Archive: Opinions

Thinking about it, I'm for a much simplified tax system.  While it would probably devastate the accountant industry, I just think it would be nice to be able to understand how much of my hard earned money is going to the federal and state governments, and why.  The current reduction of the State And Local Tax (SALT) deduction proposed by the IRS is something that I didn't understand or even think about.  Until I noticed Governor Andrew Cuomo going on and on about it.

Cuomo said something I certainly understand: "For the first time ever since the tax code went into effect under President Abraham Lincoln, the federal government says, we will also tax the tax you paid to the state government and the local government," Cuomo said. "So they now tax the tax that you paid. First ever tax on tax. So what does it mean? It means if you pay taxes of $100,000, you are taxed on that. If you pay property taxes of $20,000 you're now taxed on that. We have worked for seven years to reduce the tax burden on people. We have a two percent property tax cap every year, which means property taxes can't go up more than two percent. If you now tax people's property taxes, that's like a 30 percent increase."

Taxing taxes?  Whoah!

We already knew we are being multiple taxed -- for instance you already paid income tax on the money you spent on that new high res TV, and now you are also paying a sales tax.  Or if you went to the stationary store located on a boat turning into the wind to buy a box of push pins, you ended up paying tacking tacks tax tax (sorry, couldn't resist, even though I know it is tacky...)

Sales tax is easy.  You pay for something and a percentage of the value is the tax.  I can do that math in my head.  But paying taxes on paying taxes... that is something that is very hard to fathom.  Paying taxes on something I didn't want in the first place, and am forced to pay anyway... the unfairness of it boggles the mind.  Now I do think we need to pay some taxes because we need protections and services that governments offer.  But I also think we pay too much in taxes.  Just too much.

I also think it is ironic that Cuomo is leading the charge against the SALT reductions, in light of the fact that he is the leader of New York, the Emperor of the Empire State.  According to several reports, including an MSNBC report last April that drew on a Wallethub analysis of the highest and lowest taxed states, New York is the highest taxed state in the nation, despite the Governor's constant touting of the so-called 2% tax cap.  New York is followed by Hawaii, Maine, Vermont, Minnesota, Connecticut, Rhode Island, Illinois, New Jersey, California, Ohio, Maryland, West Virginia, Iowa, and Mississippi.

So Cuomo is right when he says that New Yorkers will be most negatively impacted by the SALT reductions.  Is he leading this charge to justify high state taxes, making the federal government appear to be the villain?  That's politics, so you will have to decide.  But the core of his argument that taxing tax payments is wrong -- is right on point (another tack pun, sorry).

I am a native of Massachusetts, which we used to call Taxachusettes many years ago when I lived there.  It was 18 out of 50 on the Wallethub list.  In 2012 USA Today reported Massachusetts was number 8 in the 2010 tax season.

Maybe New York could do whatever Massachusetts has been doing?  Because, evidently, the less state tax we pay, the less federal tax on state tax we will pay.

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