My claim is that a normatively desirable definition of taxable income would accommodate a deduction for state & local taxes. It's no answer to say that all income should be taxed the same. cc @BorisBittker #BittkerSurreyDebate
I understand the theory, but the fact that the two are so fungible creates a problem for treating them as different from a policy perspective.
-
-
They aren’t nearly as fungible as many economists assume they are. One of the problems with economics as a profession is this sort of assumption about employer taxes and wages. It just doesn’t work the way they think it will in the real world.
-
One Democratic justification for the Cadillac Tax - that wages would rise when benefits get scaled back - is a good example of this misguided thinking that doesn’t have good evidence behind it.
-
Yeah I don't disagree with this at all. Moving income taxes from employee to employer is fairly un-fungible in one sense: it requires a state tax law change! But on the other hand, if the tax effects are quite different, you would expect that kind of policy effect.
-
A good example of this in the real world of today is how much people are willing to reorganize their income into S-corp ("pass thru") form to take advantage of favorable tax treatment (which is why Obama was in favor of normalizing C corp rates closer to individual rates ~28%)
End of conversation
New conversation -
Loading seems to be taking a while.
Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.