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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?
at one time they allowed everything to be deducted like credit card interest. the reality is as the standard deductions grew larger most folks can't itemize anyway so it is a moot point.
of course you can ask your question from the other side too.
if i have to pay such high taxes to new york and new york city why should my income be judged the same way someone living in a no tax state is.
at one time they allowed everything to be deducted like credit card interest. the reality is as the standard deductions grew larger most folks can't itemize anyway so it is a moot point.
of course you can ask your question from the other side too.
if i have to pay such high taxes to new york and new york city why should my income be judged the same way someone living in a no tax state is.
Why shouldn't your income be judged without regard to the state you live in? You chose to live there. You chose to buy a house. Etc.
Why should you get a break for paying mortgage interest?
I think feds are distorting the cost of living in NY, NJ, IL, CT, CA, etc.
Those studies are always too simplistic. A state with lots of military bases distorts the figures for federal spending in a state. Northern Virginia and Maryland benefit from massive numbers of federal employees in the area. States with high per capita income will pay more income taxes. So what? A progressive tax system discriminates against high income people.
Each of these states could take steps to reduce its own tax burden on its citizens.
Are you expecting taxes to make logical sense? If so, you're going to spend a good deal of time banging your head against a wall.
Tax laws are what they are, until they change yet again.
I want them to make sense. I don't expect them to.
I had hoped someone here could explain the origin of this deduction - I have been paying federal taxes a long time and do not know when these deductions first appeared in the tax code - and why Congress put them there.
Most taxes today are more about behavior modification and government attempts to influence what we do do. Government picking winners and losers.
I want them to make sense. I don't expect them to.
I had hoped someone here could explain the origin of this deduction - I have been paying federal taxes a long time and do not know when these deductions first appeared in the tax code - and why Congress put them there.
Most taxes today are more about behavior modification and government attempts to influence what we do do. Government picking winners and losers.
In my office, we have a framed copy of the first Form 1040 and the entire federal income tax code. All together, four pages.
Can anyone explain why a deduction for state taxes exists for federal income taxes?
Because you don't have that money, you were required to give it to another taxing authority?
In general, it's like business expenses. Businesses are only taxed on their profits, the money they keep after all their operating expenses, labor and material costs. So all expenses get subtracted out (like those taxes), and then businesses are taxed on the what they didn't spend.
Its not too simplistic.... You just don't like the numbers because they don't back your implied statements.
Taxation in part is to influence behavior. It doesn't have to make sense. ie. They give tax breaks to home owners because they want more home owners.
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