Patterico's Pontifications

11/9/2017

A Response to Beldar

Filed under: General — Patterico @ 7:17 pm



What follows is a long response to Beldar regarding a debate we have had over the morality of SALT deductions. This was initially a comment, but for reasons explained at the end of the post, I have elevated it to a new post, with light edits for those unfamiliar with the previous discussion. (It will certainly help to read the previous post to which I added the comment, and the comments thereto, to fully understand the discussion.) Here is the comment:

I also don’t understand your distinction between the same dollars being taxed and the same dollars being “taken” by two sovereigns. The latter is grammatically impossible.

I believe what you are actually objecting to is having the federal definition of taxable income based on your pre-(state)-tax income rather than your post-(state) tax income. That’s the effect of the deduction.

Yes, of course the same dollar cannot literally be taken by two different sovereigns. But there is a conceptual way in which something like that is happening.

Return to my example of two extortionists on a highway. Imagine that instead of reaching into your pocket, the two extortionists have you line up stacks of dimes. You have one hundred Inflatable football helmet tunnel dimes, and extortionist A goes first. He tells you to set them up in stacks of 10. You do, and he takes one of the stacks.

Extortionist B tells you to line them up in stacks of 10 as well. “Rather than taking stacks, I like to take one dime from each stack of 10.” You line up your nine remaining stacks, and he takes one from each stack. Then he says: “Where is the last dime.” You say: “What do you mean? I have only nine stacks.” He says: “You started out with ten. I want a dime from the stack you started out with.”

You say someone else has it. So he takes another dime from one of your stacks of nine.

Yes: literally he did not take one of the dimes the first extortionist took. The actual dime he takes will be a different dime, possibly with a different date and mint mark, a different state of cleanliness, and a different amount of wear and dirt.

But in a conceptual sense, he took one of the same dimes you gave the first extortionist. And in this world, where money is most often measured by numerical symbols on a computer screen, and the reality behind those symbols is a binary code reducing to a universe of ones and zeros, the conceptual is supreme.

So yes, I believe there is a sense in which it is indeed the same money.

But if that explanation somehow seems like mental trickery, let’s put it a different way. There is a tax base (defined as the universe of income you receive that is subject to taxation) and then the taxes (defined as the money actually paid out of that tax base). And my issue is not that the same dollars serve as the tax base for two different sovereigns. My issue is that the sovereigns each include in their tax base, money that is already gone, as taxes pledged (whether it has already been paid, or will later be owed) to a different sovereign.

Now, granted: some commenters have (in their mind cleverly) tried to analogize this to money paid to private businesses. For example, commenter “furious” says above: “You can no more declare your earnings ‘pledged to another’ than you can deduct from the electric bill what you paid to the gas company, or from Union 76 what you spent at Ralph’s.”

To fully explain why I think this analogy doesn’t work would probably require an entirely separate comment or post for me to explain it correctly. The short answer is that government is not just another “business” and the things it does are not just another “suite of services” that are on offer, the way any business might offer you a suite of services. The key difference is this: you choose to give money to a private business like the supermarket. By contrast, the government indeed resembles a highway extortionist much more than it resembles a private business. There is nothing whatever that is voluntary about the payment of taxes. Ultimately, if you fail to pay them and get caught, men with guns will appear at your door to forcibly throw you into a cage. There is nothing voluntary about that.

I don’t much care if you agree with some or all of what government does. If you are taking Bus A downtown to switch to Bus B which will run you to the City Park, and some guy with a gun hijacks Bus A and demands to be driven to the City Park, you might like where you are going — but that doesn’t really make it “voluntary,” now does it?

And I thought that aphrael’s rather amazing insight was that disallowing SALT deductions really creates a rather unique situation: in which two different government sovereigns, each with the ability to initiate force against me, are each extorting payments from me that are based on a tax base of money that is, in part, only theoretical — not because I used part of it voluntarily to obtain services, but because part of the tax base has already been extorted from me in the form of taxes, or extortion, by the other entity.

And that strikes me as wrong.

Different taxing authorities each set their own definitions. That was what I meant by my comment about highwaymen not respecting each others’ criteria. You’ve instead twisted that into my defending highwaymen.

I promise you, most sincerely, that I never intended to twist your words. I took care to state that I thought I was being fair. I am disappointed that you think I wasn’t. So let me try to see where I misinterpreted you. You said:

Your successive highway robber analogy presumes that highwaymen are supposed to be bound by consistency to respect one another’s tolls. But since when have highwaymen or taxing authorities ever been honorable or consistent or respectful of anyone?

To me, that sounded like a defense — or at least a description of the taxing authority that acknowledges that it really doesn’t need to be honorable or consistent, that it never has been, and that I shouldn’t expect it to be. You seem to say you didn’t mean it as a defense, and I’ll accept that. I suppose, then, that you mean it instead as descriptive: this is how it is.

But I have been arguing about the way it should be. I was attempting to force everyone — at least anyone who defends the concept of taxing the same dollar that another sovereign also demands — to morally justify the state of affairs in which we find ourselves. And I haven’t seen that from you, Beldar. Instead, I find a description of the taxing authority as not caring about honor or consistency or respect.

If that is your only response to my request for a justification, then I really don’t think I was being unfair to say that, in essence, you are making a sort of “might makes right” argument.

I disagree that it’s only “moral” for the federal government to consider your post-(state) tax income whether that’s post-state income tax, post-state property tax, or post-state sales tax. I don’t think you have any right, moral or otherwise, to insist that only your post-state tax income be considered as part of your taxable income for federal income tax purposes.

That is, with all due respect, an assertion but not really an argument. You are simply couching the issue in rather traditional terms and declaring that you don’t think it’s immoral. But why? Why should a sovereign be able to pretend that you have a tax base of x from which to draw tax dollars, when in reality you have a tax base of x-y, where x is what you started out with, and y is what another sovereign extorted from you.

This is what I am looking for. And it’s why I spent a long time writing this comment.

And why, rather than leaving it as a comment, I am turning it into a new post — to make it more prominent, to open up discussion from more people, and to make sure Beldar does not miss it.

[UPDATE: edited to remove a misuse of the word “normative.”]

51 Responses to “A Response to Beldar”

  1. getting rid of SALT deductions is just the right thing to do

    plus it’s a great way to hit the fast forward button on the situation the fiscally irresponsible states find themselves in

    states like Failifornia and Illinois and New Jersey

    we’d all be better off (as Americans) if the profligate states face their dire problems *before* interest rates reconcile with reality

    the great thing about America is everyone is free to move to a state what makes sense for them personally

    i feel a praise song comin on

    happyfeet (28a91b)

  2. “The actual dime he takes will be a different dime, possibly with a different date and mint mark, a different state of cleanliness, and a different amount of wear and dirt.”

    Best sentence ever posted here.

    harkin (b4548f)

  3. I love these discussions. Thank you, Pat.

    I am a yoooge 10th Amendment guy. The sovereign states ought to have the freedom to do almost anything they see fit, extremes to the contrary notwithstanding. The degree and types of taxation most certainly fall within the 50 separate sovereigns’ purview.

    So, too, the federal government. The constitution was amended, albeit naively and stupidly, and income may be taxed. Might does not make right. The constitution does.

    Fairness? What a loaded question! A citizen makes any number of calculations as to where s/he might live. Economics typically are a prime driver. Look at the exodus to Texas and Florida (no income tax) for proof. Others make a climate-based decision, knowing full well there may be a resultant increase in the cost of living. Me? I once chose the San Fernando Valley for climate and for proximity to so many great entertainment options. But, the economics began to make no sense for me and I moved. Point being, I was not forced to endure California pricing, taxation, and liberal governance. It was a choice.

    So, too, is living in the USA and/or retaining citizenship. If I object to living here, I may leave.

    It is virtually impossible to construct a taxation or fee system without creating losers, and lesser losers. As we are all well aware, the issue of fairness, across the board, had been the spear point of many, many fights these past few decades. It is getting only worse.

    I have no particular problem with those living in the most desirable areas, whose polity itself votes all manner of insane benefits for themselves, being made to pay a Federal price that most of the flyovers would avoid. That neither the states nor the feds actually pay for the services demanded is a whole ‘nother and disgraceful topic.

    It’s a tragedy across the board as it is entirely self-inflicted. I don’t view disparate SALT taxation in this vein.

    Article V for the win!

    Ed from SFV (3400a5)

  4. Here’s a question. Could the federal government and the state government each impose a 75% tax on its highest earners? If there were no deduction of SALT that would be 150% of a person’s income. Put aside realism, people’s ability to move, etc. Would that be moral?

    What about 13.3% (California has it now) with 90% federal (we have had it)?

    Patterico (115b1f)

  5. If either highwayman is bound, in any way — as things are or as they should be, morally, logically, legally, constitutionally, or otherwise — to take any notice or account of the other’s enforced demands, the state-government highwayman must take account of the federal-government highwayman’s tax schemes and rates. I explained elsewhere, and you’ve not disputed or commented upon the fact that, the entire nation ratified an amendment to the Constitution specifically giving Congress the power to levy an income tax without apportionment between the states. Californians, Texans, and all other Americans got a representative voice via their elected state legislators during the ratification process. Imposition of tax consequences from the federal income tax is therefore politically legitimate as to all 50 states.

    But low-tax states and their residents have had no comparable opportunity to be heard or represented in the decisions made by high-tax states. It’s unreasonable for any one state to expect to be able to bind Congress’ tax policy choices based on purely intrastate tax policy choices.

    Why would you characterize this as a “might makes right” argument? I have not so argued and don’t think that’s a reasonable construction of my federalism argument. As with the notion that I’m defending highwaymen, this seems to me a projection or assumption on your part that’s been no part of my argument.

    More fundamentally, as I’ve tried to explain already without seeming to get any traction with you, I do not believe these two highwaymen, or joint sovereigns, or overlapping taxing authorities, or however else one wants to characterize them, are bound up in a single package such that either is required to respect the other’s definition of your taxable income, or the collective taxable income of everyone, which together makes up the tax base in your new version of your moral argument if I’m following it correctly.

    I think it is affirmatively bad federal policy, in fact, to attempt to accommodate different state taxation regimes through deductions in the federal tax code.

    You conceded, with a wisecrack, that you do not think it would be right for Congress to set different federal income tax rates for California than for Texas, but you declined to explain why. I certainly think that would be wrong. There is no principled distinction between doing that directly and by doing it through the back-door by deductions.

    When and if Congress stops preferentially subsidizing high-tax states through deductions, then perhaps those states will make better decisions. At a minimum, though, they’ll no longer have an incentive to load up their residents with taxes whose sting is considerably offset by federal income tax deductions.

    You see Congress’ thumb on the scales. I still can’t see why you defend that here, when you oppose it so rigorously in other contexts.

    Beldar (fa637a)

  6. Here’s a recap regarding how state and local taxes came to have their current deductibility under the federal income tax:

    State and local income and real estate taxes make up the bulk of total state and local taxes deducted (about 60 percent and 35 percent, respectively), while sales taxes and personal property taxes account for the remainder. The state and local tax (SALT) deduction is one of the largest federal tax expenditures, with an estimated revenue cost of $96 billion in 2017 and $1.3 trillion over the 10-year period from 2017 to 2026. (Tax expenditures are defined as “those revenue losses attributable to provisions of the federal tax laws which allow a special exclusion, exemption, or deduction from gross income, or which provide a special credit, a preferential rate of tax, or a deferral of tax liability.”)

    State and local taxes have been deductible since the inception of the federal income tax in 1913. Initially, all state and local taxes not directly tied to a benefit were deductible against federal taxable income. In 1964, deductible taxes were limited to state and local property (real and personal property), income, general sales, and motor fuels taxes. Congress eliminated the deduction for taxes on motor fuels in 1978, and eliminated the deduction for general sales tax in 1986. It temporarily reinstated the sales tax deduction in 2004, allowing taxpayers to deduct either income taxes or sales taxes, but not both. Subsequent legislation made that provision permanent starting in 2015.

    Which of those prior changes were similarly immoral in your view, Patterico? Any of them? All of them? Or which of them?

    I think they were all moral, and that the trend has generally been in the right direction (getting rid of federal preferences that states can game to their differential benefit).

    Beldar (fa637a)

  7. Patterico, is there some synonym that you’d accept for “moral”?

    Because that seems to me an odd word to ever use regarding tax policy. In your example above, ignoring definitional quibbles, I suppose it would be “immoral” for state and federal governments to prescribe tax rates which together would be impossible to satisfy, meaning that everyone everywhere would go to prison for tax evasion. But that is so extreme a hypothetical as to become useless.

    I have no clue — literally no idea in the world — how you are going about deciding which taxes are “moral” and which aren’t. I tried arguing Kant and the categorical imperative, but you ignored that, which is the best philosophical construct for morality that I’m aware of. Political legitimacy seems to me to be a species of morality, and I’ve explained why I think it’s politically illegitimate for high-tax states to extract a differential benefit under the federal income tax code because they’re doing that without consent or representation from all those adversely affected thereby in the low-tax states. But that also doesn’t seem to register on your morality radar.

    So what does your morality radar measure, short of everyone going to prison?

    Beldar (fa637a)

  8. Does your concept of tax morality require that your total tax bill, state and federal, in a high-tax state be equal to or less than the total tax bill, state and federal, of those living in low-tax states? If not, why not?

    Beldar (fa637a)

  9. But low-tax states and their residents have had no comparable opportunity to be heard or represented in the decisions made by high-tax states.

    In a way, they do have influence- by courting established and high profile businesses and industries to move– forcing states/locales w/a higher tax base to create incentives to keep those businesses from leaving. New Jersey’s efforts to attract NBC to leave Rockefeller Center for new digs in the Meadowlands comes to mind. NYC and NY state cut some sweet deals to keep them from moving out of 30 Rock.

    OTOH, for example, Boeing left Seattle after 85 years: ‘In September 2001, Boeing moved its corporate headquarters from Seattle to Chicago. Chicago, Dallas and Denver – vying to become the new home of the world’s largest aerospace concern – all had offered packages of multimillion-dollar tax breaks. Its offices are located in the Fulton River District just outside the Loop, Chicago.”

    DCSCA (797bc0)

  10. The only moral thing to do is to repeal the 16th. Abolish the federal income tax and require the federal government to fund itself entirely through tariffs. Some reduction in spending may also be necessary.

    Anon Y. Mous (6cc438)

  11. The short answer is that government is not just another “business” and the things it does are not just another “suite of services” that are on offer, the way any business might offer you a suite of services. The key difference is this: you choose to give money to a private business like the supermarket. By contrast, the government indeed resembles a highway extortionist much more than it resembles a private business. There is nothing whatever that is voluntary about the payment of taxes. Ultimately, if you fail to pay them and get caught, men with guns will appear at your door to forcibly throw you into a cage. There is nothing voluntary about that.

    I don’t see that being voluntary is relevant. You may have more options available, but buying food is not really voluntary any more than paying tax is voluntary – starvation is arguably a worse fate than imprisonment. Neither, as a practical matter, is paying for shelter, electricity, water, etc.

    In all the other cases, your decision not to pay for food, shelter, electricity, etc has a direct effect on your own well-being, providing a clear incentive, while failure to pay taxes does not – this accounts for and justifies the state’s ultimate resort to coercion (on behalf of the people who ARE meeting their responsibilities). If you do not pay your taxes, you are effectively stealing the services paid for by others.

    Here’s a question. Could the federal government and the state government each impose a 75% tax on its highest earners? If there were no deduction of SALT that would be 150% of a person’s income. Put aside realism, people’s ability to move, etc. Would that be moral?

    It would be idiotic and self-defeating. Your need to throw in “put aside realism” kind of points out the problem with this argument, though.

    Even with SALT deductions, that would be 15/16 of a person’s income, which (barring something like a world war or other existential calamity) would be excessive. Here the problem isn’t really “two sovereigns” but just “too much taxation”, such that property rights are being unreasonably abridged.

    Your claim is that it would be “immoral” even if the respective tax rates were 1% and 1%.

    Dave (445e97)

  12. Making base policy decisions based on shock the conscience outcomes is a fool’s errand. If we elect tools who decide to make law which is manifestly absurd (see the State of California), so be it. That’s a price potentially paid for a democratic republic.

    We’ve collectively long ago passed Go when it comes to moral governance in the USA. At a bare minimum, changing the plain meaning of words and agreements as our courts have done, ensures that we simply can’t deal with each other honestly.

    The abdication of responsibility of our elected officials has been very well documented on this site. ell, when the entire system is based on representation, and there is almost none in Congress, morality can not and will not be found.

    The GOPe have lied to us for decades, and this latest reform which is said to be “revenue neutral” is but the latest travesty. If one decides that this is the political hill to fight and perhaps die upon, fair enough.

    Ed from SFV (3400a5)

  13. Creating a tax plan that is being explicitly marketed as targeting Democrats is an excellent plan that will surely not backfire the next time Democrats are in charge.

    Davethulhu (6a4a84)

  14. Suppose, for whatever historical reason, there were a law exempting states attorneys from income taxes completely.

    And suppose, recognizing that this seemed manifestly unfair to those who honorably earn their living in other ways, a bill were proposed to eliminate the exemption, such that states attorneys were taxed no differently than anyone else with the same income.

    Would it be a reasonable position for you to say “Yes, I acknowledge that the exemption of one profession from taxation is bad policy. I fully support removing the exemption, as long as my taxes don’t go up as a result?”

    Dave (445e97)

  15. Beldar,

    Your argument in #5 is very interesting. I agreed with Patterico in a previous Jury Speaks Back post that the same dollar should not be taxed twice, which is why (for example) the estate tax is similarly wrong. (Because every dollar that’s being taxed when it’s handed to the inheritors was already taxed as income when the person received it, so the estate tax is double-dipping.)

    But I had not yet considered which should have precedence, the states or the federal government. My “double-dipping taxes are wrong” argument (which I think is the same as Patterico’s argument, unless I misunderstand him) could just as easily be applied to say that California must take the federal government’s taxes into account as to say that the federal government must take California’s taxes into account.

    Now, my gut feeling up to this point was that the Constitution was set up to give all powers to the states, and a minimum to Congress — and therefore states (and local cities) should have precedence, and the federal government must allow you to deduct your state and local taxes. But you argue that the precedence must now be the other way around, now that the 16th Amendment is part of the Constitution. And while that still runs counter to my gut instinct and so it’s not easy to accept immediately, I haven’t yet come up with any good arguments against that position, so I might have to change my mind and accept it.

    Here’s a question, though: if you’re right and the Constitution requires that states must take federal income tax levels into account, would it be Constitutional for Congress to pass a law to that effect? I.e., what if Congress passed a law that said, in essence, “The SALT deduction is hereby repealed, and furthermore, all states which impose income tax must take a person’s post-federal-tax income as the tax basis, rather than their pre-federal-tax income”. I.e., if my income last year was $20,000, and I paid $2,000 in taxes to the IRS, then the state I live in may only consider me as having an income of $18,000 when it’s time for their own bite at the apple.

    Would such a law be Constitutional? My non-lawyer’s instinct says that it wouldn’t. I can’t see how that could possibly be considered as “interstate commerce” (even though that clause has been twisted out of all recognition, my question is “Is it REALLY Constitutional?” rather than “Would some people try to twist the Constitution’s words out of all true shape to allow this?”). And I also don’t see how anything in the Sixteenth Amendment would give Congress the power to dictate how the states would define a person’s income.

    So I don’t know what the right answer is. Your argument that the states should give precedence to the federal income tax seems persuasive, but I also don’t see any way in which it would be Constitutional to enforce that. And if something cannot be enforced, it will be ignored, and then we’re back at the “double-dipping tax” situation again.

    Do you have thoughts on this? In particular, do you know of a reason why the hypothetical law I just suggested would be Constitutional?

    Robin Munn (606a13)

  16. The analogy to the two highway extortionists makes no sense to me. You get extorted by two different people, and you think that the real immorality is that the second extortionist took a tenth dime from a different pile????? No, if this is really like extortion, then the real immorality is that you getting extorted at all. It doesn’t work to say that first 19 dimes they took were just fine, but the last one is really immoral. For me at least.

    If you are going to accept the morality of taxation in a democracy at all, then you need to accept that there is some choice involved. Choice in your legislators, and choice in which (taxable) actions you take. You choose to live in California. You choose your legislators (together with your fellow Californians) who write your tax laws. You have agency.

    A.S. (568264)

  17. Patterico is really hoping that there is a way to adjust the tax code that makes no one worse off. I’ve not seen, in any of his posts on this topic, a proposal that he feels would do that (maybe I missed it). But I am certain that any change in the tax code that affects deductions, or exemptions, or rates, will make somebody worse off. Because the tax code was not made complicated for no reason. It was made complicated deliberately to provide favorable treatment to those whom the government wishes to favor.

    I don’t think any change in the tax code,/i> can avoid harming someone because people change their behavior in response to it. But, a change in the outcome of the code, applied after the fact, I think could favor everyone.

    Something like, you do your taxes how you are supposed to do them, and when you get to the line that says what you owe, you are allowed multiply that number by say 0.99 and then that is the tax liability.

    In that scenario, everyone who has to write a check and send it with their tax form gets a 1% reduction in what they would have paid. Millions of Americans would see literally no benefit from this, but I don’t think anyone could say they were harmed.

    However, simple things like this are never adopted because everyone would benefit in an obvious way without having to do something differently that the government wishes to favor. Allowing everyone to benefit in a simple way is not a goal the government appears to have.

    To anyone who has ever wondered, why does the collection of government revenue have to be so complicated, the answer is that the desired result is not revenue as such, but revenue that is gained by rewarding one’s friends, and because we live in a democratic republic these rewards to friends cannot be blatant; just highly-specific and difficult or impossible for most except the favored groups to take advantage of.

    Frederick (c42085)

  18. In my professional life I mostly deal with financial outcomes and incentives. And everywhere I have looked, if there is an outcome that seems at odds with the outcome ostensibly desired, or a process that is incredibly complicated but could yield the same or better outcome if a simple process were followed, then that means the desired outcome is not what you think it is.

    If FedGov really needs $3 trillion in revenue, which I highly doubt they do, it would be trivial to collect this much money in any number of simple ways which people might be able to cheat at certainly, but wouldn’t require specialized and complicated compliance. For example, VAT or sales tax + payroll taxes would do it. Yeah, there would be people who work off the books and black markets–which is the case now. And changing from our system now, where lots of people derive non-obvious benefits, to a simple system would be damaging to those who benefited from the earlier unfairness. But it would be very simple for most people to comply. We have no trouble complying with sales tax, we do so thousands of times a year, and on every paycheck we get a chunk taken out in payroll taxes so there’s no difficulty in compliance there for most of us.

    But we must have a complicated code, so every year 150 million Americans need to be their own tax accountant or rent the services of one, and all these specialized exemptions and deductions need to document compliance, and all these government officials are needed to process the paperwork.

    It’s not simple because too many benefit from it not being simple, and they are very aggressive about keeping that benefit, whereas the costs are diffused among the whole population so they are not aggressive about eliminating them. The usual story.

    Frederick (c42085)

  19. “whereas the costs are diffused among the whole population so they are not aggressive about eliminating them.”

    Like subsidies for insurance in flood plains.

    Or, even better, federal relief for profligate pension plans which continue to accumulate liabilities which cannot be paid when (not if) they are due.

    Sophistic debate over shadings of playground morality does not have a high utility when the actual situation involves competition between organized crime syndicates regional share of spoils. Personal mobility allows individual choice as to the type of highwayman one might choose to avoid. Choose your syndicate wisely.

    Rick Ballard (a99308)

  20. @ Robin Munn, who asked (#15):

    if you’re right and the Constitution requires that states must take federal income tax levels into account, would it be Constitutional for Congress to pass a law to that effect? I.e., what if Congress passed a law that said, in essence, “The SALT deduction is hereby repealed, and furthermore, all states which impose income tax must take a person’s post-federal-tax income as the tax basis, rather than their pre-federal-tax income”. I.e., if my income last year was $20,000, and I paid $2,000 in taxes to the IRS, then the state I live in may only consider me as having an income of $18,000 when it’s time for their own bite at the apple.

    Would such a law be Constitutional?

    In South Dakota v. Dole, 483 U.S. 203 (1987), in passing upon the constitutionality of federal legislation that denied federal highway funds to those states which hadn’t raised their drinking age to 21, the SCOTUS held that it was a proper use of the spending power for Congress to attach conditions on the receipt of federal funds, subject to certain restrictions, including that the federal purpose being served be for the “general welfare,” and provided that the the spending power isn’t being used coercively to induce the States to engage in activities that would themselves be unconstitutional. Through financial carrots and sticks applied to the states themselves (as opposed to carrots provided directly to citizens of a state), Congress can indeed try to influence states in their legislative choices. But I don’t think Congress could pass a statute purporting to directly require a state to pass or repeal a particular state tax because that’s not covered by the spending power nor otherwise an enumerated power of the federal government. So I agree with you that a statute trying to directly override a state legislature’s ability to pass intrastate tax laws would be unconstitutional.

    I don’t think either sovereign is constitutionally obligated to take any account of the other’s taxation in setting up its own taxation schemes. My argument from federalism and the passage Sixteenth Amendment, though, is that the federal income tax has nationwide political legitimacy in the sense that every state has had a hand in the passage of the enabling enumeration of constitutional power; no state’s citizen can claim that the federal income tax is taxation without representation, because each state had a hand in ratifying the Sixteenth Amendment and now each state continues to send representatives and senators to Washington to exercise that newly-enumerated federal taxation power. State governments aren’t subject to the same enumerated powers analysis that the federal government and its actions should be subject to, but they should still be subject to the limits of political legitimacy. The key to political legitimacy is “no taxation without representation.”

    Insisting that the federal government defer to its own taxation scheme, imposing its consequences on all taxpayers nationwide by tailoring its local practices to best exploit the federal deduction currently offered for SALT, seems to me illegitimate and unreasonable, but if the federal government caves in to that insistence, I don’t see that as a constitutional violation or beyond the federal government’s constitutional power. Nevertheless, it’s not fair to the low-tax states because they end up subsidizing the high-tax states disproportionately, and the low-tax states haven’t had any say in those decisions by high-tax states, so I think it’s politically illegitimate and profoundly unwise policy.

    Beldar (fa637a)

  21. Texas is a low tax state.

    My ox is gored!!!

    Ben burn (b3d5ab)

  22. Red states should look at Puerto Rico for their bright future. It’s so easy a caveman could do it.

    Ben burn (b3d5ab)

  23. I’m tired of them catching a ride on my California kilt. Hobbes is calling all Leviathans.

    Ben burn (b3d5ab)

  24. If you are going to accept the morality of taxation in a democracy at all,

    I’m not sure I do, beyond the absolute most core functions of government.

    Most people — in my opinion blindly, like sheep — not only do what they’re told (which I do) but accept that it must be acceptable, moral, constitution, whatever . . . simply because that’s the way it’s always been.

    I don’t think enough people actually think about how closely taxation resembles garden-variety extortion. We forcibly take money from people at gunpoint and throw them in cages if they don’t comply. (Sure, it happens in a nicer way than that almost all the time, but try not doing it and see what happens.) No single individual could ever do that and it’s not completely obvious to me that a government should be able to do what individuals would be imprisoned for. Pretty much all governments act like might-makes-right thugs all over the world, just to different degrees.

    So let’s not pretend I have agency. There is no place to which I can move to escape a taxation system. My vote has zero effect. Your vote has zero effect. We are the slave in the famous Nozick thought experiment. The “social contract” is a laughable joke. There is no other “contract” on earth that you can reject at every moment in your life and never once explicitly agree to and yet be held to. The idea that “if you don’t like it, vote with your feet” is again fictional and absurd because there is no Shangri-La of nontaxation anywhere on this earth.

    Nevertheless, it seems equally obvious to me that my anarchist friends who take this logic to its extreme, and want to privatize literally everything — law enforcement, courts, transportation, etc. — are naive, and blind to the warlord mentality that would break out without a basic rule of law.

    So I am willing to go with the compromise struck by the Founders. We have a system of extremely limited government which understands that the states are the primary sovereigns, and grant limited power to the federal government, only as set forth in the Constitution. To me, the reason this is so important is because government power is so awesome, and the monopoly on the initiation of the use of force so frightening, that it absolutely must be reined in, hard, at all times.

    But that’s not what we have. Not only do we have the 16th amendment — which, let’s be clear, does not explicitly or implicitly repeal the 10th — but we also have a vision of federal government power that literally every honest person who looks at the question concludes is fictional, and not even arguably based on any words contained in our Constitution. Judges have simply rolled over and pretended that the federal government has the right to engage in activity that no founding father could have imagined is within the proper scope of a central government.

    This, by the way, is my answer to who gets primacy. The 16th amendment did not say: “the federal government may tax the citizens for purposes that this document does not begin to recognize as legitimate.” So my view is that federal taxation is already completely out of control and fundamentally illegitimate to a very large degree — that is, the degree to which the taxes are collected for purposes that are patently unconstitutional.

    And that informs this debate for me, as it informs my thinking on a lot of topics.

    Patterico (115b1f)

  25. Beldar,

    I’ll try to address all your points. Because I just got through writing a long comment that, while responding to another commenter, does address some of them, I’m going to start with the easier ones, because whew!

    Patterico (115b1f)

  26. Patterico…many varieties of Anarchism

    https://en.m.wikipedia.org/wiki/Anarchist_schools_of_thought

    Ben burn (b3d5ab)

  27. Does your concept of tax morality require that your total tax bill, state and federal, in a high-tax state be equal to or less than the total tax bill, state and federal, of those living in low-tax states? If not, why not?

    Nope. There is no reason why it would. And of course, that is not the case now. Because even if I deduct high state income taxes, I still pay them. Because it’s not a credit, the net effect of paying those taxes and then deducting them is still a very large hit, making my total tax bill higher than those living in low-tax states. While I may (as articulated in the previous comment) have moral grounds to object to the levels of taxation to which I am subjected, in particular by the federal government for unconstitutional purposes, I do not claim that it is “immoral” (although it is of course quite annoying) that my total tax bill is already much higher than that of a citizen of a low-tax state.

    Why not? I said already: there is no reason why that would be a complaint of mine. The argument concerning the immorality of taxing the same dollar I already spent or pledged to my state government does not compel a conclusion that I am saying my total tax bill must be equal to or lower than that of a citizen of a low-tax state. If you think my argument does compel that, then I think the burden is on you to explain why you think so. I don’t.

    Patterico (115b1f)

  28. If either highwayman is bound, in any way — as things are or as they should be, morally, logically, legally, constitutionally, or otherwise — to take any notice or account of the other’s enforced demands, the state-government highwayman must take account of the federal-government highwayman’s tax schemes and rates. I explained elsewhere, and you’ve not disputed or commented upon the fact that, the entire nation ratified an amendment to the Constitution specifically giving Congress the power to levy an income tax without apportionment between the states. Californians, Texans, and all other Americans got a representative voice via their elected state legislators during the ratification process. Imposition of tax consequences from the federal income tax is therefore politically legitimate as to all 50 states.

    To this argument, I refer you to my comment at 11/10/2017 @ 10:39 am, which argues that the federal government does not deserve priority when a large percentage of its taxes are being collected for patently unconstitutional purposes.

    But low-tax states and their residents have had no comparable opportunity to be heard or represented in the decisions made by high-tax states. It’s unreasonable for any one state to expect to be able to bind Congress’ tax policy choices based on purely intrastate tax policy choices.

    Nor should low-tax states have any ability to be heard or represented regarding what goes on in California.

    To the extent that you are complaining that citizens of Texas are being hurt by SALT deductions, I will not repeat at length the arguments of my previous posts. To summarize, a) the Rube Goldberg attenuated level of causation is an argument that (perhaps due to the deliberate length of my sentence describing it) is an argument that literally not one person has responded to; b) Congresspeople largely add to the debt when dealing with shortfalls; c) California is a donor state.

    I’ll elaborate and add to one of my arguments, to respond to your direct complaint that Texans cannot be heard about internal decisions in California affecting the federal tax liability in Texas. No, you have not and will not get any input into internal California decisions. (I consider this unfortunate because the input of Texans like yourself would be welcome and helpful!) But you have had say — your theoretical, totally ineffective say — by virtue of your theoretical and totally ineffective “ability” to choose your federal representatives, who voted for (or more likely voted against but failed to prevent) a system that allows Californians to deduct SALT. Hooray! Your voice has been heard, and you lost. And because I expect this bill to go down in flames, you will continue to lose. SALT will continue to be deductible. And — as far as our system is concerned — all of this is A-OK with Beldar of Houston, TX, because he had his chance to elect federal representatives to fight it, and influence others through communication and donations, and he failed.

    Let me bat that ball right back at you in a different context. As we have discussed, there are subsidies that Houstonians benefit from that Californians don’t. One that I have highlighted is flood insurance. California, as a donor state, subsidizes that flood insurance. Now, what makes that flood insurance necessary? Decisions by Houstonians to build in areas prone to flooding — decisions over which I have no control. More to the point, since we are discussing the interface of two sovereigns, the need for flood insurance is also a product of the failure of Texas state government to either ban, or disincentivize with taxes, fines, and the other punitive powers at the disposal of state government, the building of houses in flood-prone areas.

    As a Californian, I could modify your statement about low-tax and high-tax states to make it a complaint about low-flood and high-flood states, saying: “low-[flood] states and their residents have had no comparable opportunity to be heard or represented in the decisions made by high-[flood] states.” And yet the decisions made by high-flood states like yours end up having an effect on low-flood states like mine, because as a donor state, we subsidize those decisions.

    But of course we can try to have our representatives defeat flood-insurance subsidies, just like you can have your representatives try to defeat SALT deductions. My point is that the complaint about one state’s inability to have representation regarding the internal decisions of other states cuts both ways.

    It’s at this point that I would expect you to retreat to your fallback position that you oppose both flood insurance subsidies and SALT deductions as subsidies that distort the market (in the former case) or the tax code (in the latter). I can deal with that argument separately (and have already to some degree) but I insist that at this point in the discussion, if you make that argument, you are changing the subject. And I want to stay on topic for the time being. The topic being the morality and legitimacy (related but different concepts) of SALT deductions as it relates to the interface of two sovereigns.

    Another way of saying this is this: to respond to your point (which I will quote again):

    But low-tax states and their residents have had no comparable opportunity to be heard or represented in the decisions made by high-tax states. It’s unreasonable for any one state to expect to be able to bind Congress’ tax policy choices based on purely intrastate tax policy choices.

    The answer is: no, it’s totally reasonable if that is what Congress decides to do. Because you had your input and so have we. This is a “might makes right” argument to a degree, of course — it’s saying that any politically legitimate decision of Congress is politically legitimate. Maybe I can get you to agree that, not as a matter of normative ethics but a description of our view of political legitimacy, that SALT dedutions are perfectly legitimate if that’s what Congress chooses to do.

    Why would you characterize this as a “might makes right” argument? I have not so argued and don’t think that’s a reasonable construction of my federalism argument. As with the notion that I’m defending highwaymen, this seems to me a projection or assumption on your part that’s been no part of my argument.

    Let’s be clear: the language that you say was not a defense was this: “Your successive highway robber analogy presumes that highwaymen are supposed to be bound by consistency to respect one another’s tolls. But since when have highwaymen or taxing authorities ever been honorable or consistent or respectful of anyone?” I’m trying to see, but having a very hard time seeing, how this is not a sort of defense of the notion that, hey, the taxing authorities are going to do what the taxing authorities are going to do.

    More fundamentally, as I’ve tried to explain already without seeming to get any traction with you, I do not believe these two highwaymen, or joint sovereigns, or overlapping taxing authorities, or however else one wants to characterize them, are bound up in a single package such that either is required to respect the other’s definition of your taxable income, or the collective taxable income of everyone, which together makes up the tax base in your new version of your moral argument if I’m following it correctly.

    Again, I believe a “definition” that allows one sovereign to take money already given or pledged to another is just wrong. Maybe this is one of these things where you just see it or you don’t. But my comment #4 may help illustrate the issue. Could each sovereign impose a 75% tax on someone, and not allow deductions? Because that would create a situation where a person is taxed at 150% of his income. At that point I don’t think it’s fair to call it “taxation.” It’s pure confiscation.

    Could the federal government impose an income tax of 150% under the Sixteenth Amendment? Would that run afoul of principles against confiscation of property?

    I think it is affirmatively bad federal policy, in fact, to attempt to accommodate different state taxation regimes through deductions in the federal tax code.

    You conceded, with a wisecrack, that you do not think it would be right for Congress to set different federal income tax rates for California than for Texas, but you declined to explain why. I certainly think that would be wrong. There is no principled distinction between doing that directly and by doing it through the back-door by deductions.

    Well, sure there is. Congress must make tax rules generally applicable throughout the country. Sure, some of those generally applicable rules will benefit some individuals more than others. But you as a Texan have the ability to deduct SALT just like I do — and as I noted before, you can even deduct sales taxes when I (as a deductor of state income taxes) cannot. That is different from making specific rules for specific states.

    When and if Congress stops preferentially subsidizing high-tax states through deductions, then perhaps those states will make better decisions. At a minimum, though, they’ll no longer have an incentive to load up their residents with taxes whose sting is considerably offset by federal income tax deductions.

    You see Congress’ thumb on the scales. I still can’t see why you defend that here, when you oppose it so rigorously in other contexts.

    As I have said elsewhere, but for the aphrael argument, I would agree that distortions in the tax code like special tax breaks are generally to be avoided, and should be eliminated where possible. But only in a way that does not hike someone’s tax bill. Make taxes flatter, to be sure, but also make the rates lower.

    You can stop arguing that you “can’t see” why I support this particular distortion and reject others. It should be crystal clear by now why. The aphrael argument. You don’t have to agree with that argument, but at least you know why I consider this different. So please, stop acting like it’s totally inexplicable why I support one “subsidy” (in air quotes because I don’t consider tax relief to be spending or subsidization) and not another. I have explained it, again and again. It’s not hypocrisy when there is a reason for it, whether you agree with the reason or not.

    Patterico (115b1f)

  29. Interesting discussion. Curious as to Patterico’s thoughts on a couple of points:
    1) I think it’s reasonable for two taxing authorities to tax based on the same amount, so am in favor of eliminating the SALT deduction. See it as more akin to state sales tax, county sales tax, city sales tax. All are on the same sales amount, with no deductions at each level.
    2) Federal and state are also separate sovereigns for criminal law, in that if a conviction is not found at the state level, the feds can step in and try on the same offense. Correct? Is that a fair analogy for taxation?

    Ron (583284)

  30. My wife says that the idea of voting with your feet is a bad idea because it would look really dumb. We don’t have curtains on our voting booths and our neighbors would see us doing it, and it would look really awkward and embarrassing.

    Patterico (115b1f)

  31. > The aphrael argument.

    *laugh*

    I’m not participating in this conversation because I’m busy, AND i’m entertained to see this description. :)

    aphrael (e0cdc9)

  32. The aphrael argument

    Aphrael gets an argument named after him, and Beldar gets a whole thread.

    I feel so left out.

    :)

    Dave (445e97)

  33. I think it’s reasonable for two taxing authorities to tax based on the same amount, so am in favor of eliminating the SALT deduction. See it as more akin to state sales tax, county sales tax, city sales tax. All are on the same sales amount, with no deductions at each level.

    Someone elsewhere made the point that these entities are all legally creations of the same state sovereign.

    Federal and state are also separate sovereigns for criminal law, in that if a conviction is not found at the state level, the feds can step in and try on the same offense. Correct? Is that a fair analogy for taxation?

    Not “the same offense” exactly, but a violation of the other sovereign’s laws based on the same conduct, yes. Many people have doubts about this, and my understanding is that while it happens, it is generally disfavored on the federal level, requiring specific criteria be met and extra levels of approval obtained. And if memory serves, it is disallowed in California by state law to try someone for a state violation when they have been acquitted by a different sovereign for the same conduct.

    So while this is theoretically possible, many people have a problem with it.

    Patterico (115b1f)

  34. Which of those prior changes were similarly immoral in your view, Patterico? Any of them? All of them? Or which of them?

    Under the aphrael argument (glad you like it, aphrael!), any taxation by two sovereigns where one is including in the tax base money paid or pledged to another is immoral. That would be my opinion regarding the various categories you named.

    Patterico (115b1f)

  35. Patterico, is there some synonym that you’d accept for “moral”?

    Because that seems to me an odd word to ever use regarding tax policy. In your example above, ignoring definitional quibbles, I suppose it would be “immoral” for state and federal governments to prescribe tax rates which together would be impossible to satisfy, meaning that everyone everywhere would go to prison for tax evasion. But that is so extreme a hypothetical as to become useless.

    I have no clue — literally no idea in the world — how you are going about deciding which taxes are “moral” and which aren’t. I tried arguing Kant and the categorical imperative, but you ignored that, which is the best philosophical construct for morality that I’m aware of. Political legitimacy seems to me to be a species of morality, and I’ve explained why I think it’s politically illegitimate for high-tax states to extract a differential benefit under the federal income tax code because they’re doing that without consent or representation from all those adversely affected thereby in the low-tax states. But that also doesn’t seem to register on your morality radar.

    So what does your morality radar measure, short of everyone going to prison?

    I’m not an expert on Kant, but let me take a stab at it. If the categorical imperative is this: “Act only according to that maxim whereby you can, at the same time, will that it should become a universal law” — then taxation itself could arguably run afoul of it. Should any man be able to show up at your door with a gun and demand that you give him money, else he will throw you in a cage? Does this work as a universal law of action?

    I don’t think it does. So I think we have to confront the fact that we are allowing an essentially amoral set of actions for purely utilitarian reasons: we believe that the need for common defense and a basic rule of law requires a generally funded structure that must be paid for involuntarily, because a voluntary system would create too many free riders. As I argued above, this is questionable enough morally that it should be limited very very strictly. I think our constitutional compromise was a reasonable one (and one that has now been totally ignored by the modern federal government).

    So it’s kind of hard to apply the categorical imperative to a situation that is utilitarian and amoral right out of the gate.

    We agree that, in this imperfect world, political legitimacy is a species of morality (a very imperfect one, I would argue, but better than nothing). In this context, SALT deductions are politically legitimate and therefore arguably moral under this imperfect construct. You could argue the reverse — that their elimination (if it happens) would also be politically legitimate. But I think the argument I have made, that collection of federal taxes for patently unconstitutional purposes is arguably illegitimate, militates in favor of the legitimacy of the deduction (as paying less to a corrupt government spending more for illegitimate purposes) but against the legitimacy of eliminating the deduction.

    As for going outside political legitimacy to the morality of taking a dollar that is already pledged or given to another sovereign, I am coming to expect that the persuasiveness of the argument is like the nature of obscenity per the ever-so-flexible Justice Stewart. Either you see it or you don’t.

    Patterico (115b1f)

  36. I think I have now addressed all of Beldar’s points. My responses may not be to his satisfaction, but I have made an honest attempt to respond to all his arguments in a respectful way, trying not to dodge any argument or twist any words.

    This, to me, is the ideal of what the Internet is capable of: rational and respectful disagreement. We never come to an agreement, but I am very much enjoying the sparring process.

    Patterico (115b1f)

  37. Thanks for the courteous response. As a resident of California I would benefit from maintaining the SALT deduction, yet still I disagree. Which, I think, is the best of these types of discussions – that we can disagree, but still see the validity of the other sides argument.

    Ron (583284)

  38. The USA taxes income of its citizens living abroad. Naturally, the foreign countries where the US citizens live also tax those resident’s income. Is it immoral for those foreign governments NOT to allow the US citizens to deduct the taxes paid to the USA?

    I don’t see how it can be. That foreign government is taxing all income at a particular rate. If the USA reaches in and claims that they get a piece too, why should that foreign government accept less taxes from the American than they take from their own citizens?

    Anon Y. Mous (6cc438)

  39. As a California citizen who will be harmed by the removal of the SALT deductions (if it happens, which I doubt) I still don’t agree with our host. He argues that disallowing these deductions is unfair. But as a very smart and very liberal (not that this stopped him from being called a racist, but that is another story) tax professor of mine convincingly argued back in the day, all deductions from income are unfair to some person or another, as they benefit the person who gets them to the detriment of the the person who does not. The only deduction that should be allowed, he contended, is the deduction of the amount you expend to earn the income.

    The answer I had for him then is the same answer I would give Patterico today. There is nothing about the income tax that was ever intended to be fair. It causes the high earning guy to pay more than the poor guy, in spite of the fact that they both get the same government services, are defended by the same military, and drive on the same roads.

    The reason why we have an income tax is because, as Willie Sutton responded when asked why he robbed banks, “that is where the money is.” We tax high earners more then low earners not because it is fair, but because they can afford to pay more, pure and simple. So, whether to have a change in tax policy should never be about whether it is fair, because of course it isn’t. The only issue is whether it is good public policy.
    So, I would be against raising tax rates to pay down our debt, not because it would hit my bottom line or because it would be unfair to me, but because it would be poor public policy; it would be one more drag on the economy, and growing the economy is probably our only hope at getting out of the fiscal mess we are in. On the other hand, disallowing the SALT deductions would, I think, be good public policy, because it should help restrain the growth of state and local spending, which I think is part of the problem.

    Roscoe (c401a1)

  40. McConnell: Forget what I said about not raising taxes on the middle-class

    I generally think McConnell, Ryan and the adult wing of the GOP in congress get a bad rap from Trump’s apologists, but this is epic facepalm material…

    Dave (445e97)

  41. Mr. Roscoe you are very perspicacious

    thank you for adding your voice to this discussion

    happyfeet (28a91b)

  42. Kevin D. Williamson is on fire over at National Review:

    Rhetorically, President Trump is all bang — and in reality, he’s all whimper.

    “I alone can fix it,” he insisted. Fix what? Everything!

    How’s that working out for you, Republicans?

    A big, beautiful wall paid for by the rascally Mexicans? No — though Trump might oversee the renovation of some existing fencing and let your grandkids pay for it. Whoopin’ on the Chi-Coms with currency-manipulator sanctions and punitive tariffs? Trump went to Beijing and kissed more a** than the extended Kardashian family has sat on. Repealing and replacing Obamacare? Nope and noper. Showing Republicans how to win? Ask Ed Gillespie, Luther Strange, Rick Baker, Maine, Georgia, New Jersey . . . We’ve got panicky Republicans pointing to Mary and Joseph to argue that maybe it’s not so bad for a grown man to be hooking up with a 14-year-old girl.

    He looks at the state of play of the tax cut bill(s), and points out how Trump’s incapacity for leadership is setting the stage for another disaster:

    Trump doesn’t do policy — he does adjectives: “kind,” “generous,” “terrific,” “great,” “best.” Absent intelligent and committed presidential leadership, it is difficult to get anything complicated or difficult done. Maybe Paul Ryan should pass a bill replacing the current revenue system with one based on “pure awesomeness” and leave it to the IRS, the Supreme Court, and Judge Judy to sort out what that means.

    His final analysis:

    Imagine three sad-faced clowns sitting backward on a drunken mule and trying to march it sideways through a coin-operated carwash without any money and you’ll have a pretty good idea where the Republican tax-cut plan is right now.

    Read the whole thing…

    Dave (445e97)

  43. If the first extortionist takes 10% of 100 dollars, that leaves you with 90 dollars. If the second extortionist sets his rate at 11.1% of the remaining 90 dollars, that leaves you with 80 dollars. So you are left with the exact same amount as in your scenario but in my case you have not been double taxed.

    There is no difference, except semantics, whether the second extortionist double taxes you 10% or taxes you only on what you have left at 11.1%.

    In the end what matters to me is the total of what I take home. If they take away my deduction and tax me at a slightly lower rate and those equal each other, then I am left in exactly the same spot as I started.

    Steve D (9e97f6)

  44. It’s an income tax. The entire income amount is subject to taxation by each taxing authority. The taxing entity is under no obligation to allow for any deductions. The fact that it chooses to offer deductions, allowances and/or credits is within the purvey of the taxing authority, but no matter how many or few, the beginning amount is the person’s income.

    At no point are you or I being double dipped or penalized by having the same income amount being taxed by two different taxing authorities than when taxes are applied against the entire amount of a store purchase by both the local and state taxing authority, nor is my property’s assessment adjusted to a lower amount to reflect that I pay tax on it to multiple taxing authorities.

    The SALT deduction is actually one of the most unintentionally devious perversions of our tax code, that ultimately gives a large subsidy to the wealthy whenever state or local tax increases are implemented. For every $100 of new state taxes, the wealthiest citizens only pay $60-65, but for the lower income earner, they will often pay the entire $100; even if they itemize, they’ll pay $85-90. That is immoral.

    Sam Ritter (458538)

  45. In the end what matters to me is the total of what I take home. If they take away my deduction and tax me at a slightly lower rate and those equal each other, then I am left in exactly the same spot as I started.

    Not remotely what is happening to me or other professionals in states with large urban areas.

    Patterico (115b1f)

  46. Patterico,

    I will recall the suggestion I made on your earlier post. This dual-sovereign taxation problem could be solved if the states incorporated itemized deductions for federal income taxes into their income tax calculations. No moral imperative that the national level of government should be responsible for solving this problem.

    Let’s just assume we’re talking about the federal government eliminating all state tax deductions, income, real estate, and sales taxes.

    In fact, this is the superior solution to retaining itemized deductions at the federal level. If Federalism has any value, it is that states should be in competition with each other to attract residents with their policies on taxation and spending programs (roads, schools, infrastructure, etc.). Itemized deductions at the federal level reduce the differential impact of higher taxation by the size of a resident’s marginal tax rate at the federal level. In essence, high-tax states appear more competitive against lower-tax states than would otherwise be the case.

    El Gipper (f1f816)

  47. Our host wrote above:

    I think I have now addressed all of Beldar’s points. My responses may not be to his satisfaction, but I have made an honest attempt to respond to all his arguments in a respectful way, trying not to dodge any argument or twist any words.

    This, to me, is the ideal of what the Internet is capable of: rational and respectful disagreement. We never come to an agreement, but I am very much enjoying the sparring process.

    I agree that we’ve each attempted to address the other’s points respectfully. Although neither has convinced the other, perhaps others reading our respective arguments pro & con on SALT deductibility have found that worth their while.

    Beldar (fa637a)

  48. This is probably the only time I think you, our host, have tied yourself up in logical knots for something you want but cannot (in my opinion) logically justify, so you end up resting on it not feeling ‘moral’.

    In one sentence from your post:

    And my issue is not that the same dollars serve as the tax base for two different sovereigns.

    OK, so you acknowledge that either sovereign can define the ‘base’ (your income) how they want, and you’re fine with that.

    But in very next sentence:

    My issue is that the sovereigns each include in their tax base, money that is already gone, as taxes pledged (whether it has already been paid, or will later be owed) to a different sovereign.

    Can you not see you contradicted yourself right there? Either one can define your income, their base, however they want. Until they don’t include some magical criteria paying attention to other obligations (regardless of whether or not it has already been paid, even).

    As neither sovereign offers the same exact services in exchange for their taxation, I see no conflict at all. You made X, they each want some bite out of X. You can reductio ad absurdum with each bite adding up to more than X, you can argue that one might have already been deducted or not during the course of the year, whatever. It doesn’t change the simple matter that you already acknowledged they define X, and the period over which X occurs. They don’t care whether you withhold, pay at the end, or whatever to the ‘other guy’, only when they get theirs.

    Are there no other places that some earnings gets taxed, or some exchange of goods gets taxed, by different sovereigns to different rates regardless of one another? Foreign business income perhaps?

    Gasoline federal excise as well as state and local taxes, for example? The only difference is one is a tax on an exchange of goods to you, the other is a tax on the services you provided an employer (or not, as income can also be profit from sales of goods you made). You didn’t have to buy the gallon of gas…neither did you have to work and make money, if you didn’t find the benefits outweighed the negatives of doing so.

    Whether the state is a ‘net taker or giver’ to the federal government in other ways (some of your earlier argument paths) is also completely besides the point, in my opinion…glad you seem to have dropped that argument.

    rtrski (8a042a)

  49. If it is so logical ot to allow the deduction of state and loacal income taxes for individualks, maybe it is also logical not to allow coprations to do so?

    Sammy Finkelman (02a146)


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