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Hey. Those credits you are complaining about help the generation that will pay your social security benefits and wipe your rear end when you are no longer able. Children are the future for all of us. Get over it.
Finally a good reason to have kids - future butt wipers of America! And let's face it if you need it done, who is quibbling over cost?
The federal deduction of state taxes has been in place since the inception of federal income tax in 1913. It has always been there. As others have said, it's there to prevent double-taxation.
Now, rather than whining that residents in some states get a deduction on their federal taxes that you don't get, you can always lobby your local government and ask them to implement a state income tax in your home state. Then you can deduct those taxes from your federal income too.
I'm voting this best answer.
In all seriousness, it is an excellent case for living in a state that acquires revenue through taxes that can be deducted vs. other forms of taxation that are non-deductible. Never thought about it that way until now.
If you had ever owned property in any of those places, you would understand. The cost of living is significantly higher in every way. Hawaii, too.
I think people are allowed to deduct some of the costs of a mortgage because it's in our nation's interest that people be homeowners. That why I believe the government's lack of action in averting the mortgage crisis was so egregious. A nation of renters is not a sound idea.
I am a homeowner in Texas and pay lots of property tax. Why does the federal government need to consider the cost of living of where people live. If they really care about this - then they should have a tax code code that considers the city or county where people live.
That idea that the federal government should be creating incentive to be a homeowner is just the kind of behavior modification we should all be appalled by. I believe people should buy a home because they want one and can afford it. There are no other reasons. The federal government should have no role in this.
In all seriousness, it is an excellent case for living in a state that acquires revenue through taxes that can be deducted vs. other forms of taxation that are non-deductible. Never thought about it that way until now.
Why should the federal government alter the economics of where you choose to live?
Why should the federal government alter the economics of where you choose to live?
You live in Texas. You can deduct your property taxes from your federal tax return. It also happens that your property taxes are about double what I pay in property taxes in California for a house of the same value. Using your logic, I could snivel that it's not fair you get to deduct twice as much property tax as me when the value of our homes is equal. I could say they should cap the property tax credit so everyone pays the same.
I won't, because unless you're arguing in favor of a flat tax with no deductions for anyone, then something is going to be perceived as unfair to someone (that "every kid should get a trophy mentality"). The smarter option is to figure out how to make the tax code work for you, instead of obsessing over what the other guy is getting.
Can anyone explain why a deduction for state taxes exists for federal income taxes?
Why should those that pay state and local taxes be able to deduct them? Why should someone pay less federal tax because they pay income tax in California? Or property tax in New Jersey (or Texas like me)?
We know that for some reason the feds think people with children should pay less tax. And those that have mortgage interest should pay less tax. Buy why state taxes?
It makes sense to me. If I pay state income tax of 10%, then I actually ever possessed only $90 out of every $100 I earned. And by the time other taxes, e.g. property, excise, sales, are deducted, let's say another 20%, then I am required to pay federal income tax only on the $70 (in my fictitious scenario) that I actually possessed to spend in some way of my choosing.
The federal deduction of state taxes has been in place since the inception of federal income tax in 1913. It has always been there. As others have said, it's there to prevent double-taxation.
Now, rather than whining that residents in some states get a deduction on their federal taxes that you don't get, you can always lobby your local government and ask them to implement a state income tax in your home state. Then you can deduct those taxes from your federal income too.
It can be quite challenging for some to understand why they can't take a deduction on taxes they don't have to pay.
The most amusing part is that they usually come from tax-benefit, "red" states whose lack of state income tax is directly subsidized by those in states which shoulder the bulk of the tax burden.
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