Drudge Retort: The Other Side of the News
Wednesday, July 17, 2019

New Jersey is suing the Internal Revenue Service, challenging new rules that would block states' attempts to get around a new $10,000 cap for state and local tax deductions.

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I didn't know these states had done this as an end-run around that $10K SALT cap.

Good idea...too bad the IRS stopped it.

#1 | Posted by eberly at 2019-07-17 04:22 PM | Reply

Of course these blue states want to give a tax cut to the upper 20%. That's progressive!

#2 | Posted by nullifidian at 2019-07-17 04:26 PM | Reply

The number of right-wingers, fiscal conservatives, and Republicans who will cry "Double Taxation!" over the same Democrat income being twice should add up to approximately zero.

Actually, I suspect my estimate is too high. We already have one Deplorable cheering for it in #2.

Double Taxation!
Double Taxation!
Double Taxation!

#3 | Posted by snoofy at 2019-07-17 04:31 PM | Reply

I read it better after I posted it...it's deemed quid pro quo to give a 100% tax credit for the contribution.

turns out states offer similar tax credits for contributions but it's 50% or so for those.

#4 | Posted by eberly at 2019-07-17 04:37 PM | Reply

I want my legitimate itemized deductions which any Corporation can take. But thanks to Republicans the cost of moving to a new job, other job search expenses and other itemizations have been removed from the tax code without any fair warning causing a spike in taxation, not a cut.

#5 | Posted by bayviking at 2019-07-17 08:02 PM | Reply | Newsworthy 1

It's deplorable what some will do to get out of paying their fair share.

#6 | Posted by visitor_ at 2019-07-17 08:14 PM | Reply


@#2 ... Of course these blue states want to give a tax cut to the upper 20%. That's progressive! ...

Normally I'd agree with the sentiment you express, but in this case i disagree.

The SALT tax was a targeted tax, targeted to the blue states. A good example of what one supporter of Pres Trump stated, hurting the right people.

It walks and talks like a tax targeted against those who Pres Trump wants to hurt.

That's the part of it I don't like.

"The power to tax is the power to destroy." (Daniel Webster, 1819)

Given that even a supporter of Pres Trump has noted that "hurting the right people" is the goal, the SALT tax looks quite suspicious, especially in light of the very significant tax cut given to other wealthy people and corporations.

#7 | Posted by LampLighter at 2019-07-17 09:48 PM | Reply | Newsworthy 1

Lamp,

Let me turn that around.

Why should a person in California who earns $500K in income pay less in federal income taxes than a person in Florida with the same income?

#8 | Posted by JeffJ at 2019-07-17 09:55 PM | Reply


@#6 ... It's deplorable what some will do to get out of paying their fair share. ...

I know, it is deplorable.

The wealthy giving huge donations to Republican candidates' campaigns. Then, when those Republican candidates get elected, they pass a HUGE tax cut for those wealthy who contributed.

The wealthy look at it as a good investment, donating a million here and there to a candidate, or a PAC, so that the candidate (now an elected Congress person) passes tax cuts worth trillions to the wealthy. It's almost a better investment (probably a lot less risky) than the stock market.

It is very deplorable how the republicans will sell tax cuts in such a manner.


#9 | Posted by LampLighter at 2019-07-17 09:55 PM | Reply | Newsworthy 1


@# ... Why should a person in California who earns $500K in income pay less in federal income taxes than a person in Florida with the same income? ...

Once again, I agree with the sentiment.

If only the federal tax code, with all its deductions and tax credits, etc, were that simple.

It isn't. Too many loopholes, specifically for the wealthy.

I'll admit it's a complex topic.

But I'll also continue to state that the SALT cap was a targeted tax designed to hurt the blue states.

Regardless of the other faults in the tax laws.

The SALT cap was targeted.


#10 | Posted by LampLighter at 2019-07-17 10:01 PM | Reply

Why should a person in California who earns $500K in income pay more in state income taxes than a person in Florida with the same income?

Answer one and you'll answer the other.

#11 | Posted by snoofy at 2019-07-17 10:07 PM | Reply

Why should a person in California who earns $500K in income pay less in federal income taxes than a person in Florida with the same income?
#8 | Posted by JeffJ

Just a guess at some reasons.

The federal tax code recognizes that the cost of living may be drastically different in the two states.

A person's tax burden in one state vs. another state may be drastically different if one state has significantly less SALT.

Allowing a full SALT deduction may be balancing act to lessen the movement of businesses from one state to another to gain SALT benefits.

Federal taxes may attempt to recognize that a person's total tax burden.

#12 | Posted by truthhurts at 2019-07-17 10:09 PM | Reply

Why should a person in California who earns $500K in income pay more in state income taxes than a person in Florida with the same income?

Answer one and you'll answer the other.

#11 | POSTED BY SNOOFY

I get the concept behind deducting state tax outlays from federal obligations. I just disagree with it. I see it as the federal government subsidizing high-tax states to the detriment of low tax states.

#13 | Posted by JeffJ at 2019-07-17 10:09 PM | Reply

But what's your actual answer to:

"Why should a person in California who earns $500K in income pay more in state income taxes than a person in Florida with the same income?"

#14 | Posted by snoofy at 2019-07-17 10:10 PM | Reply

But what's your actual answer to:

"Why should a person in California who earns $500K in income pay more in state income taxes than a person in Florida with the same income?"

#14 | POSTED BY SNOOFY

It's a nonsensical question. States set their own tax rates. The federal government's tax rates should apply the same regardless of which state a person chooses to live.

#15 | Posted by JeffJ at 2019-07-17 10:12 PM | Reply

"It's a nonsensical question."

Well then so must be yours, since it's the same question just at a different scale of government!
Not the progress I was hoping to make, but I'll take it.
This is called "failure to reject the null hypothesis."

#16 | Posted by snoofy at 2019-07-17 10:19 PM | Reply

Some additional reasons.

The SALT deduction encourages states to raise taxes on higher income people. So CA, having higher SALT would have more money to spend on State projects compared to FL.

Since these higher SALT states are the more economically productive states, the SALT deduction allows them to retain workers and productivity.

Higher income people already have an Alternative Minimum Tax that can effectively limit their SALT deduction regardless.

#17 | Posted by truthhurts at 2019-07-17 10:23 PM | Reply | Newsworthy 1

I see it as the federal government subsidizing high-tax states to the detriment of low tax states.

Think about this though. A lot of the federal budget is doled out to states. If a state taxes its citizens aggressively, then presumably that state will need less federal money because it already has more money of its own. This theory is borne out by the fact that many high tax states are net contributors to the federal government as opposed to net takers. So it makes sense to allow citizens of those states to deduct state taxes paid, because they won't need the federal aid as much as a state that neglects to collect adequate taxes to fund its infrastructure, education, etc.

#18 | Posted by JOE at 2019-07-17 10:30 PM | Reply | Newsworthy 4


@#15 ... The federal government's tax rates should apply the same regardless of which state a person chooses to live. ...

Agreed.

However, the SALT cap) is targeted towards the blue states.

There are many other parts of the tax code that give tax "relief" for the wealthy who do not happen to live in the blue states.

I'll go back to something i said earlier, why the HUGE tax decrease for wealthy but the imposition of the SALT cap that specifically targets a tax increase for the wealthy in blue states.

So if you want to fix the tax code, let's do it. But let's not do it with the intent to "hurt" a political adversary.

#19 | Posted by LampLighter at 2019-07-17 10:33 PM | Reply | Newsworthy 1

#17 and #18

Pretty good arguments, guys.

#20 | Posted by JeffJ at 2019-07-17 10:34 PM | Reply | Newsworthy 3


@#17 ... have more money to spend on State projects compared to FL. ...

Probably why Florida sells its driver license information to anyone who wants to buy it.

Florida is selling drivers' personal information to private companies and marketing firms
www.wxyz.com

Gotta get that money to run the state somewhere...



#21 | Posted by LampLighter at 2019-07-17 10:36 PM | Reply

#14

I'll answer that, snoofy. Florida doesn't HAVE a state income tax. That makes it not only nonsensical, but stupid as well. Are you like corky and monson wondering who Trump is going to replace Stevens with?

#22 | Posted by willowby at 2019-07-17 10:48 PM | Reply | Funny: 1

Why should a person in California who earns $500K in income pay less in federal income taxes than a person in Florida with the same income?

#8 | Posted by JeffJ

What, suddenly deductions to lower one's tax burden are wrong?

And so what, a person in FL has equal access to decreasing their taxes via the SALT deduction.

#23 | Posted by jpw at 2019-07-18 12:14 AM | Reply

I see it as the federal government subsidizing high-tax states to the detriment of low tax states.

#13 | Posted by JeffJ

Yawn. Of course.

When in reality the opposite is true, but don't let that stop you...

#24 | Posted by jpw at 2019-07-18 12:18 AM | Reply

Gotta get that money to run the state somewhere...
#21 | Posted by LampLighter

Red states get their money some how. They claim they're low tax havens but they nickel and dime you and scrape the cash from the populace somehow.

It's all a facade, though.

#25 | Posted by jpw at 2019-07-18 12:21 AM | Reply | Newsworthy 1

Progressives for 1%er handouts lol.

#26 | Posted by sitzkrieg at 2019-07-18 07:59 AM | Reply

#26 Do you ever tire of being so stupid? It's not a "handout," they live in states that take less money from the federal government and are net payers even with the SALT deduction. Why should they pay even more subsidize your redneck welfare state?

#27 | Posted by JOE at 2019-07-18 08:19 AM | Reply

Socialism.

#28 | Posted by sitzkrieg at 2019-07-18 08:26 AM | Reply

Socialists against redistribution! If you can't get why that's so hilarious, there's no helping you.

#29 | Posted by sitzkrieg at 2019-07-18 08:27 AM | Reply

27

I don't understand what you are saying. "net payers"? what does that mean?

#30 | Posted by eberly at 2019-07-18 08:53 AM | Reply

#30 It means a particular state pays more money into the federal government than dollars it gets back. Are you really unfamiliar with the concept?

#31 | Posted by JOE at 2019-07-18 09:01 AM | Reply

Every state has a component of 3 primary drivers of tax revenue.

income
property
sales

Colorado, for example, has a low property tax rate but sales tax is a better for them because they are tourism state...a lot of folks paying taxes to stay in hotels, resorts, etc....

colorado has seen property values go up significantly so that's been a tax boon for the state as well.

Kansas has fairly higher property tax rates (on homes worth less).

Texas has no income tax but property tax rates are somewhat higher.

#32 | Posted by eberly at 2019-07-18 09:02 AM | Reply

31

I'm familiar with the general concept...but not with how to tie it back to an individual tax payer.

Am I supposed to be okay with paying a higher effective tax rate because my state is red?

#33 | Posted by eberly at 2019-07-18 09:03 AM | Reply

Am I supposed to be okay with paying a higher effective tax rate because my state is red?

Based on the data (and this is a generalization), it's likely your state fails to tax its citizens sufficiently to support its infrastructure and takes more money from the federal government as a result. So, yes.

#34 | Posted by JOE at 2019-07-18 09:07 AM | Reply

Just shut up and pay your fair share

#35 | Posted by homerj at 2019-07-18 09:07 AM | Reply | Newsworthy 1

The IRS has never routinely allowed a state to do this. I don't think it's the first time a state has tried to give a tax credit swap for "charitable donation". Imagine the Treasury department doesn't like that.......

#36 | Posted by eberly at 2019-07-18 09:11 AM | Reply

For example:

Mississippi taxes its citizens at rates from just 3-5%. And they are one of the most federally dependent states in the nation.

New Jersey, on the other hand, taxes its citizens at rates of up to 10.75%. And they are one of the least federally dependent states in the nation - they pay more to the federal government than they get back. And that's even with the SALT deduction in place - so why should that deduction be removed and they be forced to pay even more?

#37 | Posted by JOE at 2019-07-18 09:12 AM | Reply

Just shut up and pay your fair share

Agreed. Tell that to Mississippi, Kentucky, West Virginia, Alabama, Arizona, Alaska, Montana, South Carolina, Indiana, Louisiana, Tennessee, Wyoming, North Dakota, Oklahoma and Missouri, all of whom are among the most federally dependent states in the nation.

#38 | Posted by JOE at 2019-07-18 09:13 AM | Reply

federally dependent states in the nation.

#38 | POSTED BY JOE

How much of that is tied to providing services for the federal government, like military bases and production?

#39 | Posted by JeffJ at 2019-07-18 09:25 AM | Reply

#39 Feel free to figure that out and report back, rather than make argument by implication.

#40 | Posted by JOE at 2019-07-18 09:27 AM | Reply

And so what, a person in FL has equal access to decreasing their taxes via the SALT deduction.

#23 | POSTED BY JPW

By that same logic the SALT cap doesn't vary from state-to-state.

#41 | Posted by JeffJ at 2019-07-18 09:27 AM | Reply

someone recently did make that argument here. I don't remember who...but it was sourced.

Hans!!!!

#42 | Posted by eberly at 2019-07-18 09:28 AM | Reply

States don't pay taxes. Individuals and corporations pay taxes. Most people that actually pay taxes pay out more than they directly receive back.

#43 | Posted by visitor_ at 2019-07-18 10:36 AM | Reply

Bey Jeff, did some research for you, and it turns out of the top ten states in military spending, only one of them breaks the top 20 in terms of federal dependency (Alabama). So you'll need to come up eith a new theory (or just admit that the SALT deduction is more than fair).
www.defense.gov

#44 | Posted by JOE at 2019-07-18 01:03 PM | Reply

Bey=Hey

#45 | Posted by JOE at 2019-07-18 01:03 PM | Reply

""As I said when the IRS rule was finalized in June, it was nothing more than a gut punch to the middle-class New Jersey families who know that the Trump tax plan is a complete sham," Murphy said at a press conference in South Orange, New Jersey."

Regardless of which side someone is on, what should be taken from this is that we still have people who have absolutely no idea what it's like to be middle class saying they know how the middle class feels. Trump's tax cuts weren't a gut punch or a sham. They weren't as monumentally positive for people like Trump said and they weren't as negatively impactful as Dems say. They didn't do much at all for anyone. But since we have people who have never been truly poor or middle class making these absurd statements, this is all the media can report. And if the publication wants to be biased like this one, it will be even more absurd.

#46 | Posted by humtake at 2019-07-18 01:23 PM | Reply

How much of that is tied to providing services for the federal government, like military bases and production?

#39 | Posted by JeffJ

Irrelevant.

It's still an economy and government floated by federal dollars, which allows them to be "conservative" as an illusion.

#47 | Posted by jpw at 2019-07-18 01:33 PM | Reply

63% of the SALT tax benefit goes directly to the top 1%.

More hilariously, the entire New Jersey drive to bring back SALT is a fear of tax flight. The same people with that fear were trying to raise taxes on the same 1% demographic just before the federal tax cuts. Christie kept vetoing it. Truth is always better than fiction.

#48 | Posted by sitzkrieg at 2019-07-18 02:18 PM | Reply | Newsworthy 1

63% of the SALT tax benefit goes directly to the top 1%.

Since when does the "right" give a ---- about that?

#49 | Posted by JOE at 2019-07-18 04:20 PM | Reply

"63% of the SALT tax benefit goes directly to the top 1%"

This is the same 1% that pays almost all our taxes for us, right?

#50 | Posted by snoofy at 2019-07-18 04:31 PM | Reply

It's deplorable what some will do to get out of paying their fair share.

#6 | POSTED BY VISITOR_

Agreed. The south owes GDP positive states reparations.

#51 | Posted by IndianaJones at 2019-07-18 04:44 PM | Reply | Funny: 1

Yeah... I have a hard time defending the SALT deduction. The thing that pissed me off the most about it was mainly that it was a nakedly partisan way for Trump to punish blue states with higher taxes while redistributing it to his buddies.

Also, though, as stated above the states that tax the most also contribute the most in federal taxes. You could argue that the reason that they are so successful is because they have such high tax rates which allows them to invest in creating an environment more conducive to economic success. By taking away that away they might be doing something along the lines of "killing the goose that laid the golden egg".

Though, to be fair, it could be correlation over causation... being successful and having a lot of affluent people makes them demand more and better services from the state, which causes the state to raise taxes.

#52 | Posted by gtbritishskull at 2019-07-18 04:52 PM | Reply | Newsworthy 1

Trump and the GOP are taxing money that has already been taxed.

#53 | Posted by BruceBanner at 2019-07-18 11:15 PM | Reply

"Why should a person in California who earns $500K in income pay less in federal income taxes than a person in Florida with the same income?"

Because since 1913, you don't pay taxes on taxes paid.

Until now.

#54 | Posted by Danforth at 2019-07-18 11:22 PM | Reply

"They weren't as monumentally positive for people like Trump said and they weren't as negatively impactful as Dems say. They didn't do much at all for anyone."

Talk to your favorite charity in 18 months.

If it's still in business.

#55 | Posted by Danforth at 2019-07-18 11:27 PM | Reply

Must be some really wealthy people on this blog to pay over ten grand in property taxes. Seems they should be able to afford it.

#56 | Posted by visitor_ at 2019-07-19 01:10 AM | Reply

Double Taxation! - #3 | Posted by snoofy at 2019-07-17 04:31 PM
Do you not already pay sales tax on post-taxed income? Why the sudden outrage over double-taxation that has been in place since before you were born?
Everyone-not-snoofy: Can someone help me find (or create) a term which means someone who's outrage over a subject is direction related to the political party in charge at the time of complaint'? It would get a hell of a workout around here.

#57 | Posted by Avigdore at 2019-07-19 06:48 AM | Reply

You could argue that the reason that they are so successful is because they have such high tax rates which allows them to invest in creating an environment more conducive to economic success.

#52 | POSTED BY GTBRITISHSKULL AT 2019-07-18 04:52 PM | REPLY

High tax rate is not exclusive to being a top SALT beneficiary. Texas is in the top 5. It does not have an income tax.

The top states that benefit are simply home to the most corporate HQs.

#58 | Posted by sitzkrieg at 2019-07-19 08:16 AM | Reply

Must be some really wealthy people on this blog to pay over ten grand in property taxes. Seems they should be able to afford it.

#56 | Posted by visitor_ at 2019-07-19 01:10 AM | Reply

It's not just property taxes, it also includes state, county, and city income taxes or sales tax.

Also, the richest folks are not the ones really impacted by this anyway. They were likely unable to fully deduct SALT because of AMT. This has the most impact on the upper middle class; people who were able to itemize because the SALT put them over the standard deduction. What this has done is reduce the ability of those in the middle class to itemize and effectively increased the tax burden on them. The increase in the standard deduction wasn't enough to compensate for this cap and the removal of the personal exemption. Which has also made it more expensive for the middle class to give to charity. The cap on the amount of charitable deduction you can take was also raised, probably making up for the loss of SALT for the richest. People smarter on the tax code than I can probably point out where I might be wrong on that.

Also, there are plenty of people who live in high-value properties who don't have large incomes. If your family has owned a house for a long time near DC, LA, Boston, or many growing cities, your home value and taxes may have gone up considerably without a commensurate increase in your income.

#59 | Posted by StatsPlease at 2019-07-19 09:06 AM | Reply

They didn't do much at all for anyone.

Except corps and the very rich.

Nice to see you're finally understanding the game.

Too bad you're still to much of a rube to see you've been had.

#60 | Posted by jpw at 2019-07-19 09:46 AM | Reply

Also, the richest folks are not the ones really impacted by this anyway.

#59 | POSTED BY STATSPLEASE AT 2019-07-19 09:06 AM | FLAG:

But 70% of them benefit from it. Only 7% of all SALT deductions go to AGI < $200k & > $100k.

If your property value went up and your income did not, you just got free equity for doing nothing but owning property. Sell it and move. Be happy, people think property values are guaranteed to appreciate but that's simply not the case.

#61 | Posted by sitzkrieg at 2019-07-19 11:00 AM | Reply

"Do you not already pay sales tax on post-taxed income?"

Sales tax can be subtracted from federal taxable income if the taxpayer qualifies. It happens all the time to itemizers in states without a state income tax.

#62 | Posted by Danforth at 2019-07-19 01:33 PM | Reply

"The top states that benefit are simply home to the most corporate HQs."

Not true. It's all states except the four blue states paying for the SALT cap: NY, CA, NJ, and DE. All other states have a net positive, despite the fact many wealthier locals will get limited by the cap. The cut in income tax rates for the wealthier more than makes up for the difference.

#63 | Posted by Danforth at 2019-07-19 01:41 PM | Reply

Wait until Bernie decides to tax the same money 4x

#64 | Posted by BruceBanner at 2019-07-19 03:09 PM | Reply

then the cons will squeal.

but for now, it's all good.

#65 | Posted by BruceBanner at 2019-07-19 03:23 PM | Reply

"What this has done is reduce the ability of those in the middle class to itemize..."

More like UPPER middle class...say the 5% to the 2%.

"...and effectively increased the tax burden on them."

Not in the larger equation. If they're still hit by the AMT, the income tax savings more than makes up for the SALT loss.

Although in the ultimate equation, it's a tax increase on workers, especially if if lasts as long as the last code, and ESPECIALLY if you look at who'll be paying it back: certainly corporations and the 1% won't be paying back 82%, and the .1% will DEFINITELY not be paying back 60%.

#66 | Posted by Danforth at 2019-07-19 06:44 PM | Reply

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