed.

Wee!! Math is fun!

Article I used was from 2011 for SS benefits and caps, but hasn't changed much.

#101 | Posted by gavaster at 2018-01-09 12:37 PM | Reply

Are you claiming only Dems use welfare? That welfare recipients in red states are Dems?

#95 | POSTED BY JPW

No, of course not. I am pointing out that when looking at "takers" and "contributors" breaking it down as red state/blue state doesn't make a whole lot of sense given that these states are comprised of people who vote for both parties.

#102 | Posted by JeffJ at 2018-01-09 12:37 PM | Reply

#100 | POSTED BY DANFORTH

"assumes the cap....and the rates have been the same". No, I'm assuming the increase of dollars paid in benefits will be negated by the rise of inflation and the max cap will be adjusted along with the inflation over time.

#103 | Posted by gavaster at 2018-01-09 12:50 PM | Reply

"Max taxable by SS - $106,800"

Not today, and certainly not 45 years ago, when your 66 yr old was 21.

SS Contribution - 12.4%

Since when? Not the year you're pretending.

#104 | Posted by Danforth at 2018-01-09 01:03 PM | Reply

"breaking it down as red state/blue state doesn't make a whole lot of sense given that these states are comprised of people who vote for both parties."

You understand the concept of majorities, right? And vast majorities? The red states with perennial vast majorities tend to lead the taker pack.

#105 | Posted by Danforth at 2018-01-09 01:09 PM | Reply

"Article I used was from 2011 for SS benefits and caps, but hasn't changed much"

Tell that to the folks hit by it. The cap has risen almost 20%

And you're pretending the rate has always been 12.4%; it hasn't, and not in the years it matters most to the equation. Today's cap takes that earlier reduced rate (and ALL its subsequent compounding) into account. Your math doesn't.

#106 | Posted by Danforth at 2018-01-09 01:12 PM | Reply

Joe wasn't paying 12.4% from the start:
www.taxpolicycenter.org

And if Joe was making $40,000 per year, his first job at 21 paid him roughly 475% of the median income.

You're right...math IS fun. Not Republican math so much, but math math.

#107 | Posted by Danforth at 2018-01-09 01:20 PM | Reply

Clarification: "The cap has risen by almost 20%" refers to the amount subject to SS taxes. "Today's cap" refers to the payout cap. My apologies for not being clear.

#108 | Posted by Danforth at 2018-01-09 01:24 PM | Reply

"Then you must be in favor of removing all child tax credits.
#35 | POSTED BY HANS"

"Nope. I have 2 kids. :-)
#36 | POSTED BY JEFFJ"

Jeff's got principles! Until he doesn't....

#109 | Posted by mOntecOre at 2018-01-09 02:15 PM | Reply

The SS rate hasn't been changed in pushing 30 years, it's been 12.4% since 1990. SS is based on your 35 best income earning years, which are usually your later years. Meaning we are approaching a time where your contributions will all be based on a flat 12.4% contribution rate.

Also. Max cap is almost directly linear with average disbursements.

SS benefits basically pay out dollar for dollar when adjusted for inflation. It's an imperfect system and needs to be revised.

#107 - Danforth
Ever worked a job for 45 years and never received a raise? Do you know anyone in their early 60's who makes fewer real dollars at a full time job than they did in their early 20's? Didn't think so.

#110 | Posted by gavaster at 2018-01-09 02:32 PM | Reply

Continuing the "no taxation without representation" theme of the founders how about each state contributes *exactly* the same amount to the federal budget, as we get the same amount of senators, regardless of state population.

You strict constitutionalist/originalists should be on board right? Why should I contribute so much when my vote is worth so little compared to someone from say Wyoming?

#111 | Posted by dibblda at 2018-01-09 04:33 PM | Reply

Gavaster, you don't pay in and then get paid out.

Your payments today are some retirees check today. It's not an account with your name on it.

#112 | Posted by snoofy at 2018-01-09 04:55 PM | Reply

"The SS rate hasn't been changed in pushing 30 years"

So the first 15 years of your 45 years---1/3rd of the time---is based on lower rates. Your totals and numerical conclusions are therefore off.

"SS is based on your 35 best income earning years, which are usually your later years."

But you've counted contributions from 45 years, and pegged his earliest jobs as paying the most over the median, so your totals and conclusions are now waaaay off.

"Do you know anyone in their early 60's who makes fewer real dollars at a full time job than they did in their early 20's?"

Then why did your calculations have Joe making more than four times the median income in his first job in his 20s, and so much less than the median income in his 60s? Waaaay, waaaaay off.

#113 | Posted by Danforth at 2018-01-09 05:25 PM | Reply

"And the reason I said "You don't know" is because the disparity isn't $30B. "

Did I forget to carry a zero? You said the difference in what Red states take vs. what they give is about 1.8% of GDP. GDP is about 18 trillion dollars.

So, three hundred billion then.

And you still want to play some sort of game where three hundred billion dollars isn't much.

#114 | Posted by snoofy at 2018-01-09 05:33 PM | Reply

#112 - Snoofy

If any financial retirement fund offered the same plan with the same results nobody would voluntarily give them their money. This isn't working.

#115 | Posted by gavaster at 2018-01-09 06:09 PM | Reply

#113 | POSTED BY DANFORTH

Gives us the real numbers. What are they? Please tell me what they are since I'm "so far off". Calculate the changes in taxable income per year over the past 45 years, outline the typical career salary growth trajectory over the life of an individual (I cheated and used max earnings so this isn't a question), adjust for inflation, tabulate the annual increase of SS payout and tell us what a SWELL deal SS is. I'll wait.

#116 | Posted by gavaster at 2018-01-09 06:14 PM | Reply

#114 | POSTED BY SNOOFY

First. It's 2.08% of their GDP. And based on 2016 numbers that's $132B...out of the total 18.5T economy. So the red states would need to contribute an additional.....0.71% of the GDP to taxes to be on par with blue states. Whooped de doo da day. Yet you act like blue states are carrying "so much" more. Like I said, Alabama just CRUSHED GA didn't they?

And aren't you for progressive taxes? Shouldn't the blue states making double the amount of the red states pay a higher percentage of their income versus the red states? Come on man. Pay your fair share! It's a dumb talking point and it needs to be retired.

#117 | Posted by gavaster at 2018-01-09 06:28 PM | Reply

"that's $132B"

So, a little less than the GDP of Nevada, a little more than the GDP of Arkansas. en.wikipedia.org
A whole small-ish state worth of GDP.
"Nothing."

#118 | Posted by snoofy at 2018-01-09 06:37 PM | Reply

"If any financial retirement fund offered the same plan with the same results nobody would voluntarily give them their money."

Clearly.
Why would anyone donate want to donate their pay today to a retiree today?
Likewise, I don't want to donate any of my pay to pay for some Senator's wages.
But here we are.

#119 | Posted by snoofy at 2018-01-09 06:39 PM | Reply

"This isn't working."

For thousands of seniors in my town, it's pretty much all that keeps them from becoming homeless; living on about a thousand dollars a month.

But hey, I can understand why you'd want them to have zero, and you to have a bit more.

#120 | Posted by snoofy at 2018-01-09 06:43 PM | Reply

"Pay your fair share!"

So in some states, the fair share is zero, and in other states, the fair share is non-zero.

What's up with my "fair share" changing based on where I stand not in terms of income or wealth, but in relation to some arbitrary state line? Sounds like --------.

#121 | Posted by snoofy at 2018-01-09 06:46 PM | Reply

#120 | POSTED BY SNOOFY

Didn't say that at all. I said the current system isn't working, as evidenced by the fact that people are expected to live on $1k a month. But SS is a smashing success huh? Or is it? I can't be sure which one it is for you. I think it sucks.

#118 | POSTED BY SNOOFY

Exactly. So switch state party affiliation to the map where Trump got elected instead of when Obama won in the 2012 election and now the blue states are the blood suckers. See how it changes every 4 years? It's a too close to even matter calculation.

#122 | Posted by gavaster at 2018-01-09 07:10 PM | Reply

" So switch state party affiliation to the map where Trump got elected instead of when Obama won in the 2012 election and now the blue states are the blood suckers."

The whole South is a giant leech, and it's solidly GOP. Though Trump might be fixing that.

#123 | Posted by snoofy at 2018-01-09 07:57 PM | Reply

"I said the current system isn't working, as evidenced by the fact that people are expected to live on $1k a month."

You don't have a Plan B for these people. Their working years are over. Ending SSI would necessarily end their income.

You have no point, and you're making it well.

#124 | Posted by snoofy at 2018-01-09 07:58 PM | Reply

"Gives us the real numbers."

Do your own damned work. And don't blame me because your math is sloppy, and you don't fully understand the equation.

"and tell us what a SWELL deal SS is."

I never said it was. I merely said your equation was screwy, and your assumptions strained credulity, therefore your numerical and non-numerical conclusions were incorrect.

#125 | Posted by Danforth at 2018-01-09 09:57 PM | Reply

"Gives us the real numbers."

Are the real numbers the ones where $300 billion isn't much to get worked up about?

#126 | Posted by snoofy at 2018-01-09 10:15 PM | Reply

#125 - Dan
You're right, a flat projection based on today's numbers is a bit screwy. But, with historical rates of increase to the benefits, max cap, and SS tax rate changes all adjusted for inflation over the next 45 years a max capper will receive 81% of what they put in. Only slightly better than I previously reported before. Happy? Any other variables you want to account for? Did you think the number was going to "magically" jump to a positive? My point is SS shouldn't be increased. But despite what Snoofy says I don't think it should be eliminated all together either.

So when I replied to "assumes the cap....and the rates have been the same". with "No, I'm assuming the increase of dollars paid in benefits will be negated by the rise of inflation and the max cap will be adjusted along with the inflation over time." Now you know.

#124 | POSTED BY SNOOFY
I said I didn't want to triple SS. And nice work trying to put words in my mouth that I want to take SS away so I can have more. Never said that either. SS isn't sustainable and needs a new approach. What we're doing, taxing Peter to pay Paul, is not a sustainable model.

One of the ways would to provide short term relief and give us options for modifications would be to drastically increase wages for lower income individuals, which increases SS contributions. I advocate that be done by incentivizing businesses to increase wages for lower income wage earners. Make certain lower wage brackets a bigger write off over other business expenses. If a business wants to save money they'll increase wages before say buying new equipment. At least that's what I wrote my Congressman. What's your idea? Wait, I know. Increase taxes on businesses.

#127 | Posted by gavaster at 2018-01-10 01:59 PM | Reply

"But, with historical rates of increase to the benefits..."

Which aren't going to happen 100% going forward, due to the change to chained CPI...so your numbers are off.

"...over the next 45 years a max capper will receive 81% of what they put in."

Great. Now you're ignoring longevity gains. More off numbers.

SS is a crappy investment, I'll give you that. But I'm done pointing out your actuarial problems.

#128 | Posted by Danforth at 2018-01-10 02:12 PM | Reply

You might have a point in longevity gains, it remains to be seen. The life expectancy has decreased 2 years in a row (2015-2017) in the USA. We'll see if it's a trend or an anomaly. Based purely on my view of the American diet and lifestyle I have a more pessimistic view of longevity gains for future years. Should longevity increase I expect Congress will again increase the full retirement age again, though not wiping out the increase in longevity.

The change to using chained CPI isn't a factor until after you retire and it further increases the disparity between dollars in and dollars out...bringing the payout back to just above my original numbers percentage wise, if not exact dollars...which was my point all along. Thanks for pointing out the flaws in my rudimentary calculations (which were never meant to be actual actuary calculations) that when accounted for bear up my original contention. You get way less out than you put in and it's a crappy system.

#129 | Posted by gavaster at 2018-01-10 06:36 PM | Reply

#112

Correct, it is like a giant annuity ponzi scheme.

You are basically being taxed for services you are not guaranteed to receive in return for those taxes.

#130 | Posted by HeuristicGratis at 2018-01-11 05:18 AM | Reply

"You might have a point in longevity gains, it remains to be seen. The life expectancy has decreased 2 years in a row (2015-2017) in the USA."

That's the opioid crisis, and it's a blip on an upward trajectory.

"The change to using chained CPI isn't a factor until after you retire"

No, the new formula starts immediately, meaning everyone will get lower payouts every year going forward, vs. using regular CPI. Increases are percentages of the prior year's base, so a lower increase in one year causes lower increases in every year going forward.

"Thanks for pointing out the flaws in my rudimentary calculations"

Not flaws; mistaken assumptions. Flaws move you to a nearby answer; mistaken assumptions move the destination, and therefore the conclusion, markedly.

"You get way less out than you put in"

Thanks for proof of my claim.

#131 | Posted by Danforth at 2018-01-11 09:52 AM | Reply

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