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The best tax deduction to chop
Washington Post, by Charles Lane

Original Article

Posted By:nhchemist, 11/20/2012 11:58:36 AM

What’s the least defensible special break in the U.S. tax code? With so many distortions to choose from, it’s hard to name just one. If forced to pick, I might say the deduction for state and local taxes, which cost $67 billion in fiscal 2011, according to the congressional Joint Committee on Taxation. This one overwhelmingly benefits upper-income households in a handful of upper-income states, while rendering the entire nation’s finances less transparent. It’s also a potential source of friction in the “fiscal cliff” negotiations between President Obama and the Republicans (but we’ll get to that in a moment).

Comments:
Living in NH with no sales or earned income taxes, I would like to see this. Of course, it will never pass because only blue states benefit with these tax deductions.

      


Post Reply  

Reply 1 - Posted by: Passion, 11/20/2012 12:03:08 PM     (No. 9025646)

It´s an assinine idea - it means double taxation on many many people. Totally academia nut double talk.

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Reply 2 - Posted by: Country Boy, 11/20/2012 12:05:24 PM     (No. 9025653)

How about we just talk about the best spending items to cut?

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Reply 3 - Posted by: batchief, 11/20/2012 12:16:36 PM     (No. 9025680)

Absolutely double taxation!


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Reply 4 - Posted by: Emmajustin, 11/20/2012 12:17:40 PM     (No. 9025685)

Cut any tax credits or benefits to movie production.

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Reply 5 - Posted by: DaBigGuy, 11/20/2012 12:20:48 PM     (No. 9025696)

Get rid of the earned income credit. The savings is $4 billion a year just for the illegal alien portion. Then get rid of any other social welfare buried in the tax code.

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Reply 6 - Posted by: iceman, 11/20/2012 12:21:35 PM     (No. 9025698)

I couldn´t agree more. That said, NY, CT, CA, etc. will fight mightily against repealing this deduction. But, if repealed, it ewoud be a safety valve against excessive taxation.

Take a look at the Potomac river. The west end of the Wilson Bridge is dominated by commerce thriving in a lower tax environment. The east end is mostly a lower income dormitory for federal workers in a confiscatory tax environment.

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Reply 7 - Posted by: navybrat, 11/20/2012 12:23:14 PM     (No. 9025705)

I would like for the unearned tax credit refund to be abolished. It is not right for people who do not pay taxes or very little taxes, to get a refund above the taxes taken out. I worked with a woman whose lazy no good son, who did not like to work, would get a tax refund that he did not earn. She laughed and thought it was funny that he got back more than he earned. She was and I am sure remains a raging liberal.

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Reply 8 - Posted by: Gallo3, 11/20/2012 12:24:27 PM     (No. 9025709)

How about we delete all programs that have a racial factor involved?

That would save about 1.4 Trillion per year.

Or, how about we balance the budget using the pensions of government workers?

There is another Trillion.

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Reply 9 - Posted by: lazlototh, 11/20/2012 12:29:39 PM     (No. 9025722)

I am a New Yorker and for the past several years have had the good fortune to be able to complain about being in AMT territory. Being in Westchester County that means I have astronomical property taxes for which I get no deduction. I expect nobody to feel sorry for me because I life in a high-tax jurisdiction, and this is offset by things like being able more easily to max out my 401 because it´s a percentage of my New York-inflated income.

I am fine with eliminating the state income tax deduction because it will affect me negatively but it will overwhelmingly affect blue states and far fewer red states and will force blue staters to think for 10-15 seconds about whether it makes sense to be taxed so heavily, and maybe even push for budgetary restraint.

I would start here if I had to agree to higher taxes. And if the additional tax would go solely to paying down debt I would be okay with the tax - I´m not okay with it because I know that will never be the case.

But there´s no reason not to increase the taxon the states that essentially voted for high taxes, even though I voted differently.

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Reply 10 - Posted by: fritzilou, 11/20/2012 12:33:56 PM     (No. 9025733)

Liberals always look at things from the taxations side, not the spending side. This lame brained idea is nothing but double taxation in the very high tax states particularly; another great way to cut down on jobs.

Lane, the writer, should stick to his field of reporting on what economists say not coming up with his own lame brained ideas. Left wing economists have enough of their own he can write about; Krugman 91% tax on the rich.

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Reply 11 - Posted by: TexaTucky, 11/20/2012 12:41:27 PM     (No. 9025757)

Why should the federal taxes I pay in Texas (where there is no state income tax, so I don´t get this deduction) subsidize those who choose to live in states that overtax their residents?

Just because double taxation is unfair to you doesn´t mean it´s fair to me to help you with that.

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Reply 12 - Posted by: Msctex1, 11/20/2012 12:42:08 PM     (No. 9025761)

Guys, all this talk about doing away with the deduction in order to force budget tightening -- that´s not the way the world works anymore. The Leviathan is feeding itself, and simply does not care about what works.

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Reply 13 - Posted by: chief568, 11/20/2012 12:55:30 PM     (No. 9025807)

As a Tennessee resident, I cannot deduct sales tax anyway...and we have NO income tax. So whatever.

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Reply 14 - Posted by: DaisyCrockett, 11/20/2012 1:00:36 PM     (No. 9025821)



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Reply 15 - Posted by: DaisyCrockett, 11/20/2012 1:06:15 PM     (No. 9025845)

I am also a TN resident and an accountant. If you itemize deductions, you can detect local sales taxes. This ability was added to the IRS code as a way to equalize state tax deductibility between states that have no income tax. I would like to see the EITC welfare program removed as part of the tax code. It allows what is really a welfare program to be hidden within the tax code and it is wildly abused.

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Reply 16 - Posted by: LadyHen, 11/20/2012 1:10:39 PM     (No. 9025855)

#5... ditching the EITC sounds like a solid plan but it won´t win anyone any votes so it will never happen. It is merely welfare regulated by the IRS.

Yep #15... as a TN resident who itemizes, I have been doing just that since it became available.

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Reply 17 - Posted by: JimS, 11/20/2012 1:20:40 PM     (No. 9025869)

While I agee that it would be unfair double taxation, I cannot help but note that the states with the highest income tax (that now gets deducted from federal taxes) are the Dim-controlled states--NY, CA, MA, IL.

Although it would be unfair to conservatives living in those states, it would be poetic justice to raise the taxes of the leftwing knuckleheads in those states.

My favorite tax deduction to chop out is union dues. Union dues should not be deductible from individual income tax, nor should unions be tax exempt.

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Reply 18 - Posted by: Mass Minority, 11/20/2012 1:34:50 PM     (No. 9025897)

As someone who lives in a high tax state (MA)this would hurt me a lot. An autoamtic 3% increase in my already astronomical federal tax bill. All so the feds can waste more money on social programs. No thanks. No tax hikes til we see spending cuts.

To those carping about living in non taxed states you´re still making out. I could use the exact same argument against mortgage deductions. Why should someone who rents pay for the break his landlord gets? Or the person who has no mortgage subsidize the guy who only put 5% down?

I actually cannot think of any tax deduction that could not be opposed using this argument. Maybe we should just eliminate all deductions and pay a flat rate?

How would anyone buy votes with that scheme?

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Reply 19 - Posted by: trapper, 11/20/2012 1:37:39 PM     (No. 9025902)

Cutting deductions is raising taxes. Why raise taxes at all? (In my best Sam Kinison voice) Why not just CUT SPENDING!!?? STOP SPENDING MONEY!!! STOP GIVING OUR MONEY AWAY TO FOREGNERS WHO HATE US!!!

That feels better, even though no one is listening.

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Reply 20 - Posted by: islebback, 11/20/2012 1:51:02 PM     (No. 9025919)

I live in New Jersey, and the Alternative Minimum Tax effective eliminates my entire state tax deduction plus a portion of my property tax deduction. The AMT already does what the writer proposes.

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Reply 21 - Posted by: TexaTucky, 11/20/2012 4:32:51 PM     (No. 9026216)

Bingo #18. Flat tax. No deductions. No socialist redistribution of wealth for the purpose of currying favor with one´s favorite constituency.

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Reply 22 - Posted by: RUReadyY3K, 11/30/2012 6:35:49 PM     (No. 9042029)

Payroll taxes are also another tax on the same $1 of income as the state income tax and federal income tax. When you count all the layers of taxes on the same $1 of income, many people are paying more than 40%.

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