The only difference between death and taxes is that death doesn’t get worse every time Congress meets.
-Will Rogers
Ready to hear the title soon from our President? It seems likely to be the case. The news I read/hear includes Steve Mnuchin complaining that think tanks are making up numbers about the effects of tax changes. How can they know when the full plan is not written yet? And curse them for explaining how they come up with it. It completely erases Mnuchin’s faux credibility when he makes up numbers by pulling them out of hat. It also includes the likely walk back of the repeal of the state and local tax deduction (see aBloomberg article on this here).
I read a few critiques from Senators in states like Louisiana suggesting that the repeal should occur. Why should people in my state pay for a tax cut for the people in your state, is the argument I hear. Okay. However, here is where it gets tricky. Look at this post from the Tax Foundation. There you see that Louisiana is one of the top states for federal aid as a share of state general revenue. That’s the instant and immediate response and why the tax cut plan is going to be a difficult political fight and a potentially intractable math problem.
Here is another article from the Atlantic (dated because it is from 2014) which has multiple metrics but shows how the argument will potentially degrade. There are some states getting less than a dollar in federal spending in the state per dollar of federal taxes paid. Yes, as the article mentions, the states with highest return have military or poverty reasons for these outcomes in many cases. It does not prevent a response of why should I pay for poverty in your state as a response from higher tax states.
I am not attempting to even begin to assess validity of these claims, and at some level they all miss the point. The state-local-federal tax balancing acts seem to largely be out of balance in most states, at least on the basis of perception. I seriously doubt real efforts at working out the math in a meaningful way will be forthcoming from the political debate.
Taxes are a necessity, yet nobody wants to put in place process to allow for the discussion of reasonable approaches and methods to determine what we really want from government, and how w can finance it in the least disruptive way possible. Instead we get tax cuts sold as tax reform (they are not the same) and political parties fighting and infighting that threatens to decouple the debate over taxes from the deficit and debt discussion.
