House representative Jerold Nadler (D-NY) wants to tax the guy behind the tree as long as the tree isn’t in his district.
Wall Street Journal editorial, The Blue State Blues: Taxing the Rich, Except in My District:
One irony of the tax increase that arrives on January 1 is that the it will hit residents of high-income, Democratic-leaning states like California, Connecticut, New Jersey and New York the hardest. This is a problem for pro-tax Democrats.
Enter New York Representative Jerrold Nadler, who wants to exempt his own six-figure constituents from the tax hike he supports. Mr. Nadler’s bill would “require the IRS to adjust tax brackets proportionally in regions where the average cost of living is higher than the national average.”
In other words, the various tax brackets would apply to residents in certain regions at higher income levels versus other parts of the country. A family with an income of $50,000 or even $1 million in Manhattan would pay less federal income tax than a family with the same earnings in Omaha. The bill is called the Tax Equity Act, but a more accurate title would be the Blue State Tax Preference Act. …
Why should someone in Spokane or Knoxville or Topeka be penalized because New York and California impose destructive policies? Mr. Nadler also conveniently forgets that the federal tax code already subsidizes high-cost states through the deductibility of state and local income and property taxes. …
So welcome to the brave new world of “tax equity.” If you live in a state that voted for Barack Obama, you get a tax cut.
Is it wrong for me to love stuff like this?
(Hat Tip: Paul Caron via Joe Kristan)
8 responses so far ↓
1 LawStudent // Aug 5, 2010 at 11:05 am
Absolutely not; Watching these sanctimonious moralizing busy-body control freaks contort themselves while trying to avoid the destruction their ideas have wrought is a beautiful thing.
2 Knox Marlow // Aug 5, 2010 at 3:06 pm
I actually believe this is perfectly logical. I’ll have to write my local representative and urge her to support the bill.
I’m an advocate of broadening the base and lowering tax rates. However, since we’re not heading in that direction, something like this could help the economy by reducing the taxes of income earners in high-cost-of-living regions.
3 Robert A Green // Aug 5, 2010 at 9:40 pm
250k is middle-class in NYC Manhattan. The housing allowance for US residents abroad is indexed by cost-of-city so why not general tax rates too. With AMT, there are few benefits from state tax deductions. Nadler is right.
4 Nadler...Don't Tax My Rich - US Message Board - Political Discussion Forum // Aug 5, 2010 at 9:43 pm
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5 Peter // Aug 6, 2010 at 9:19 am
Robert,
The reason there is a higher cost of living in Manhattan is because of….. TAXES!
Why should someone in another state who votes for low tax legislators subsidize those in New York who vote for high tax legislators.
Also, presumably, the Manhattaners are getting more benefits for that higher cost of living.
This one will go nowhere because it’s preposterous.
6 Peter // Aug 6, 2010 at 9:22 am
Knox,
I’ll go along with Nadler’s proposal if I get some of those state government benefits that cause his constitutents to have such a high cost of living.
7 Knox Marlow // Aug 6, 2010 at 6:14 pm
Peter, I disagree that the primary factor driving cost-of-living differentials is the burden of state and local taxes. I’ll concede that it could be a relatively minor factor.
Supply and demand are the forces ultimately driving cost-of-living differentials. People are attracted to (high cost) metropolitan areas because of the career opportunities in (high cost) metropolitan areas. Real estate is limited, which pushes up real estate prices (commercial real estate and residential real estate). Businesses pass those costs on through to consumers, individuals demand higher wages to be able to cover rent or mortgage payments, etc. etc. Big city government adds to the problem through development restrictions, generous compensation packages for city employees, political cronyism and so forth, but ultimately the cost of living differential between Manhattan NY and Manhattan KS is a function of supply and demand.
In my view, any law that reduces the tax burden on productive households and keeps spending and savings decisions in the hands of private individuals is an improvement on the status quo. So I would support a cost-of-living indexing proposal.
Have a good weekend!
8 Peter // Aug 9, 2010 at 8:30 am
Knox,
You might be right, but still it feels weird when a pro taxer wants to lessen the burden of taxation on his own constituents.
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