Tax Cuts: Good or Nah?

Off Topic Politics & World Issues
666

Just because I’m pedantic: this shouldn’t be a 1:1 equation. There are other incentives/considerations for a business to consider to operate in the location it does. Some have no other choice, others b/c of other incentives aside from taxes - i.e. the market they serve, their business model, other costs of operation relative to other tax environments, etc…

I generally agree with both you and BGs sentiment but high taxes tend to be a relatively substantial barrier to entry in most markets/industries but does not necessarily equate to less employment given the alternatives (alternative here being another state/municipality to conduct business).

tl;dr - taxes aren’t the only thing a business or potential business will look at when determining their geographical location or where they’re headquarters are registered. There are other significant factors that are considered, but, yes, taxes (state, local, federal, etc) and other regulations (which can be considered as a tax) are one of those significant factors.

Thanks for indulging a pedant.

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667

Oh definitely not. There’s a “total quality” of each state depending on the industry/size/how many pols you bought/etc. Imo taxes is just usually the biggest piece of that pie.

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668

Indeed. Plus the trade-offs per state. I thought this was interested when looking at the top businesses from this article. Also California is ranked at 28 according to this and interestingly Mississippi has the lowest cost of doing business but one of the worst scores according to this. Where businesses locate is much more than just “low taxes” same thing with people.

**3. Minnesota **

The North Star State continues to follow its offbeat path to competitiveness, charging some of the highest taxes in the nation but insisting that businesses get plenty of value for their money. So far, they’re buying it. Businesses are expanding, and the economy is growing. What are they getting for their money? One of the best education systems in the nation and a great quality of life. Say what you will about Minnesota’s strategy. It’s working.

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669

I’m saying that competing for business by racing to the bottom–by seeing who can pay the least/regulate the least–is not in our (the US’s) long-term interest. Because it does indeed lead to a reductio ad absurdum of sorts–absurd wage reductions, absurd worker-safety reductions, absurd environmental protection reductions, etc.

670

In Minnesota?

I have family off Lake Superior (northern Minn) and would never, ever, ever, want to go through those winters. I would say the same for all those folks up north who say “eh”. Add in Mosquitos the size of bumble bees and I’m running out of there with my tail tucked between my legs.

Semi-joking of course, but cmon people, if it doesn’t get above freezing for a month…

Edit: I see other high quality of life rankings for North Dakota, New Hampshire, Montana, and Nebraska over places like Colorado and Utah. They must like the cold a lot more than me.

671

Can’t speak for the other places but New Hampshire if fuckin’ beautiful year round. Wife and I went up there for a weekend get a way last February for some snow shoeing/winter hiking.

We probably head up there once a season for some wilderness exposure. Went white water rafting this past summer. Still haven’t seen a moose though … fuckin elusive bastards

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672

I think education helps them there. I didn’t look into particulars but if I remember from other things quality of life usually looks at health care, education, crime, etc.

You don’t have to preach to me on the winter. I’m a dumbass who lives in Kansas and we have been single digit highs for most of the last 7 days. Eating lunch in my office right now and my nose is still cold. I bitch about the weather every single year but continue to live in a place with winter. Fuck winter and everyone who likes it.

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673

Irrelevant! Because of this:

Except for skiing. That’s fun, as long as its not cold. Yep, you read that right, I want to ski on snow and not be cold while I do it.

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674

I’ll give you skiing but my pussy knees get aggravated by it. Still living where snow doesn’t exist would easily be worth giving up skiing.

Even the winter olympics suck. So boring they had to invent a sport with a broom to watch.

Also nothing attractive by a girl wearing 2 sweaters and 15 layers of coats/clothes. By the time the wife gets out of everything I’ve fallen asleep waiting.

675

I went to high school in northern CA and would ski in jeans and a t-shirt pretty regularly. Then I went to college in Oregon. I went skiing one time at Mt Bachelor. It was a complete white-out and I was freezing and miserable the whole time. Haven’t been skiing since. Fuck that noise.

676

You sure you’re not from Jersey?

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677

Nah, just the 80s.

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678

Jersey is still in the 80s.

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679

This is a big YUP! I go in from time to time to help and there is a hand full of these kids that have no ‘OFF’ button at all… I ready to wring their little necks myself. But then there are those other handful that are super sweet and they are really trying. But the school set up makes it so that the disruptive kids win the day almost all the time. Those little fuckers need to be out of a regular classroom and put in some sort of EBD class, but it takes an act of congress to do it.

I really don’t know the answer. That’s the million dollar question, how do you fix it?

680

Both parties are run by elites. Why would yo think there would be any tangible outrage against them?

681

Angst about removing SALT deductions shows the danger of taking the status quo as the baseline in fairness. SALT taxes are generally used only to provide services to people in those communities, while the federal taxes provide nation-wide services everyone. Making those taxes deductible allows states and local governments to reduce the amount that their citizens send to Washington, while not actually affecting the services they receive from the federal government. This makes low-tax states and localities overpay for the same services to compensate. Reducing this deduction was a move towards a fairly distributed tax burden.

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682

That was an excellent post. Spot on. You’d think all the SALT states would be in far better financial positions, since they’ve been shifting the tax burden to state and local causes. I’m sure CA wishes it could just print money. I believe we’re the only state with cap and trade, too. Someone correct me if I’m wrong.

Right now any tax increases in my SALT state are going to shore up pensions. Nobody want’s to vote for that, so they just redistribute funds, but that’s exactly what’s happening. People making over $100,000 per year have supported a new gas tax, but it will very likely be repealed because it’s effectively a regressive tax on poor people. An extra $500 per year in gas to drive to work is a big burden for people making $15 an hour.

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683

I read this story and am perplexed -

what say you about the alleged CA budget surplus I’ve been seeing reported today?

684

That’s the first I’d heard of that, polo. My thoughts, for what they’re worth?

An annual budget surplus doesn’t equal total debt. And I don’t believe that addresses unfunded pension liabilities. It’s strange to say you have a surplus, but you have FAR more in unfunded pension liabilities, so… I don’t know. They’re crying about how desperately they need that gas tax.

685

Since we’ve been talking about how the new tax rules will effect SALT states. @polo77j, more about the CA budget.

Unreal.

Note: De Leon, the Dem pictured there, is currently caught up in a sexual harassment scandal so… Nice people.

Much has changed in Donald Trump’s first year as President, including some progressive principles. Lo, California Democrats in 2016 campaigned to extend a tax hike on the rich. Now they’re promoting a gimmick to help reduce their wealthy residents’ tax burden.

State Senate President Kevin de Leon, who is challenging U.S. Senator Dianne Feinstein in the June primary, complained last week that the new GOP tax law “offers corporations and hedge fund managers massive tax breaks and expects California taxpayers to pick up the costs.” It’s the “worst tax policy in the history of this country. Perhaps the world.”

In fact, some California taxpayers are among the law’s biggest beneficiaries—to wit, Silicon Valley titans such as Apple, Facebook and Google. California tech companies are sitting on more than $500 billion in cash overseas, which they will now be able to repatriate at a discounted tax rate.

But speaking of bad tax policies, Mr. de Leon has proposed legislation to help high earners avoid the new $10,000 state-and-local tax deduction limit. Taxpayers would receive a dollar-for-dollar tax credit for contributions to a new California Excellence Fund, which they could then deduct as charity. Taxpayers can deduct up to 60% of their income for charitable contributions under the new federal reform.

The Senate leader cites as his model private-school scholarship tax-credit programs in other states that function like vouchers. However, these charitable contributions help nonprofits or parents who want to send children to private schools. Mr. de Leon’s “excellence fund” would exist within the General Fund, and donations would be appropriated by the legislature. The only beneficiaries of this “charity” would be the donating taxpayer—and politicians.

In other words, Democrats in Sacramento want to help the rich dodge federal taxes. According to IRS data, California’s 71,000 taxpayers with million-dollar incomes deducted on average $462,500 in 2015 compared to $6,940 for individuals making between $50,000 and $100,000. Few California middle-class taxpayers will be harmed by the $10,000 deduction cap since the standard deduction has doubled to $12,000.

Neither the IRS nor federal courts are likely to allow this charity dodge. The IRS disallows deductions for charitable contributions to the extent that a taxpayer benefits—for example, paying $10,000 at a charity auction for an artwork valued at $8,000 would only yield a $2,000 deduction. In 1989 the Supreme Court ruled that contributions “made to such recipients with some expectation of a quid pro quo” are not deductible.

The one reform Mr. de Leon isn’t proposing is a cut in California’s top marginal tax rate of 13.3%, including the three percentage-point increase that Democrats pushed in a 2012 referendum. Rates on individuals making more than $250,000 also increased. Democrats successfully pushed to extend the tax hikes through 2030 in November 2016. The federal GOP tax reform means that the effective top state and federal combined marginal rate for Californians increases by 2.7-percentage points in 2018—to 50.3% from 47.6%.

Revenues are soaring due to strong income and capital-gains growth. Gov. Jerry Brown on Wednesday proposed a $132 billion budget that forecasts a $6 billion surplus. While the Governor wants to add some revenue to the state’s $8 billion rainy day fund, this will quickly vanish in the next recession—unless Democrats raid it first after he leaves office. State tax revenues fell cumulatively by more than $70 billion following each of the past two recessions.

California’s steeply progressive tax code has encouraged a boom-bust revenue and spending cycle. Reducing taxes on high earners would impose spending discipline and ameliorate the effects of the limitation of the state-and-local tax deduction. Alas, Democrats in Sacramento seem mainly interested in boosting their favorite charity—themselves.