I’m not a fan of Ann Coulter – her style is a little too abrasive for me, and while I usually agree with the philosophy of her arguments I’ve generally found her supporting info to be too factually challenged to take seriously. But once in a while she makes an excellent point, and this is one of them. Her argument is simple – “Tax rich liberals”. I’ve written before how the left loves to call for higher taxes on the wealthy, as long as said wealthy don’t include themselves. And when given the opportunity to pay their fair share, they selfishly choose not to. Coulter found a way to raise taxes in a way that will disproportionately affect wealthy leftists, and particularly leftists from the states that like to vote for higher taxes - remove the federal tax deduction for state income taxes. While there are exceptions to each, the bluer states tend to be the ones with higher state income tax rates, while the red states have lower rates. Here is how they break down with the highest and lowest rates. Based on the Federation of Tax Administrators’ rates for the 2012 tax year, here is how the high and low states rank
The Highest: Oregon, California, Iowa, New Jersey, Vermont, District Of Columbia, New York, and Maine
The Lowest (no state income tax): Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Washington, and Wyoming
There are obvious exceptions here, such as a relatively moderate state such as Iowa being among the highest and a blue state like Washington being among the lowest. There are also other unique elements to each state that dictate their tax policy. Alaska has oil wealth, Florida and Nevada have tourism dollars, etc. Of course, this gives California even less excuse for not exploiting its vast natural resources, but that’s a topic for another day. While my initial point in this post is finding a method to make left leaning state residents pay higher taxes, this is more over a different philosophical point. Allowing residents to deduct their state taxes from their federal taxes just pushes their tax burden onto other states that have no say in their policies. How can people who call for fairness in our tax code possibly justify the people of Missouri having to pick up the burden for wealthy California?
An easy hole to poke in this theory is how disastrous it would be to the states to force them to make such massive changes on a short time frame. This is actually the position held by two of the more mainstream conservative voices in Victor Davis Hanson and Rammesh Ponnuru. I argue that there’s a good halfway mark – phase this elimination in over a ten year period. States will know that they have time to get their houses in order, and their populations will have a vested interest in pushing their leaders toward meaningful action as their tax bills rise each year. And as an added bonus this will provide an additional “revenue enhancement” to the federal government as we phase out this tax deduction. Most importantly, eliminating this distortion in the higher tax level places gives those residents more responsibility for the policies that they vote for in their states. If more Californians had to pay a greater share of the burden they might be more hesitant to vote for the higher taxes the so love. Or they might actually take how their tax dollars are being spent seriously. And if anyone thinks that it is unrealistic to expect states to shoulder their burden of their taxes, what makes pushing the burden up the the federal level and across the rest of the states any more sustainable?
This is part of why I’ve adapted the “Let it burn” philosophy that you’re starting to hear from the right. Not too long ago I was arguing that going over the Fiscal Cliff would have been a good thing for our country in the long run. Back in 2010 the Tea Party revolution made me hopeful that this country was finally waking up to its fiscal reality. Since then the various events we’ve seen over the last two years leading up to the 2012 election show that instead as a nation we’ve chosen to double down on stupid. I’ve tried rational talk, and I’ve tried educating in terms that even the slowest among us could understand.
As the recent fiscal cliff deal has shown what a complete failure treating the American people like adults has been, it is time to adjust tactics. Every time I keep trying to swat your finger away when you try to poke the hot stove I get called an extremist. No problem; if you want to touch the stove, I’m ready to help you over and hold your hand against it until it’s blistered and burned and you realize that such as situation is not sustainable. And whatever pain you feel is nobody’s fault but your own – President Obama made it quite clear that this is what you were voting for back in November.
Increasing our national debt at increasingly higher levels is selfish at best, and malevolent at its worst. Handing an extra one thousand billion dollars in debt per year to future generations to fund our current consumption only shows how selfish and ignorant we as a country have become. I think that at this point we won’t be able to have an adult conversation about our finances until many more of us start to feel a lot more pain.
And hopefully when that time comes we’ll be ready to make real, meaningful reform to our government. Who knows, when we get to that point we might even be ready for an idea like the Neutral Tax!
Cross posted from Brother Bob’s Blog