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From: mjk@ttrdc.UUCP (Mike Kelly)
Newsgroups: net.misc,net.politics
Subject: Re: State Tax Dedudction
Message-ID: <200@ttrdc.UUCP>
Date: Thu, 30-May-85 18:21:10 EDT
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Posted: Thu May 30 18:21:10 1985
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 >From: js2j@mhuxt.UUCP (sonntag)  writing about the state tax deduction:

 >Consider:  the marginal cost to a local government of each citizen
 >is highest when the population density is highest. (else why are NJ, NY, NYC,
 >CA, etc. the places with the highest local taxes?)  Some people choose to
 >live in these places anyway, for whatever reason, and end up paying more to
 >their local governments in taxes than people who live more rural areas.

I think this may be a case of "a and b, therefore a->b".  I don't know whether
population density has anything to do with tax rate, but density of low-income
people does.  In Illinois (not a dense state, but a large one), the single
largest line item in our state budget is public aid.  I expect that may be true
in the other large states you mentioned as well.   The cities (New York, Chicago,
Los Angeles) have always been destinations for the poor seeking jobs.

Of course, a proper sense of national justice would establish pay for the
national public aid programs with national taxes.  But that isn't how it
works, and it's working even less that way under Reagan.  The states are
receiving increasing responsibility for their poor, sick and jobless 
residents.  The state and local tax deduction was one way of mitigating the
taxes needed to pay for those services.   By taking that away, Reagan will
make it even harder for the states to pay for services for their residents.
The result will likely be cutbacks and yet another gaping hole in the "safety
net."

I'm all for tax reform.  But the Reagan program seems to do more of what
Reagan does best: hurt poor people.  The supposed cuts in tax rates for low-
income people don't amount to much in real dollars; the poor don't pay a lot
of taxes now.  But the cuts in services that will probably result from this
plan will very definitely hurt.

By the way, an analysis in today's Chicago Tribune shows that the President's
plan helps the very poor (because it costs almost nothing and deflects
political criticism) and the very rich (because it's from Reagan) the most.
25% of middle income taxpayers (and 32% of upper middle income taxpayers)
would see their taxes increase under the Reagan plan, primarily because of
the loss of deduction of state and local taxes.

Mike Kelly