HEI: Powell press conference showed why Fed should stop talking
THE HEISENBERG writes: If you took anything away from the past 24 hours in markets, it ...
“Call me crazy, but I have always liked paying income taxes; the more the better”.
THE HEISENBERG writes:
[Editor’s note: The following is from the latest commentary by Harley Bassman. If you’re not familiar with Bassman, he (literally) created the MOVE – more here.]
Excerpted from “State Of Mind”, by Harley Bassman
Call me crazy, but I have always liked paying income taxes; the more the better. Why ? Notwithstanding various (legal) tax mitigation strategies, taxes paid have some rough correlation to income, so I am happy to have them both rise.
I suppose this may explain why my wife and I chose to move from New York City to Laguna Beach five years ago as it was the only way to increase our marginal state tax rate from 12.7% to 13.3%….and did I mention the additional 1.0% mental health tax added last year?
Thus, filed under the heading of high-class problems, I was a bit bothered with the passage of the Tax Cuts and Jobs Act (TCJA) in late 2017 which greatly reduced the deduction for State and Local Taxes (SALT).
And it has been a painful irony that mortgage REITs and MLPs, two of the asset classes that benefited from the TCJA, imploded in March; so perhaps the third time will be a charm as I consider an investment in tax-free Municipal bonds.
I say a pox on both their houses with respect to the juvenile bickering between MSNBC and Fox. That said, there is often a (small) kernel of truth underlying the much larger topics that are soon twisted beyond recognition.
Proponents keen to eliminate the SALT deduction posit that the Federal Government has no business subsidizing states whose greater services are supported by a higher tax rate. One could argue that residents of these states vote for such policies by who they elect.
Subject to a few Schedule A limitations, a resident’s Federal tax bill is reduced by their state tax times their Federal tax rate. Thus, the IRS is effectively paying a portion of your state tax bill via reduced revenues to the Federal Government.
In a vacuum, this is not a bad concept; except for the small detail that we are a Republic with a Federal system of Government. While state law is disparate, the Federal Government offers a unified system of taxes and benefits for everyone.
“From each according to his abilities, to each according to his needs”, or so said Karl Marx about communism. He would surely appreciate the incongruity found in the –shale table– that details how Federal taxes are collected and redistributed.
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