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josie's avatar

How do I answer my friends in Florida about the tax reform being debated in Congress?

Asked by josie (27536points) 2 weeks ago

One of the tax reform provisions being debated in Congress is eliminating the tax deduction for State and Local taxes.

I live in a pretty high tax state. For me personally, losing the deduction would hurt a little (to be totally fair, in my personal case it would be offset by the increased personal deduction, also being debated).

Anyway, since I would lose the deduction, I gripe about it.

But I have a couple of buds in Florida (a low tax state) who ask why they should they subsidize states that punish their citizens with high taxes? Why don’t you folks (meaning me) pressure your legislature to lower your taxes, rather than make me (meaning them) pay more to offset your deduction. Washington is going to get their money one way or the other. They will not spend less.
If one state’s people get a big deduction, another state’s people have to make up for it.

I get it.

If I were them, that would sort of piss me off, and I would ask the same question.

So, when I gripe about it, and they ask me the question, how do I answer it without sounding too selfish and whiny?

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6 Answers

zenvelo's avatar

Ask them if their state is a net giver or taker.

Florida ranks #3 on states that get more from the Federal Government than it pays in taxes. Tell them on that basis they should have their federal taxes raised so that they aren’t living off the hard work and taxes paid by more responsible states.

rojo's avatar

Not sure if this counts in Florida but here in Texas the fact that we do not have a state income tax is offset by having much higher property taxes to cover the same. I guess they get their money one way or the other. The difference with this latest boondoggle is that I still get to deduct my property taxes while you do not get to take off your state income tax.
As for the sales tax, ours is 8.25% I figure that if at the end end of the year I have nothing left in the bank then somewhere close to that is what I have paid out and certainly in the thousands but I don’t keep every frikkin’ receipt to prove it and the legal amount they allow is a mere pittance, in the hundreds, so I already get fucked over there.
Also, as an aside, you do realize that although they are increasing the standard deduction you are losing the personal deduction and while it works for singles and couples, a family with children is probably going to lose out.
Just using round number lets say that the standard deduction at this point is 6k, and the personal is 4k for a total of 10k. With the proposed system a single is better off by 2k and a couple by 4k but a couple with one child breaks even (10k +10k +4k for the child vs 12k + 12k) and a couple with two children ends up 4k in the hole. The more kids you have the worse off it gets.
I realize this is a real simplified example and does not include child care credits and all the rest but just throwing it out there..

seawulf575's avatar

I guess the best answer would be to ask your friends how to best hold state legislature (and local or federal for that matter) accountable for being fiscally responsible. Maybe if we all started demanding more out of those we elect to support us, we could find taxes going down at all levels.

zenvelo's avatar

@seawulf575 You just made a very cogent argument for not passing the current GOP tax “reform” measure, since it does nothing to reduce spending (it will increase the deficit by $1.5 Trillion) and raises taxes on most middle and lower class taxpayers.

JLeslie's avatar

I live in Florida, and have lived in several other states. My first inclination was to look up to see if Florida is a net giver, but I guess I don’t have to bother, because @zenvelo did that for us, and I’ll take his word for it that Florida is a little bit on “the take.”

One thing to consider is people can take sales tax as a deduction off of their federal taxes if the sales taxes spent in a year are very high. I assume that deduction still exists. That’s another factor in the tax game, especially for the wealthy.

The republicans seem to want to do away with income tax and increase sales tax, so maybe this change in tax law for deductions is on the road to that goal?

I don’t really see how Floridians can bitch. We don’t pay state income tax! That’s a really nice bonus. Our property taxes do tend to be high to make up for it, but honestly who we tax the most is the tourists. That’s the way I’ve always looked at.

seawulf575's avatar

@zenvelo Actually, the argument was for all legislators to spend money more wisely. There is so much waste in our government and either the legislators don’t know about it (which speaks to incompetence) or they don’t care about it (which speaks to apathy) or they support it (which speaks to corruption). If we could do away with waste and duplication at all levels, then we might find that the taxes we are currently paying might be enough to support the government and have some left over. Unfortunately, politicians on both sides of the aisle hate to cut spending. They love to increase spending.

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