The best tax deduction to cut

  • Article by: CHARLES LANE , Washington Post
  • Updated: November 23, 2012 - 10:24 AM

If any deductions must go, the one for state and local taxes is a good place to start.

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cstoney48Nov. 22, 12 9:40 PM

Sorry Lane, "The theory is it's unfair to make people pay twice for the public services they receive" is not the case. The theory is that you should not have to pay taxes on the taxes you have already paid. The real object of your argument is to encourage states to spend as little as possible on state and local services. In other words, lets all be like Mississippi. If you really want to reform the federal tax structure--start from ground zero--eliminate all deductions and then justify each and every one--one at a time. No clandestine tax earmarks for specific clients and no automatic tax subsidies for some congressperson's sugar daddy. Bring the whole corrupt system into the open and then let the public interest determine tax policy--not which special interests own the most representatives. Start from zero on deductions and treat all income as equal. What a novel idea!

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pumiceNov. 22, 1210:20 PM

From the article: "[T]he deduction [for state and local income tax] helps [blue states, notably California and New York] pass the tab to other states, most of them red." And yet, Charles Lane, neither California nor New York is among the ten states receiving the most federal funding per tax dollar paid. Those 10, according to the Wall Street Journal, are (1) Alaska, (2) Virginia, (3) Maryland, (4) Hawaii, (5) New Mexico, (6) Kentucky, (7) Alabama, (8) West Virginia, (9) Connecticut and (10) North Dakota.

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pumiceNov. 22, 1210:44 PM

The whole premise of cutting or eliminating deductions and credits is eerily familiar to those of us who remember the Reagan years. The tax which all workers pay (read, FICA) increased while deductions which we enjoyed (read, credit card interest, car loan interest, student loan interest, ...) vanished. Eliminating the mortgage interest deduction, property tax deduction, charitable donations deduction would hit many middle class families hard.

To the point of this commentary, tax incidence studies show that low- and middle-income households paid a substantially higher percentage of income in state and local taxes than high-income households, so Charles Lane's notion that Uncle Sam would be "getting most of the money from the wealthy" by eliminating the charitable donations, mortgage interest, state income tax, and local (read, property) tax deductions.

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viktorvaughnNov. 22, 1211:18 PM

Blue states already subsidize red states by paying more in federal taxes than they receive in federal benefits. Red states are currently subsidized by blue states by receiving more federal benefits than they pay in taxes. Eliminating the deduction for local taxes would exasperate the wealth transfer from Minnesota to Mississippi.

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mdachsNov. 22, 1211:32 PM

How about introducing a 5% income tax on some, if not all, the roughly 45% of Americans who pay no income taxes (yes, I know that they do pay FICA and Medicare taxes - but they will receive benefits from Social Security retirement and Medicare later!) and probably use more federal government services than any other group? And eliminate the tax credits for half of them receive these (i.e., this is income from our federal income taxes)? It's very popular to demand higher taxes for the so-called "rich," many, if not most, of whom provide and create jobs. But the so-called rich also already pay the lion's share of federal income taxes! For those who demand more taxes of the rich, why not just require them to write checks in a specified amount to other people directly? We could save a lot of money transferring income tax payments to the federal Treasury, which, in turn funnels the money to federal agencies, which, in turn employ a huge number of government workers, who in turn redistribute the money to other people. We could save a huge amount of government bureaucracy expense by just giving the rich the names and bank account numbers of other citizens and paying the monies directly to those citizens - rather than increasing taxes.

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DufferHNov. 22, 1211:51 PM

The writer has it wrong. The deduction for state and local taxes did not COST $67 billion in fiscal 2011. Rather the deduction allowed the taxpayers to KEEP $67 billion of their own. This guy is another who operates under the premise that government owns it all and we should only be allowed to keep that which government says we can keep.

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crystalbayNov. 23, 12 3:02 AM

Losing the state/local income tax deduction would translate into lower-income people paying more in federal taxes. The loss of this deduction would hurt the folks who pay the highest state taxes. Bad idea.

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obamafone4meNov. 23, 12 3:47 AM

The deductions do not "cost" anything. The word games played by liberal politicians never ends. Only in the liberal world is an increase in spending a "cut" when they don't get to spend as much as they want.

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obamafone4meNov. 23, 12 3:52 AM

More games... you will note the posts that claim that red states receive greater federal aid than blue states, yet they ignore the facts and tell half truths. Per capita aid numbers don't tell the story, but they will try to convince you otherwise. Repeating a lie does not make it the truth.

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obamafone4meNov. 23, 12 3:59 AM

"Blue states already subsidize red states by paying more in federal taxes than they receive in federal benefits". Liberal rhetoric at it's finest. The states that are receiving the most federal spending are those that receive the majority of defense spending. Blue states are welfare magnets... apply logic and common sense to this and the truth is that blue states consume more welfare benefits than red states.

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