taking tax breaks with a grain of SALT
among states that is presently cheered is being subsidized by – you guessed it – the federal tax code.
AMERICA’S TAXES: IN A BROKEN STATE
The simple truth is that a revival of the SALT deduction would, far from subsidizing blue states, actually make it more difficult for taxpayers to live off of one another. That’s unfortunate when it’s remembered that the American ideal was always for taxation to be higher the closer the government is to us. If realistic, and with the latter in mind, the true call should be for a state and local tax credit to push government and its funding even more local than any deduction would. Sadly, however, what’s proposed doesn’t seem to be in the cards. In modern times we’ve turned this laudable model of local government on its head. No doubt the arguments in favor of state competition have merit, but that’s not what we’re seeing now. State competition on taxes is perilously pushing more tax and spending power to the federal government, all at the expense of cities’ and states’ rights, along with the rich. This is once again backwards. It suffocates local government, plus never forget the Rockefellers, Vanderbilts, and Phipps. John Tamny is editor of RealClearMarkets, and author of many books on economics including Popular Economics, Who Needs the Fed , and They’re BothWrong .
The arguments on the matter of SALT are backwards and upside down. This will only get worse. If the cap on SALT deductions is maintained, incentives will grow for cities and states to shrink taxes as much as possible with an eye on pushing as much government activity and spending as possible to the federal government. Why not? If local spending is going to be discouraged by the tax code, why not move it to the federal government? Such a scenario is one Democrats would love, but Republicans would logically despise. Again, Republicans want local government, yet they’re paradoxically encouraging the opposite with a form of taxation that once again subsidizes the flow of dollars away from state and local governments and into the hands of Washington. What’s proposed doesn’t seem to be in the cards. In modern times we’ve turned this laudable model of local government on its head. No doubt the arguments in favor of state competition have merit, but that’s not what we’re seeing now.
56
August 2021
Made with FlippingBook - professional solution for displaying marketing and sales documents online