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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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