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Comment by jayess | Hacker News Reader

So people in high tax states vote for higher taxes, then complain when they have to actually pay those taxes?

New York and California went for Hillary, so they didn't vote for these increases.

GP was referring to higher state taxes. I believe. People in those states voted for higher state taxes and got it, but now that they can't deduct them from federal income tax, it's starting to sting.

But the two are tied. The assumption was that the local tax increases wouldn't be as burdensome on the tax payer in those states because it would be offset by the SALT deduction at the federal level. The whole picture can be considered.

Someone living in NJ could easily be offered a tax increase from a state lawmaker, feel that there is a benefit to them in the service that tax will pay for, do the math and realize that with the SALT deduction, they wouldn't be paying any extra money in taxes for their services. Changing the SALT deduction is what changes the math here.

They weren't voting for "higher taxes" they were voting for "more services".

They were voting to keep the money for their state and short the federal government. That's how the unlimited SALT deduction worked and it gave states an incentive to raise taxes sky high, because it didn't affect the residents of the state, it just dropped what the federal government took in. If I was in one of those states I would've agreed with it too: keep more money for ourselves at no additional cost!

Now the law has changed where, regardless of state, your federal tax burden remains the same. It leveled the playing field and states will have to adapt and lower their taxes, otherwise risk losing residents to states where tax money is better managed.

>>It leveled the playing field and states will have to adapt and lower their taxes, otherwise risk losing residents to states where tax money is better managed.

The assumption that the tax money is poorly managed is a misrepresentation. They aren't just lowering taxes, they're also going to be cutting services (or finding new revenue streams). Assuming the states lower their taxes to bring residents in line with their previous combined tax bill, is it realistic to expect that these states are going to get the same funding for the same types of projects from the Feds? No. So while it's "leveling the playing field" it's also a kick in the dick to states with higher State/Local tax levels and forces them to scramble.

But hey, look at all those Florida billionaires flush with cash that they're going to trickle down on us now...

Yes, but those higher state taxes were offset at the federal level, so really the people of those states were voting to shift federal burden to state level. But then the new tax plan pulled the rug out from under them. The rules changed in the middle of the game and ruined a previously reasonable tax rate.

I guess I don't see why high tax states should be able to keep the tax money for themselves that would otherwise be destined for the federal government. By taking a federal deduction for SALT, it hardly seems to make sense why states would have an incentive to keep taxes low when the federal government would have originally been the one taxing the hit, not the taxpayer.

Depends if the state thinks it can manage the money better than the feds.

Good point! I'd be happy seeing the federal _income_ tax drastically reduced or eliminated and states could opt to increase their income taxes if needed. It would encourage more efficient use of the tax money, IMO and shift responsibility to individual states to use the money efficiently.

Nobody votes for "higher taxes" they vote for "better services". Also, it's a pretty bold assumption that NY and CA voters were in favor of the party that changed federal policy affecting their taxes.

This is a confederalism vs federalism issue. If you believe in a strong Federal government, support the lowering of the SALT. If you believe that states are best at determining how to support their residents, oppose it.

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