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Me: Frank Lynch

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Tuesday, November 28, 2017

Making "Giving" states give more.

There are many reasons to hate the tax bills under consideration. They genuinely are, please excuse the tired phrase, wolves in sheep's clothing. If you're not well off, short term tax decreases get replaced by long term tax increases. Teachers who reached into their own wallets for class supplies won't be able to soften the blow with a tax deduction. Important social benefits are struck throughout. But the "good" news is that corporations will get stable tax cuts, in the unsupported hypothesis that they will bring more of their income home to the U.S. (Uh, here's a clue: if it still costs less to offshore it, it will still cost less. Maximizing share holder wealth means it stays offshore. Got it?)

I do not mean to focus on this next point; I only raise it because I don't think I've read it yet, and because I studiously avoid writing about what I think you've already read, let's talk about the "giving states" and "taker states." I do this gingerly, because I'm not interested in finding another reason for division. A "giving state" is a state that sends in more in Federal taxes than it receives in Federal budget benefits. The flip side is that a "taker state" is one which receives more in Federal budget expenditures than it pays into the budget through the IRS.

I am not against the concept of giving states and taker states. It's part of national unity and understanding that we are all in this together. But you might have heard that there is an interest in getting rid of Federal tax deductions for state income taxes. Some of the states which are hit hardest are "Blue" giving states (like New York, New Jersey, Connecticut). I haven't read enough of the rationale behind this move; I do know that if the tax bill is less than revenue neutral, it needs more than a simple majority in the Senate to pass. And the intense effort to cut taxes on the wealthy and corporations puts a lot of pressure on the revenue neutral concept. So maybe states with high income taxes, who have the temerity to take decent care of its citizens aren't really being targeted. Maybe it has NOTHING to do with who they vote for in Presidential elections.

But it does make "giving states" give more, and accentuate the phenomenon.

Home | 7:32 PM (DISCLOSURE: I work for Abt Associates. My company does lots of stuff, including polling. My opinions should not be construed as representing those of my employer.)

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