The Blue-State Suicide Pact - an interesting take on taxes

The following was found on NewGeorgraphy.Com and has, appeared in Forbes Magazine:


http://www.newgeography.com/content/...e-suicide-pact


excerpt

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With their enthusiastic backing of President Obama and the Democratic Party on Election Day, the bluest parts of America may have embraced a program utterly at odds with their economic self-interest. The almost uniform support of blue states’ congressional representatives for the administration’s campaign for tax “fairness” represents a kind of bizarre economic suicide pact.

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The author goes on to explain what he means, and cites the following example:

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Of course, one can argue that these changes follow the precepts of social justice: Rich people and rich regions should pay more. Yet being “rich” means different things in different places, due to vast differences in costs of living. The cost of living in New York and Los Angeles, for example, is so high that the adjusted value of salaries rank in the bottom fifth in the nation. In other words, a couple with two children with a $150,000 income in Austin or Raleigh may be, in terms of housing and personal consumption, far “richer” than one making twice that in New York or Los Angeles.

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That last sentence is telling: people in the south live far better on half as much as people in LA or NY.

It is high time for true tax reform. No, it is past time for that, but nobody in either party in congress has the political will to even attempt doing so.

It's time, past time, for a new party to emege. Maybe that will be the Tea Party, which I fully expect to emerge in full force next summer or the summer after. Now if only they can agree NOT to talk about those hot button social issues and focus on what is important and best for America. Now there's a thought.

good read henry

actually a bad read ;) as I'm a NY-er where cost of living is much higher - just returned from a biz trip to NC - Raleigh/Durham/Winston Salem/Charlotte - very affordable - make that cheap - met an agency person who made $40K and had a house - in NY that gets you 3 people in a converted 1BR to 2BR apt. with one on the LR couch

i've been talking this point all along with of course crickets from the obama lovers - DAMN THE RICH !!!

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Of course, one can argue that these changes follow the precepts of social justice: Rich people and rich regions should pay more. Yet being “rich” means different things in different places, due to vast differences in costs of living. The cost of living in New York and Los Angeles, for example, is so high that the adjusted value of salaries rank in the bottom fifth in the nation. In other words, a couple with two children with a $150,000 income in Austin or Raleigh may be, in terms of housing and personal consumption, far “richer” than one making twice that in New York or Los Angeles.

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fairness ?

actually the opposite

This is why places like California have to move ahead of the rest of the country on things like our minimum wage, it's simply not realistic to live in California unless you are housing with extended family on $5.75 an hour. Or $6.25 or whatever the Federal min wage is right now.

I wouldn't be opposed per se to a tax scale that reflected some degree of regional cost of living in theory, because it is quite correct that it varies a lot from region to region. However I say that with the massive caveat that it should never be a system where people who have CHOSEN to live in places like Malibu or Beverly Hills or the upscale parts of Manhattan should have their income appear to be equivalent to a lower middle class person because of how much of their income they tie into a million+ dollar home and a high end lifestyle. It should be a tax basis established over a regional base as large as a county, at the minimum imo, based on average cost of living factors.

I do have to say though that I question the sincerity of people opposing the "unfair taxation" of rich people in high-cost-of-living-areas when that's for the most part going to encompass blue states over red ones.

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may have embraced a program utterly at odds with their economic self-interest

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Hmmmmm, now where have I encountered this before? It isn't quite coming to me, but I know I'll figure it out...

If it causes people to leave these states for another reason

Right now it's the cost of living inclusive of state and city taxes

How is that a good thing ?

Not recognizing that 250k in NYC is diff than Des Moines is not remotely "fair"

What's the problem here? The economic cost of living makes sense. Urban areas have a higher cost of living and are taxed more than rural areas. In turn, you have a greater investment of state and federal government infrastructure that allows you the city benefits of living that you enjoy. These states aforementioned are happily blue. They understand they pay more in taxes than other states. Most of them still won't be affected by the $250,000 tax rate because most Americans still don't make that kind of money.

Taxes aren't an evil thing. The tax rate that was before the Bush tax cuts was a normal tax rate. The 3% increase isn't going to mean the end of the world for the rich. The economy isn't going to tank because the top 2% are paying a normal rate of taxes.

If you want to have a real discussion about taxes, you should look at this comparison of how Red states take more federal money than blue states. Blue states feed the Red states in federal assistance to improve the lives of its citizens. I find it funny when you tout the Tea Party was a moral voice to this discussion, when their beliefs would cut this federal aid to the average citizens in these Red states that need it the most:



There's no suicide pact. The Blue states are fine and happy.

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Originally Posted by chance1

If it causes people to leave these states for another reason

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That's a half-truth. Sure, some people leave these high cost of living states to get away from the cost of living. But that is omitting to mention the enormous amount of people who move to these places, or choose to live there, because they're also the best places to get a large amount of high-income job options.

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Originally Posted by xbuzzerx

That's a half-truth. Sure, some people leave these high cost of living states to get away from the cost of living. But that is omitting to mention the enormous amount of people who move to these places, or choose to live there, because they're also the best places to get a large amount of high-income job options.

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You are correct, sir.

Chance1, take a look at this article. There's no shortage of people who want to live where you're at:
http://www.reuters.com/article/2012/...8EQ5AJ20120326

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More Americans move to cities in past decade-Census
In 2010, a total of 80.7 percent of Americans lived in urban areas, up from 79 percent in 2000.

Conversely, 19.3 percent of the U.S. population lived in rural areas in 2010, down from 21 percent in 2000.

At the same time, the population of urban areas grew by 12.1 percent, much faster than the country's growth rate of 9.7 percent from 2000 to 2010.

More people residing in urban areas could drive up demand for housing, public transportation, road repairs and social services such as schools and healthcare, at a time when city budgets are starving from cuts in state aid and lower property-tax revenues.

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thanks guys but you're IGNORING the facts

it's hard NOW

raising the federal inc. tax rate makes it harder
reducing/eliminating mortgage deduction makes it harder

and i have no doubt people want to come to nyc - it's awesome

but it's expensive - too expensive now

i will ask the question again

person A makes 250k in nyc
person B makes 250k in des moines

tell me that income should be taxed at the same rate understanding that all expenses in nyc > des moines
rent/home ownership
real estate taxes if home owner
sale taxes
city taxes
commuting costs
grocery prices

i was in Bonefish in Winston Salem for my birthday last week - me and a colleague had an amazing dinner
entrees, appetizer (shared), wine, desert
$120 for 2
same dinner in NYC would be at least double

as for jobs, i'm relatively certain that ny unemployment rate overindexes the nation

a friend has a house on LI - bought the house for 250K 10 years ago - taxes were < $4K - he invested another 200k in the house - vs. moving to a bigger house - his taxes are 14k per year - 14k !!!

not to mention what a mortgage deduction elimination would do to the housing market

not indexing federal taxes to reflect REAL LIFE REALITY is head in the sand

and JB, your article talks about total people - not increases - yeah houston and some other cities are popular

charlotte for example - charlotte is cheap !!! charlotte is not nyc or boston or sf or la

so i don't think your article is in any way a rebuttal to my point

What? The article is all about increases! What are you talking about? There is a systematic trend that more Americans are moving and living in urban areas and less are living in rural areas. Where is the disconnect here?

As for mortgage deductions, that has not been specified, and any reductions (no talk of eliminations) are only conjecture at this point.

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Originally Posted by Just_Believe18

What? The article is all about increases! What are you talking about? There is a systematic trend that more Americans are moving and living in urban areas and less are living in rural areas. Where is the disconnect here?

As for mortgage deductions, that has not been specified, and any reductions (no talk of eliminations) are only conjecture at this point.

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here's your article

http://www.reuters.com/article/2012/...8EQ5AJ20120326

it focuses on shift to urban - i get it

but the cities they ref as growing - houston, charlotte - these are not top 5 or even top 10
when talking about chicago, boston, ny - it's about the # of people who live there - NOT the trend

the article specifically points to NEW cities emerging - take a re look

No, no, here is what I mean. I'm not saying only those big cities are growing. Yes, places like Houston and Charlotte are growing the fastest. They are also urban cities that will increase in cost of living over time as they continue to grow. It is the natural order of any metropolitan city. They are also blue zones in what is an otherwise Red state.

The topic of this thread is claiming that Blue-states, or just blue areas in general are engaging in some kind of "suicide" pact with prospective tax increases hitting the top 2% of Americans based on a disproportionate cost of living between urban and rural areas. My points still stand that Americans are happily moving to urban areas and enjoy the local, state, and federal infrastructure that is built on higher taxes in those areas.

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Originally Posted by Just_Believe18

No, no, here is what I mean. I'm not saying only those big cities are growing. Yes, places like Houston and Charlotte are growing the fastest. They are also urban cities that will increase in cost of living over time as they continue to grow. It is the natural order of any metropolitan city. They are also blue zones in what is an otherwise Red state.

The topic of this thread is claiming that Blue-states, or just blue areas in general are engaging in some kind of "suicide" pact with prospective tax increases hitting the top 2% of Americans based on a disproportionate cost of living between urban and rural areas. My points still stand that Americans are happily moving to urban areas and enjoy the local, state, and federal infrastructure that is built on higher taxes in those areas.

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And they are compensated as the local situation dictates. A buddy who just moved into the civilian workforce could have moved to NYC or to South Carolina based on his job offers. The offer in NYC was essentially the same even those it was much more cash. Simply because the cost of living. Hell most companies have a COLA adjustment for folks based in areas with higher cost.

So what is the point of this article... blue states will fail and get angry because they pay more taxes?

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Originally Posted by Just_Believe18

No, no, here is what I mean. I'm not saying only those big cities are growing. Yes, places like Houston and Charlotte are growing the fastest. They are also urban cities that will increase in cost of living over time as they continue to grow. It is the natural order of any metropolitan city. They are also blue zones in what is an otherwise Red state.

The topic of this thread is claiming that Blue-states, or just blue areas in general are engaging in some kind of "suicide" pact with prospective tax increases hitting the top 2% of Americans based on a disproportionate cost of living between urban and rural areas. My points still stand that Americans are happily moving to urban areas and enjoy the local, state, and federal infrastructure that is built on higher taxes in those areas.

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i sorta took the article and ran with it

but i agree with the concept - that in MAJOR cities - this tax increase - will be devastating

i recently saw an article - NYT I think that talked about the impact of the proposed tax cuts expiring - and guess what NYC got hammered

and there's only so much u can take

i have to tell u being in Durham it did cross my mind - moving

but then I'd have to be close to the fucking Duke Blue Devils ;) no way

but seriously

not sure why an index system on federal taxes isn't a no brainer

with a vig for "you live in nyc" being fine - just not 1:1

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Originally Posted by Just_Believe18

What's the problem here? The economic cost of living makes sense. Urban areas have a higher cost of living and are taxed more than rural areas. In turn, you have a greater investment of state and federal government infrastructure that allows you the city benefits of living that you enjoy. These states aforementioned are happily blue. They understand they pay more in taxes than other states. Most of them still won't be affected by the $250,000 tax rate because most Americans still don't make that kind of

Taxes aren't an evil thing. The tax rate that was before the Bush tax cuts was a normal tax rate. The 3% increase isn't going to mean the end of the world for the rich. The economy isn't going to tank because the top 2% are paying a normal rate of taxes.


If you want to have a real discussion about taxes, you should look at this comparison of how Red states take more federal money than blue states. Blue states feed the Red states in federal assistance to improve the lives of its citizens. I find it funny when you tout the Tea Party was a moral voice to this discussion, when their beliefs would cut this federal aid to the average citizens in these Red states that need it the most:



There's no suicide pact. The Blue states are fine and happy.

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Notice that the states with highest non payers are also states with high minority populations who disproportionatly receive benefits.
While people move to urban areas, as fewer and fewer people pay income taxes there is a big motivation for high payers to move to less hostile states. California in particular is losing millionaires.

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Originally Posted by Just_Believe18

What's the problem here? The economic cost of living makes sense. Urban areas have a higher cost of living and are taxed more than rural areas. In turn, you have a greater investment of state and federal government infrastructure that allows you the city benefits of living that you enjoy. These states aforementioned are happily blue. They understand they pay more in taxes than other states. Most of them still won't be affected by the $250,000 tax rate because most Americans still don't make that kind of

Taxes aren't an evil thing. The tax rate that was before the Bush tax cuts was a normal tax rate. The 3% increase isn't going to mean the end of the world for the rich. The economy isn't going to tank because the top 2% are paying a normal rate of taxes.


If you want to have a real discussion about taxes, you should look at this comparison of how Red states take more federal money than blue states. Blue states feed the Red states in federal assistance to improve the lives of its citizens. I find it funny when you tout the Tea Party was a moral voice to this discussion, when their beliefs would cut this federal aid to the average citizens in these Red states that need it the most:



There's no suicide pact. The Blue states are fine and happy.

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Notice that the states with highest non payers are also states with high minority populations who disproportionatly receive benefits.
While people move to urban areas, as fewer and fewer people pay income taxes there is a big motivation for high payers to move to less hostile states. California in particular is losing millionaires.

Benvolio, stop interjecting your racist garbage into every thread you post here. That is not even a remotely accurate statement. Compare the white population percentages to the states that are white and blue to the reds and they don't match up.

http://www.statehealthfacts.org/comp...sp?ind=6&cat=1

only thing that fails worse than this thread is mitt romney, the gop, and mitch mcconnell.

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Originally Posted by evanrick

only thing that fails worse than this thread is mitt romney, the gop, and mitch mcconnell.

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Thanks for that ;).

Just read that Boehner offered up tax hikes for $1m and up

Vs 250k

Settle on 500k ?

Better than a kick in the head

Just FYI, everyone: the federal poverty level is adjusted by region.

As an individual with a career in urban planning and development, NYC is way beyond the reasonable cost-of-living index for its size. Chicago and Los Angeles are close runner ups but they are way more affordable than NYC. It's one of the reasons why I am apart of the "what the hype of New York" crowd although I do respect their urbanity and dense development patterns.

Ask the question: do you really think every city should be equally affordable?

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Originally Posted by bankside

Ask the question: do you really think every city should be equally affordable?

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It would certainly be an interesting experiment.

A lot of increased cost has to do with urban planning. As an example, almost the moment Oregon adopted "urban growth boundary" rules, the price of housing inside that boundary went up, and continues to rise. Why? Because there's only so much land, and only so many people are willing to live in vertical warehouses in little boxes all the same.

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Originally Posted by bankside

Ask the question: do you really think every city should be equally affordable?

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no

the point is not "EQUALLY AFFORDABLE"

the point is the absurdity of no index on federal income as it relates to effective tax rates

250k as a set # is DUMB and not FAIR

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Originally Posted by chance1

no

the point is not "EQUALLY AFFORDABLE"

the point is the absurdity of no index on federal income as it relates to effective tax rates

250k as a set # is DUMB and not FAIR

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Well, then no number at all is "FAIR".

$250k/yr is a lot of money no matter where you are -- and people making that did just fine before the Bush cuts.

$500k/yr is an absurd amount of money anywhere you live -- and that would be a good place to add another percent or two for the bracket.

$1mn/yr is ludicrous no matter where you are -- and that would be a good place for another bracket with another couple of percentage points.

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Originally Posted by bankside

Ask the question: do you really think every city should be equally affordable?

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Also, nobody is forcing you to live in a particular place. It's a straw man argument.

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Originally Posted by maxpowr9

Also, nobody is forcing you to live in a particular place. It's a straw man argument.

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Lol

What does force have to do with it ?

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Originally Posted by maxpowr9

Also, nobody is forcing you to live in a particular place. It's a straw man argument.

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Good point.

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Originally Posted by chance1

no

the point is not "EQUALLY AFFORDABLE"

the point is the absurdity of no index on federal income as it relates to effective tax rates

250k as a set # is DUMB and not FAIR

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If I'm smart enough to live in a place that gives me good value for money, why do you think I'd be dumb enough to vote for a tax system that subsidised somebody else's choice to live somewhere expensive with exemptions indexed to their lavish cost of living?

I'm beginning to suspect that Chance's taxes are about to go up.

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Originally Posted by TX-Beau

I'm beginning to suspect that Chance's taxes are about to go up.

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About time he paid his fair share.

Though I'm still hoping for that surtax on incomes above a million.

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Originally Posted by bankside

If I'm smart enough to live in a place that gives me good value for money, why do you think I'd be dumb enough to vote for a tax system that subsidised somebody else's choice to live somewhere expensive with exemptions indexed to their lavish cost of living?

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I reject your smart dumb context.

The issue as the president stated.

Is fairness

the definition of wealthy is not the same based on your state

The issue is certainly fairness. People who eat caviar and drive porsches and live in Manhattan cannot claim poverty because their cost of living is high.

Sure they can claim it, if the rest of us buy it that's our fault not theirs.

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Originally Posted by bankside

The issue is certainly fairness. People who eat caviar and drive porsches and live in Manhattan cannot claim poverty because their cost of living is high.

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Cliche much ? ;)

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Originally Posted by chance1

The issue as the president stated.

Is fairness

the definition of wealthy is not the same based on your state

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And it's all due to the 'free' market. Which means that if you're "suffering" by being paid enough to get kicked to a higher bracket, it's because of your choice.

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Originally Posted by chance1

Cliche much ? ;)

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Cliche? Is that your new fragrance from Chanel?

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Originally Posted by bankside

If I'm smart enough to live in a place that gives me good value for money, why do you think I'd be dumb enough to vote for a tax system that subsidised somebody else's choice to live somewhere expensive with exemptions indexed to their lavish cost of living?

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But we in NYC are subsidizing the red states, not the other way around.

One main problem with the tax code here is the alternate minimum tax ("AMT"). I am covered by the AMT, which means I pay a flat federal income tax and can not take most deductions, except charitable deductions and mortgage interest. I cannot even deduct New York State and New York City income tax or property tax. Ronald Reagan instituted the AMT (something all you anti-tax, tea partying Ronald Reagan lovers should think about).

Explain this mortgage interest deduc….wait; I've found it.

Okay seriously. You're allowed to write off the cost of the mortgage on your expensive house, or is there a cap or something?

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Originally Posted by bankside

Explain this mortgage interest deduc….wait; I've found it.

Okay seriously. You're allowed to write off the cost of the mortgage on your expensive house, or is there a cap or something?

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Not the principal, just the interest.

By the way, one bedroom apartments in my neighborhood can sell for over $1 million. An expensive home here doesn't mean it's a mansion.

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Originally Posted by chance1

Cliche much ? ;)

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My point is, the price of real estate in a given locale reflects the amenities of that locale, whether it be cultural attractions, scenery, recreational activities, more opportunity for advancement, etc. If a person wants to live in the midst of a lot of amenities, they will pay for their choice. It does not mean other people should give them a disproportionate deduction on their tax bill because a bunch of people are willing to pay a lot more than average to live near a bunch of amenities.

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Originally Posted by palemale

Not the principal, just the interest.

By the way, one bedroom apartments in my neighborhood can sell for over $1 million. An expensive home here doesn't mean it's a mansion.

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Okay, but I'd say the same thing about the value of that home. Here's a freestanding house for $38 500
http://www.realtor.ca/propertyDetail...Key=1563342741

For only 39 111 US dollars you too could live in beautiful Flin Flon, Manitoba. But you'd be about as far from any amenities as you could care to imagine, and that is reflected in the price. You do get what you pay for, even when a million dollars only buys you a one-bedroom apartment. Congratulations to all the one-bedroom millionaires. Time for them to pay their taxes.

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Originally Posted by bankside

Okay, but I'd say the same thing about the value of that home. Here's a freestanding house for $38 500
http://www.realtor.ca/propertyDetail...Key=1563342741

For only 39 111 US dollars you too could live in beautiful Flin Flon, Manitoba. But you'd be about as far from any amenities as you could care to imagine, and that is reflected in the price. You do get what you pay for, even when a million dollars only buys you a one-bedroom apartment. Congratulations to all the one-bedroom millionaires. Time for them to pay their taxes.

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True. Who the fuck wants to live in Flin Flon, Manitoba?!?! Karl Marx said something, in praising capitalism, that is quite correct: "At least capitalism saved millions of people from the idiocy of rural life."

Marx never lived in L.A. The idiocy of urban life just costs more - but the boys are cuter and more numerous.

See, all that increased cost of living for the big city is really just an ass tax.

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Originally Posted by TX-Beau

Marx never lived in L.A. The idiocy of urban life just costs more - but the boys are cuter and more numerous.

See, all that increased cost of living for the big city is really just an ass tax.

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Amen! And they're better dressed too!

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Originally Posted by palemale

But we in NYC are subsidizing the red states, not the other way around.

One main problem with the tax code here is the alternate minimum tax ("AMT"). I am covered by the AMT, which means I pay a flat federal income tax and can not take most deductions, except charitable deductions and mortgage interest. I cannot even deduct New York State and New York City income tax or property tax. Ronald Reagan instituted the AMT (something all you anti-tax, tea partying Ronald Reagan lovers should think about).

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i think u should pack up and move to ........ charlotte pale

LOL

you're just a rich guy anyway - caviar and champagne

must be a northern thingy

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Originally Posted by Benvolio

there is a big motivation for high payers to move to less hostile states. California in particular is losing millionaires.

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Interesting comment, I actually know one who has done that very thing - in THIS MONTH, DECEMBER 2012, actually. I mean he posted over the weekend that his truck made it to Dallas okay with everything...

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Originally Posted by palemale

True. Who the fuck wants to live in Flin Flon, Manitoba?!?! Karl Marx said something, in praising capitalism, that is quite correct: "At least capitalism saved millions of people from the idiocy of rural life."

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This site is doing some strange things with the quote function...as in: the Benvolio quote appeared again even though I answered it.

No, me no-wanna be's in Flin Flon. I've actually been there (so isolated that not even that many Canadians have been there, as it's not on the way to ANYTHING!!). I can't imagine living hundreds of miles away from anything vibrant and interesting going on, though Macomb IL isn't all THAT much better.

Okay great, I've been through too, and I thought it was scenic. But it is in the middle of nowhere and far from comforts or opportunity. The point is that if people can only afford $30-$40 thousand for a house, can you realistically say they're unfairly burdening people in Vancouver who'd have to pay at least a million for the same tiny house? Oh, poor millionaires, being exploited by the greedy Flin Flonners!

I bet they're takers who expect all kinds of socialism for their laziness.

Flin Flon . . . .

It's intriguing that a house, even in the sticks, can cost less than my neighbor's new truck. :eek: