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The Pros And Cons Of Federal Tax Cuts

419 Words2 Pages

There have been many federal tax cuts; however, they will not be enough to offset the high state taxes or even to lead to long term growth. As many cuts have been made at the federal level, the government decided to cap the state and local tax deduction at $10,000, allowing them to bring in more revenue. However, this did not take into account that many states have very high taxes so, by capping the deduction, many people are actually paying more (Vasel). Those who live in high tax states could pay more than before as their tax deduction now has a limit. While this only occurs in some states, it shows the growing issue of state tax policies. Many states have completely different ideologies on tax than the federal government. Contrary to the federal …show more content…

If federal taxable income declines, so will state taxable income in many states, unless states make adjustments”(Campbell). When the federal tax levels are high, there will be less money available for states to tax causing the the state’s revenue to go down. But, if the federal tax rates are low and do not include many deductions, states have an opportunity to increase their revenue by including deductions. This would maximize growth through increasing people’s incomes. However, many states have yet to conform which could lead to negative effects on the people, “Despite being the richest state in the country, by per-capita income, Connecticut’s budget is a mess. Its pensions are woefully underfunded. Its deficit is projected to surpass $2 billion, or 12 percent of its total annual tax revenue. Hartford is approaching bankruptcy. Conservatives look at Connecticut and see a liberal dystopia, where high taxes have ruined the economy”(Thompson). The issues Connecticut face are why the government decided to lower tax rates and simplify the tax filing system believing that this would improve the

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Pros And Cons Of Proposition 13 In California

620 Words | 3 Pages

Local governments were hurt mightily, since property taxes went to local governments to fund education (Christensen 115). Special Districts proliferated within the state, which could tax or charge autonomously from the state. Because of the lucrative real estate, the state is forfeiting a major source of revenue, so to counteract that, we have the highest personal income tax and one of the highest sales tax within the nation. The state uses this capital to fund more services typically reserved for local governments Another flaw with Prop. 13 is best explained through the neighbor analogy. A couple has lived in a suburban home for several decades, and its assessed value is $100,000.

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Does Prop. 13 Affect California's Tax Base?

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5.5 billion dollars is lost every year in potential revenue for the state by not having sales tax on food. (Dovarganes, See California… article, 2015) The employer will have an income tax break if contributes to health plan, social security benefits, mortgage interest, and prescription medicines. (Dovarganes, See California… article, 2015)Since Proposition 13 passed, homeowners have the burden of property tax since commercial real estate changes less than residential. (Semuels, California's business… article, 2010)Unlike other states business have a higher tax rate but California assures business will have the same tax rate known as the business tax loophole.

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1137 Words | 5 Pages

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932 Words | 4 Pages

According to the National Center for Education Statistics, most the US education funds comes from state and local government, approximately 93% (PBS, 2008). The federal government only shares a little of responsibility on education funds. In most states, the taxes are collected in different forms, property tax, sales tax, corporation tax and personal tax. Because of this system, it leads some states to an inequitable allocation of tax to fund schools. Poor places like East St. Louis that Kozol described in his book, tax itself on a very high tax rate, the local government couldn’t provide adequate fund into their school system.

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1225 Words | 5 Pages

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