Several Democrats fighting for tax break for the rich

[RVonse]

The last tax bill was about punishing blue states - the deductions that were used most by households in the blue states were targeted. There are more open and more efficient methods to raise revenue than by arbitrarily limiting deductions based on geographical pain.

From what I have seen so far of this thread, the last tax bill was a very sound tax plan targeting the very people most likely to afford to pay the tax. Yes, that does happen to be the blue states. But their political ideology has nothing to do with the fact that they indeed are the richest people who not only should pay more tax but most importantly are able to pay more tax. The most efficient way to collect money is to go after the most people who have the money.

And it was not a punishment for anyone. No more of a punishment than our progressive tax rate schedules. You are always welcome to earn less money and/or move to another low cost state if you think the tax is too much. That is what freedom and liberty is all about.

Having a high cash flow in a high cost of living area doesn’t mean one is rich. That’s the point. The incomes, which are being taxed, are high but the expenses are also very high.

Yes, they are still rich. They do not enjoy any sort of life while they work, but later in life their savings are still real assets that can be spent elsewhere.

 

[laughing dog]

Sorry, but if you actually paid attention to the debates, it was about punishing the residents of blue states. BTW, there are rich people in red states as well. Some of those red states do not tax income and are first at the federal trough to suck up revenue so that they are net gainers in the revenue -tax contributions.

But you can always move if you really think they have the better deal. There is no law I am aware of that prevents you from moving to another state if you think their tax situation is better.

If you actually took your words to heart, you'd be advocating that federal gov't tax residents of states with no income tax even higher, since they have great ability to pay than similar households in states with state income tax.

Freedom of movement is true for coal, steel and auto workers, yet I don't recall you advocating they move either to different regions of the world or different careers.

More importantly, why would anyone think the federal gov't should use tax policy to induce people to move from one region of the country to another?

 

[RVonse]

Sorry, but if you actually paid attention to the debates, it was about punishing the residents of blue states. BTW, there are rich people in red states as well. Some of those red states do not tax income and are first at the federal trough to suck up revenue so that they are net gainers in the revenue -tax contributions.

But you can always move if you really think they have the better deal. There is no law I am aware of that prevents you from moving to another state if you think their tax situation is better.

If you actually took your words to heart, you'd be advocating that federal gov't tax residents of states with no income tax even higher, since they have great ability to pay than similar households in states with state income tax.

No one has any ability to pay any tax without the income in the first place. If there are people such as Elon Musk with great means living in a red state they should be taxed just like the google develpers, no argument.

Freedom of movement is true for coal, steel and auto workers, yet I don't recall you advocating they move either to different regions of the world or different careers.

I have no problem with freedom of movement within the US at all. But as a current US citizen I do not advocate moving to another country in order to maintain high value employment. I think (and still do believe) it is up to the my own government to ensure high value jobs manufacturing is kept in the US. But if one state has the manufacturing that another doesn't, I have no problem with US citizens moving where they will find the best job.

More importantly, why would anyone think the federal gov't should use tax policy to induce people to move from one region of the country to another?

Im not advocating the federal government do anything. I'm simply stating the obvious fact that it is much more efficient to collect tax from the majority of people who make a lot of money than from the few who do not.

 

[Shadowy Man]

Having a high cash flow in a high cost of living area doesn’t mean one is rich. That’s the point. The incomes, which are being taxed, are high but the expenses are also very high.

Yes, they are still rich. They do not enjoy any sort of life while they work, but later in life their savings are still real assets that can be spent elsewhere.

It sounds like you are speaking specifically of the kind of person who works a high paying job with no family and no life outside of work earning lots of money that they can then just live in later in life. That does not describe everyone living in the Bay Area. Just because one has a high income doesn’t mean they have large savings, because expenses can be proportionally high.

Whether one is middle class or upper class doesn’t depend on the pure income number is my point. But the tax rate does. And deductions are limited on pure numbers.

I should just move to Japan and take a job making one million Yen a year. Instant millionaire!!

 

[Loren Pechtel]

For the same reason the house prices are high, those salaries aren’t as sunny as they look just by the number.

I know mostly middle class families of four with decent size (1200-1600 sq ft) homes above the $1M mark. And it’s not like these are even in the best school districts in the area.

Yes, these aren’t poor people but having your taxes go up by thousands of dollars after the tax changes can be stressing on a family, especially those with children who need daycare (another very expensive service in the Bay Area).

Nah. If a few thousand dollars tax increase would be "stressful" then you really are doing something wrong when your household income is something like 400k. Sell some of your stock and you're good. Or spend slightly less eating out. And these people almost certainly have a ton of money in securities. My friend made over 100k just from the stock bonus when she switched jobs, this is on top of her ~190k salary.

You don't understand how high the cost of living is in SF.

 

[Loren Pechtel]

In case the numbers I’m throwing around were too disjointed, here’s the calculation:

Low end of the high counties was $22K in SALT
That was a deduction that we sued to be able to take, reducing our INCOME and thereby reducing our taxes.
So we’d reduce our tax burden by about $7K (30% on the $22K)
Now we can only deduct $10K. So the impact on tax burden is 30% of that, or $3K. Meaning we have to pay about $4K more in taxes than we used to.

BEAR IN MIND that the 30% I quote as a tax rate is NEVER what we pay. For those who itemize, it’s more like 15%, really. So these numbers are double, just to be extremely generously conservative.


And my point is, if losing that tax break of $4K (or up to 8K for the highest county) on an overall state tax burden of $22K is going to “hurt you,” then you are not living within your means, and the problem is not the SALT cap.

There are a lot of inequalities to fight over. This is not one of them, in my humble opinion.

You're assuming the averages describe everyone in the county.

 

[Loren Pechtel]

Is “middle class” earning $400K/year? I tend to not include them in “middle class”
I would put middle class in the median, not the average. And those in the top 5% of income I do not consider “middle class.” Do you?

“Those salaries don’t buy as much as they might look like in those areas,” but it should still be possble for those people to live within their means and not need to be subsidized, nor should it “hurt” them if their tax burden goes up by 1-2%.

$400k/yr is middle class in the most expensive areas.

 

[Loren Pechtel]

The problem I have with the SALT cap is that it is a targeted punishment to blue states. That isn't equal protection. We know stuff is cheaper in the South than the NE and West Coast. People of equivalent wealth in the South benefit fully, people in the NE and West Coast are being punished. Are they well off, most of them probably, but there are likely a number that aren't as much. Granted, yes, they get the first large chunk cut off and they are only not deducting a fraction of the cost, but that isn't equal protection of the law and it was very much intentional.

Exactly. In red areas the SALT cap makes a lot of sense. It doesn't make much sense in some very blue areas. Blue economies work better than red economies!

But isn't that exactly why the government taxes the middle class in the first place? The government always goes where it can tap the most money for the least amount of effort. Why would the government want to squeeze turn ups out of the red states when there is all manner of fruit hanging from the blue states? So that is why the upper middle class will always pay the most. There are a lot of them out there and they have the means.

And for those in the blue economies that think this kind of taxation is so unfair, all you need to do is follow the footsteps of Elon Musk. It is perfectly legal to move and no passport required going from California to Texas.

Simple fix: Adjust the lower tax brackets by the cost of living where you earn your money.

The SALT cap was explicitly about hurting the blue areas. As such, it should be abolished quite apart from how much burden it puts on the people.

 

[RVonse]

But isn't that exactly why the government taxes the middle class in the first place? The government always goes where it can tap the most money for the least amount of effort. Why would the government want to squeeze turn ups out of the red states when there is all manner of fruit hanging from the blue states? So that is why the upper middle class will always pay the most. There are a lot of them out there and they have the means.

And for those in the blue economies that think this kind of taxation is so unfair, all you need to do is follow the footsteps of Elon Musk. It is perfectly legal to move and no passport required going from California to Texas.

Simple fix: Adjust the lower tax brackets by the cost of living where you earn your money.

That helps the little people but does nothing to bring more revenue into the treasury.

The SALT cap was explicitly about hurting the blue areas. As such, it should be abolished quite apart from how much burden it puts on the people.

I can see how you might feel that way but if anything it had more to do with federal revenue generation at the expense of local democratic governments. It was simply low hanging fruit that was begging to be picked by the federal government.

 

[Shadowy Man]

Is “middle class” earning $400K/year? I tend to not include them in “middle class”
I would put middle class in the median, not the average. And those in the top 5% of income I do not consider “middle class.” Do you?

“Those salaries don’t buy as much as they might look like in those areas,” but it should still be possble for those people to live within their means and not need to be subsidized, nor should it “hurt” them if their tax burden goes up by 1-2%.

$400k/yr is middle class in the most expensive areas.

Even households making half that were impacted by the change in the tax code.

This started when it was implied that someone owning a $1M house was so rich that paying an extra $5k in taxes was in the noise. And I said that there are areas where owning a $1M house was plainly middle class. Not poor, sure, but not super rich either.

I guess we need to define the financial characteristics of a middle class family. But it will clearly differ geographically and the tax code doesn’t take that into account.

 

[Rhea]

Nah. If a few thousand dollars tax increase would be "stressful" then you really are doing something wrong when your household income is something like 400k. Sell some of your stock and you're good. Or spend slightly less eating out. And these people almost certainly have a ton of money in securities. My friend made over 100k just from the stock bonus when she switched jobs, this is on top of her ~190k salary.

You don't understand how high the cost of living is in SF.

Loren - you just totally won the Most Obliviously Ignorant Response of the Day award.
The evidence? This post earlier in this very thread:

Dude, I'm a software engineer and I live in San Francisco. I know exactly what these salaries buy at that cost of living. And I'm telling you, if you can afford a home in the Bay Area you can definitely afford to pay 5k more in taxes. People like this easily spend 1000 dollars a month just on eating out.

Loren, please say you’ll read this and confess that you just Loren-Splained about SF costs to a guy that already told you he lives in SF.

 

[Rhea]

In case the numbers I’m throwing around were too disjointed, here’s the calculation:

Low end of the high counties was $22K in SALT
That was a deduction that we sued to be able to take, reducing our INCOME and thereby reducing our taxes.
So we’d reduce our tax burden by about $7K (30% on the $22K)
Now we can only deduct $10K. So the impact on tax burden is 30% of that, or $3K. Meaning we have to pay about $4K more in taxes than we used to.

BEAR IN MIND that the 30% I quote as a tax rate is NEVER what we pay. For those who itemize, it’s more like 15%, really. So these numbers are double, just to be extremely generously conservative.


And my point is, if losing that tax break of $4K (or up to 8K for the highest county) on an overall state tax burden of $22K is going to “hurt you,” then you are not living within your means, and the problem is not the SALT cap.

There are a lot of inequalities to fight over. This is not one of them, in my humble opinion.

You're assuming the averages describe everyone in the county.

Loren. The article picked the two counties with the highest impct. Do you hear yourself?

People making this much money, no matter where the live and what choices they’ve made to live above their means, need a financial advisor, pronto, if they are “hurt” by an increased tax burden of $4-$8K

You keep pontificating on this while people who ARE affected by the SALT cap and people who ARE residents of SF are telling you, “yeah, no, this is not a big deal financially for responsible adults in this tax bracket.” Loren YOU appear to be the one who doesn’t understand.

While I agree that the original cap was wrong because it was intended to punish Blue State people, I do NOT agree that we were “hurt” by it in any meaningful way. I didn’t even have to sell one of my cars, which, if I were “hurt” by a tax hike would be the first thing to go.

 

[Rhea]

Is “middle class” earning $400K/year? I tend to not include them in “middle class”
I would put middle class in the median, not the average. And those in the top 5% of income I do not consider “middle class.” Do you?

“Those salaries don’t buy as much as they might look like in those areas,” but it should still be possble for those people to live within their means and not need to be subsidized, nor should it “hurt” them if their tax burden goes up by 1-2%.

$400k/yr is middle class in the most expensive areas.

Citation needed.
Only if you expect to live a NOT middle class lifestyle. I look at places that budget and it includes costs for “private kindergarten” and $6K in entertainment and an auto loan and 3 weeks of vacations.

That’s not middle class, that is definitely upper middle class.
The middle class takes one vacation, they pay off their car and keep it, the use public schools.

So I say again, choices. You can’t make choices like that and claim you are a put-upon middle class.
That is not how the middle lives.

 

[Rhea]

That helps the little people but does nothing to bring more revenue into the treasury.

The SALT cap was explicitly about hurting the blue areas. As such, it should be abolished quite apart from how much burden it puts on the people.

I can see how you might feel that way but if anything it had more to do with federal revenue generation at the expense of local democratic governments. It was simply low hanging fruit that was begging to be picked by the federal government.

No, Rvonse, it was explicitly about hurting the Blue areas. Luckily we can afford it and it didn’t hurt.

 

[ZiprHead]

I say get rid of it just to fuck with Trump.

 

[Rhea]

I say get rid of it just to fuck with Trump.

There is merit in that, but it blows a hole in Biden’s infrastructure effort.


Honestly, though, from what I’m reading, Biden is a savvy individual, and he knows how to negotiate, and he knows how to plan for negotiation. I expect he has built in some buffer that will allow him to give away the needed capitulations to get exactly all the votes he needs. SALT cap? Okay, we’ll take that out, how about we compromise with... Yeah, this aint his first rodeo.

 

[funinspace]

In case the numbers I’m throwing around were too disjointed, here’s the calculation:

Low end of the high counties was $22K in SALT
That was a deduction that we sued to be able to take, reducing our INCOME and thereby reducing our taxes.
So we’d reduce our tax burden by about $7K (30% on the $22K)
Now we can only deduct $10K. So the impact on tax burden is 30% of that, or $3K. Meaning we have to pay about $4K more in taxes than we used to.

BEAR IN MIND that the 30% I quote as a tax rate is NEVER what we pay. For those who itemize, it’s more like 15%, really. So these numbers are double, just to be extremely generously conservative.


And my point is, if losing that tax break of $4K (or up to 8K for the highest county) on an overall state tax burden of $22K is going to “hurt you,” then you are not living within your means, and the problem is not the SALT cap.

There are a lot of inequalities to fight over. This is not one of them, in my humble opinion.

You're assuming the averages describe everyone in the county.

Loren. The article picked the two counties with the highest impct. Do you hear yourself?

People making this much money, no matter where the live and what choices they’ve made to live above their means, need a financial advisor, pronto, if they are “hurt” by an increased tax burden of $4-$8K

You keep pontificating on this while people who ARE affected by the SALT cap and people who ARE residents of SF are telling you, “yeah, no, this is not a big deal financially for responsible adults in this tax bracket.” Loren YOU appear to be the one who doesn’t understand.

While I agree that the original cap was wrong because it was intended to punish Blue State people, I do NOT agree that we were “hurt” by it in any meaningful way. I didn’t even have to sell one of my cars, which, if I were “hurt” by a tax hike would be the first thing to go.

Even in the lower ranges of less high cost of the greater Portland suburbs, we managed fine with the tax changes (of course we always lived within our means), and we were well above the new cap on SALT deductions at the time. Property taxes alone were $5k. On another bit of trivia: we just sold our house to move to another part of the area, and it just sold in 3 days in a cash sale about 15% above what our neighbor's house sold for last November. Our house is a little nicer, but smaller. The neighbors house took about 6 weeks to sell. Evidently the new buyers are fine as well...

 

[J842P]

For the same reason the house prices are high, those salaries aren’t as sunny as they look just by the number.

I know mostly middle class families of four with decent size (1200-1600 sq ft) homes above the $1M mark. And it’s not like these are even in the best school districts in the area.

Yes, these aren’t poor people but having your taxes go up by thousands of dollars after the tax changes can be stressing on a family, especially those with children who need daycare (another very expensive service in the Bay Area).

Nah. If a few thousand dollars tax increase would be "stressful" then you really are doing something wrong when your household income is something like 400k. Sell some of your stock and you're good. Or spend slightly less eating out. And these people almost certainly have a ton of money in securities. My friend made over 100k just from the stock bonus when she switched jobs, this is on top of her ~190k salary.

You don't understand how high the cost of living is in SF.

Loren, I live in San Francisco. I understand it perfectly.

 

[Politesse]

Only a thousand bucks a months on eating, in San Francisco? Ha!

Waste of a good food mecca, that.

 

[J842P]

Only a thousand bucks a months on eating, in San Francisco? Ha!

Waste of a good food mecca, that.

Heh. In all seriousness, I am no longer shocked at how expensive the city is. I think I'm getting Stockholm syndrome... "only 11 dollars for a burger! What a steal!".

Anyway, I live in the Tenderloin, and there's a lot of really good Thai, Vietnamese, Indian, and Pakistani food at very reasonable prices.

Yesterday I found a gem in North Beach, an Italian chargrilled chicken joint. I got beer and chicken for under 20 bucks. The chicken was excellent.

I will defend Philz coffee here. It can be very expensive if you go for one of their fancy concoctions, but just a plain, small pour-over is under 4 bucks.