Cuomo blames federal tax law for $2.3 billion New York state budget deficit

[Fishking]

Sure it does, because the SALT deduction reduces the amount residents in those states pay in federal income taxes.

Exactly, a federal subsidy.

 

[Jack Hays]

That's not true, obviously. Medicaid is an example on how wrong your statement is.

But we'll agree to disagree.

No. If a state opts out of Medicaid expansion then there is no federal expenditure.

Almost all the states which opted not to expand Medicaid are red states.

[h=3]The Coverage Gap: Uninsured Poor Adults in States that Do Not ...[/h]
[url]https://www.kff.org/medicaid/.../the-coverage-gap-uninsured-poor-adults-in-states-that-d...
[/URL]

 

[AliHajiSheik]

The SALT deduction acts as a subsidy for state and local taxes - reduces their after tax cost. If you're in the top tax bracket, any amount paid over the $10,000 cap acts like a 35% state and local tax increase for the amount over $10k.

Ex. Pay 100k in SALT, take a deduction for the full amount, gives you a $35,000 reduction in your federal income taxes paid/payable.

Post TCJA, you get a deduction for $10k only, saves $3,500 in federal income taxes.

Difference - $31,500, which is equivalent to a $31,500 tax increase, because that's the amount your federal income tax bill exceeds what your bill would have been under the old law.

I'm focused on the impact on the State of New York as per the Governor's pointing it out as an excuse for lost revenue. I fully understand the impact on the Federal Government and on individual tax payers.

I don't think this one deduction can be evaluated without taking into account the increase in the standard deduction. I'm about even, but supposedly most benefit and some pay more.

 

[SenorXm/Sirius]

No. If a state opts out of Medicaid expansion then there is no federal expenditure.

Which will/might affect the states own income tax..

You're talking in circles here, and I'm not going to go back and forth all day.. We're both old farts and remember when the Feds were pushing for the Age 21 to drink law. Some states balked, the Feds got them to play along by threatening them with money, telling them if they didn't raise the age to 21 that state wouldn't get anymore Fed money for transportation, roads, etc. All the states fell in line.

Have a nice day.

 

[Jack Hays]

Which will/might affect the states own income tax..

You're talking in circles here, and I'm not going to go back and forth all day.. We're both old farts and remember when the Feds were pushing for the Age 21 to drink law. Some states balked, the Feds got them to play along by threatening them with money, telling them if they didn't raise the age to 21 that state wouldn't get anymore Fed money for transportation, roads, etc. All the states fell in line.

Have a nice day.

As you wish.

 

[JasperL]

They pay their own way, but they receive more under federal programs that are paid everywhere.

Not sure what that means. Every study of the issue I've seen is the wealthy "blue" states pay more in federal income taxes than they get in federal spending, from all sources.

I live near Oak Ridge, TN which houses Y-12 and other nuclear weapons facilities, etc. work and Oak Ridge National Laboratory. Between the two of them that little city receives $billions annually from the feds, directly or through private contractors, mostly paid for the salary of the 1,000s of PhDs, and staff, maintenance, etc. who work there. Those programs aren't "paid everywhere" and Oak Ridge would dry up if the federal government shut down, because that federal money really is the local economy in one way or another. Same is true for the big military bases, etc.

 

[SenorXm/Sirius]

BTW as more and more people now do their taxes, we'll see how 'happy' Middle Class people are going to be with these changes. I'm already hearing and reading many are very PO'ed even in 'Trump country'. They are losing $1,000's compared to past years.

 

[Jack Hays]

Not sure what that means. Every study of the issue I've seen is the wealthy "blue" states pay more in federal income taxes than they get in federal spending, from all sources.

I live near Oak Ridge, TN which houses Y-12 and other nuclear weapons facilities, etc. work and Oak Ridge National Laboratory. Between the two of them that little city receives $billions annually from the feds, directly or through private contractors, mostly paid for the salary of the 1,000s of PhDs, and staff, maintenance, etc. who work there. Those programs aren't "paid everywhere" and Oak Ridge would dry up if the federal government shut down, because that federal money really is the local economy in one way or another. Same is true for the big military bases, etc.

Federal expenditures are paid wherever federal programs call for them. Money is paid in Oak Ridge because the federal facility is there, just like money is paid in California because Lawrence Livermore is there. The blue/red state contrast has nothing to do with it.

 

[HumblePi]

VAX taxes in Europe, their version of a flat tax on consumption, have proven harmful to the middle-class and poor. Needless to say, we have sales and transfer taxes here in most states, which are also flat taxes and more of a burden on the middleclass and poor.

There's several different versions of a flat tax. The European version which as you say is a flat tax on consumption is far different than a true flat tax. A true flat-rate tax is a system where one tax rate is applied to all personal income with no deductions. Flat tax critics would say that a flat tax system could be created in two ways, one with many loopholes, or a progressive tax system without loopholes. A progressive tax system could be as simple, or simpler, than a flat tax system. A simple progressive tax would also discourage tax avoidance.

 

[JasperL]

No. If a state opts out of Medicaid expansion then there is no federal expenditure.

Sure there is because the federal government matched Medicaid spending by states pre-ACA. In Tennessee, a non-expansion state, the match is roughly $2 federal/$1 state, or alternatively the feds pay about 65% of the total cost of Medicaid.

 

[Jack Hays]

BTW as more and more people now do their taxes, we'll see how 'happy' Middle Class people are going to be with these changes. I'm already hearing and reading many are very PO'ed even in 'Trump country'. They are losing $1,000's compared to past years.

Why is that? My taxes are lower, too low, in fact. I think we should all be paying more.

 

[Jack Hays]

Sure there is because the federal government matched Medicaid spending by states pre-ACA. In Tennessee, a non-expansion state, the match is roughly $2/$1 federal/state, so the feds pay about 65% of the total cost of Medicaid.

That is true everywhere.

 

[JasperL]

Federal expenditures are paid wherever federal programs call for them. Money is paid in Oak Ridge because the federal facility is there, just like money is paid in California because Lawrence Livermore is there. The blue/red state contrast has nothing to do with it.

Right, I wasn't arguing cause and effect, just what IS, reality, what happens, what the data show.

You could say the same thing about farm subsidies - they go where there are lots of farms. And "welfare" of various kinds, which go to where there are people who are poor, etc.

And every study I've seen indicates that poor states, which tend to be "red," receive more in federal spending than they pay in federal taxes. It's common sense, actually. The opposite is true for wealthy states which tend to be "blue." There are exceptions to every rule, but we're talking generalities here.

 

[JasperL]

That is true everywhere.

I understand that which is why I said, "Sure there is because the federal government matched Medicaid spending by states pre-ACA." I didn't say in some states, or in red states, but in ALL STATES.

You said, "No. If a state opts out of Medicaid expansion then there is no federal expenditure."

My point was your statement is false everywhere and was false everywhere pre-ACA.

 

[Jack Hays]

Right, I wasn't arguing cause and effect, just what IS, reality, what happens, what the data show.

You could say the same thing about farm subsidies - they go where there are lots of farms. And "welfare" of various kinds, which go to where there are people who are poor, etc.

And every study I've seen indicates that poor states, which tend to be "red," receive more in federal spending than they pay in federal taxes. It's common sense, actually. The opposite is true for wealthy states which tend to be "blue." There are exceptions to every rule, but we're talking generalities here.

All true, and irrelevant to the point under discussion: a now-ended subsidy to high earners in high tax states.

 

[Jack Hays]

I understand that which is why I said, "Sure there is because the federal government matched Medicaid spending by states pre-ACA." I didn't say in some states, or in red states, but in ALL STATES.

You said, "No. If a state opts out of Medicaid expansion then there is no federal expenditure."

My point was your statement is false everywhere and was false everywhere pre-ACA.

I was referring to Medicaid expansion only.

 

[JasperL]

VAX taxes in Europe, their version of a flat tax on consumption, have proven harmful to the middle-class and poor. Needless to say, we have sales and transfer taxes here in most states, which are also flat taxes and more of a burden on the middleclass and poor.

No doubt VAT and the equivalent increases the tax burden of the middle class and poor, but those taxes also fund a generous set of benefits, like 'free' college, UHC, paid maternity leave, etc. so the net impact on the progressivity of the system as a whole, taxes and benefits, is a lot less clear.

 

[JasperL]

I was referring to Medicaid expansion only.

And why limit it to Medicaid expansion? It makes no sense. The "expansion" piece of Medicaid is a 90% match, versus the "non-expansion" piece which is a 65% match.

Tennessee receives about 40% of its budget from the feds each year (see above link). Medicaid is a big piece but there are lots of other state level programs that get huge funding in the form of matching and other grants from the feds.

 

[Jack Hays]

And why limit it to Medicaid expansion? It makes no sense.

Tennessee receives about 40% of its budget from the feds each year (see above link). Medicaid is a big piece but there are lots of other state level programs that get huge funding in the form of matching and other grants from the feds.

Because I thought that was the context of the other poster's previous post.
Yes, Tennessee and all states receive federal funding for federal programs in those states. That is not at issue and remains irrelevant to the thread topic.

 

[OldFatGuy]

There's several different versions of a flat tax. The European version which as you say is a flat tax on consumption is far different than a true flat tax. A true flat-rate tax is a system where one tax rate is applied to all personal income with no deductions. Flat tax critics would say that a flat tax system could be created in two ways, one with many loopholes, or a progressive tax system without loopholes. A progressive tax system could be as simple, or simpler, than a flat tax system. A simple progressive tax would also discourage tax avoidance.

Untested theories are far from absolutes. Your pronouncements ring false.

 

[SenorXm/Sirius]

Why is that? My taxes are lower, too low, in fact. I think we should all be paying more.

I'm retired, so I haven't itemized in years.

But from what I am reading and hearing many who work and USE to itemize, because of the changes they no longer can. Which is in some cases costing them $1,000's...

 

[SenorXm/Sirius]

Because I thought that was the context of the other poster's previous post.
Yes, Tennessee and all states receive federal funding for federal programs in those states. That is not at issue and remains irrelevant to the thread topic.

But you and I and others were talking about states that get more back from the Feds, then they put in.. You basically denied that, but now are saying well it's true but not on topic.

You're talking in circles..

And again, have a nice day.

 

[OldFatGuy]

No doubt VAT and the equivalent increases the tax burden of the middle class and poor, but those taxes also fund a generous set of benefits, like 'free' college, UHC, paid maternity leave, etc. so the net impact on the progressivity of the system as a whole, taxes and benefits, is a lot less clear.

And simultaneously they've made it far more difficult for the middle class and poor to get through the day. France and Italy are economic disasters. Brexit will create chaos for the British. Free college is of no value when there are no jobs. We should have UHC here, but the way to pay for it is to shift funds from the military industrial complex Ike warned us about and a universal shift from procedure oriented healthcare to preventative healthcare, not more taxes. Paid maternity leave is an issue for the private sector, not governmental mandate. When I was an employer, as a matter of conscience, I gave paid maternity leave, with no restrictions on duration. As a result, as well as other factors of beneficence, I had almost no churn rate among my women employees for 27 years, and enjoyed a productive staff. It was not just conscience but good business.

 

[Jack Hays]

But you and I and others were talking about states that get more back from the Feds, then they put in.. You basically denied that, but now are saying well it's true but not on topic.

You're talking in circles..

And again, have a nice day.

No. I am not and never was talking about states. I was talking about a subsidy to high earners in high tax states.

 

[HumblePi]

Untested theories are far from absolutes. Your pronouncements ring false.

Yet current tested methods of taxation have proven to be a huge failure.