should there be any limit in federal funds to states that don't have a state personal income tax?

[dysfunctional press]

after all- shouldn't those states be trying to solve their financial problems with their own money before coming to washington with their hands out?

some of those states could generate a nice chunk of change from the wealthiest people who claim residency in order to avoid the taxes in the first place.

[Taverner]

1. No - Seattle needs the cash too

And its not like the money isn't made up for in other ways

[dysfunctional press]

2. what ways would those be...?

just curious.

[Taverner]

19. Sales tax, property tax

Just ask anyone from WA or OR - one doesn't have income tax, the other doesn't have sales tax, both have really high property taxes.

It all works out

[dysfunctional press]

49. we have income taxes, high sales taxes, and high property taxes

and we only get back 73 cents on our federal dollars.

[Heddi]

58. Exactly. I can't even begin to explain to a non-Western Washingtoner

how fucked up the car tab rates are. In 2004, the last year (before this one) that we had our car registered in Seattle, our annual car tabs were between $130-$175, depending on how much they were "billing" us for the Pre-Monorail study, the Post-monorail study, the post-pre monorail study, etc etc.

From 2005-2008 my car was registered in Yakima, where I lived at the time. The highest my car tabs ever were was $40 for the year.

Same car, same state, but different areas with different needs.

We bought our Jetta this year used for $8000, and had to pay nearly $900 in tax. That's fine, who cares, but to suggest that Washingtonians don't pay their fair share of taxes is just ridiculous.

Oh, and the first 25 years of my life I lived in South Carolina, where there IS state income tax. Not only do they abide by the lower-level federal minimum wage, but they have horrific sales taxes as well...last time I was there (2005) it was bordering on 7% in Charleston County. So not only do you make $5 an hour min wage (compared to $7 an hour min wage in WA), but you loose SUCH a chunk of your income to Federal taxes ANYWAY **then*** the pittance that is left is parceled out again for State taxes. It's a total racket.

And what do you get for those state taxes? Certainly no community health centers, no community hospitals, the roads are shit and over-crowded. They built a pretty new bridge from Charleston to Mt Pleasant (and tore down hundreds of lived-in houses in the process). The interstates are clogged and pot-holed and are generally all 2 or 3 lanes each direction when many areas require at least 4 to 6 lanes in each direction.

The on ramps are the same as the off ramps onto the interstate, causing this hair-raising experience of trying to merge into 80mph freeway traffic while the 80mph freeway traffic merges into your lane aka the exit lane and the entire thing is only 50 feet long I swear to god.

The sidewalks (downtown is the only places that HAVE sidewalks) are cracked and broken.

There is no public transportation to speak of;.

And that's a state WITH state tax.

Then there's Washington:

Top notch ferry system that handles millions of passengers a year with very few (relatively speaking) delays or cancellations

A very comprehensive set of public transportation options, from Metro downtown and into surrounding areas, Sound Transit busses and trains

A much higher standard of living (compared to the south. Yes, more expensive, but better overall, even for the poor. There is nowhere near the level of abject poverty in Washington as there is in South Carolina, North Carolina, Georgia, Mississippi, Alabama, Florida, etc).

Roads that are in much better conditions than in the south

A higher minimum wage than what is required federally (by several dollars)


---
So I'm at a loss as to why Washington State should get less federal funds than, say, South Carolina. It seems that even without state income tax we seem to be doing okay as far as infastructure goes. South Carolina....not so much. The state was falling apart when I moved away in 2001....it hasn't gotten better since.

If anything, it seems that many states WITH state income tax do a piss poor job of managing their state with federal AND state taxes....so based on the argument from the OP, why should states that can't put two nickels together and make a dime get ANY federal monies at all, esp since they can't manage their states with the 2 tax bases (federal and state) that they have??

[eridani]

66. Still, we are one of the most regressive tax states

A balanced tax system taxes wealth, work and consumption.

[Donnachaidh]

3. I think those States need to implement a personal income tax

If they want a piece of the stimulus pie, they need to be doing all they can to prove that they are dealing with their own problems locally, at least as much as the states that do have a personal income tax.

[paulsby]

40. bull

i live in WA. we have a near 10% sales tax , but no income tax thank god.

as mentioned OR has a income tax, but no sales tax.

fwiw, the people who do well live in Vancouver WA. they do all their shopping in Oregon (no sales tax) and make their income and live in Vancouver (no income tax).

it's a sweet deal. i have several friends in vancouver, who moved from HI and instantly got about a 25% cost of living reduction.

regardless, if you are going to claim WA needs an income tax, then you must similarly think OR now needs a sales tax.

be consistent at least.

regardless, one of the reasons i chose to live here was no income tax.

[CTyankee]

69. I assume that you are not bothered by the fact that income taxes are regressive.

I say that not to be snarky; your post does quite openly support your "tax avoidance" philosophy. Which is fine and I get it. What I don't get is how regressive taxation makes us a great country. Avoiding taxes whenever possible and being ardently in favor of a taxation policy that militates against the poorer individual are two different propositions, stemming, arguably, from two different points of view.

How do you feel about taxes on food (groceries, not restaurant food)? Just wondering...

[Cerridwen]

4. Some of those states pay more in federal taxes than they receive.

Should they only pay in on a 1 to 1 ratio rather than paying to fund other states who pay less and receive more?

Be careful where you go with that. Some states have become "donor states" for some of those states with state income tax who still can't seem to get by.

[dysfunctional press]

7. a lot of the states WITH income taxes also pay more in than they recieve federally.

[Cerridwen]

11. And the states without personal income tax have other ways to

raise state dollars.

I was talking about the federal money issue.

Everybody is hurting right now. This is hardly the time to start using punitive financial measures against states who've managed to run their states without personal income tax but have used other options that are still in place and would, in fact, place an additional burden on those states should they implement a personal income tax on top of current revenue generating programs.

[dysfunctional press]

14. there should be a way to level the playing field for states that continually subsidize the others..

[pnwmom]

24. Those are two completely separate issues. Washington and Nevada have

no income tax, but Nevada has a lower ratio than California or New York, and Washington's isn't much higher than the lowest ten states.

[dysfunctional press]

50. they are too issues, but they do overlap in some ways as well...

mainly, i guess i'm just venting about being in a highly taxed state/area that gets not much back compared to hat it pays in(IL), meanwhile some of the states that get the most federal largesse will also be first at the trough when the stimulus money is slopped out.

[pnwmom]

55. It IS extremely annoying that some of the red states that complain so loudly

about federal spending are among those who reap the highest benefits.

[endarkenment]

35. Your chart reflects Fed dollars collected vs Fed dollars spent

and has nothing to do with state tax dollars collected. NH, for example, has no retail sales tax and no personal income tax, but receives back only 0.67 per dollar of federal taxes collected.

This issue illustrated by your chart has nothing at all to do with 'does this state have a personal income tax'.

Thanks for providing the evidence that refutes the claim implicit in your OP.

[dysfunctional press]

47. it wasn't meant to reflect on the op...

that's the thing about discussion threads- ideas are exchanged and thoughts changed...if you backtrack a little- something that i would imagine even you would be capable of- you'd b able to see what the chart is in relation to. c'mon- give it a try...

[billyoc]

5. No. Residents of those states still pay federal taxes which are being disbursed to other states.

[dysfunctional press]

8. so do the states where the residents DO pay income tax- so how is that pertinent?

:shrug:

[billyoc]

18. It's pertinent because you can't withhold federal services from me if I pay federal taxes

any more than I can withhold your state services from you.

[dysfunctional press]

48. i wasn't talking about federal services, either...

it was more in relation to the stimulus money, and states spending federal dollars on items that other states might pay for with their own funds.

[pnwmom]

25. We're already being penalized, dysfunctional press. Income taxes are deductible

from Federal income tax, but state sales taxes are not.

[paulsby]

41. wrong. state sales tax IS deductible

i certainly have been deducting it. if you haven't, you need a better tax preparer.

[Cerridwen]

57. Only if you file Schedule A.

If you don't file Schedule A you take the standard deduction(s) with the standard exemption(s).

Most W2 wage earners do not have enough deductions to qualify for filing Schedule A and take the standard deductions which include medical expenses and state and local taxes.

That does not mean that it doesn't all "comes out in the wash," but it does mean that some taxes are not deductible for some and to say otherwise is not a completely true statement.

See your local tax preparer or CPA for specifics.

[paulsby]

60. true dat

my taxes were like 40 pages (no joke).

if i ever go professional trader status, it would actually make it easier, but i'm going to stick with standard for now.

[damntexdem]

6. No, although I would like to say 'yes.'

We Texans paid our U.S. income taxes and are citizens of the U.S., so we should receive our due -- despite the stupidity of our elected officials, past and present.

[dysfunctional press]

10. the states where the citizens pay state income taxes are citizens too...

so?

[elifino]

9. Georgia has a 6% state tax and sales tax from 6% to 8%

Georgia get $1.03 back from the fed for each $1.00 sent to the fed.

[Johonny]

12. It is generally thought that property tax

is a better system of taxation for states since they can not print their own money. They are less susceptible to the boon-bust of the economic cycle. But when the market crashes this hard there may be no best way to tax your populous.

[dysfunctional press]

17. our state has property taxes, sales taxes, income taxes, user fees...

and we generally get back A LOT less than we pay in to the federal level.

[kiva]

26. And my state, Nevada, contributes

exactly the same percent (73) as your state, but we don't have a state income tax :shrug: . Your point?

[slackmaster]

31. Yes, Nevada makes beaucoup bucks off the gambling and entertainment industries

The roads are pretty good there too.

[kiva]

36. Across the south, and east-west across the north...

but they truly suck going north/south...over 400 miles from Las Vegas to Reno and almost all of it a 2 lane highway.;(

[Cerridwen]

61. Unless you actually live there. Then - notsomuch.

Road construction in NV, specifically southern NV, sucks - huge.

The casinos are built faster than roads are upgraded.

Yes, it is politically influenced.

[slackmaster]

67. I'm comparing interstate highways in Nevada to ones in California

If you enter Nevada from the south on I-15, the change in road condition is dramatic. It's chronically torn up on the California side.

[dysfunctional press]

51. how much of nevada's taxes are collected from out-of-staters at the gaming tables and the shows?

that's part of my point, i guess...

[Cerridwen]

63. As much as y'all are willing to contribute.

You don't actually think those casinos and hotels were built on the backs of the workers - completely - do you?

The casino industry is a dual-edged sword to Nevadans. It's kept us from personal income tax while taxing the tourists. It's also kept us from building many things, such as mass, public transportation, that would have benefitted the Nevada populace.

Tax revenue on tourist dollars has been a nice state revenue.

Thank you for playing. Please drive safely on your way home.

[pnwmom]

30. Which state are you in?

[dysfunctional press]

52. illinois

[lumberjack_jeff]

42. "generally" by whom?

Relying on property/sales taxes sucks.

The only people who think they are better is the 2% of really high income earners.

[ContinentalOp]

13. Yes, absolutely.

It pisses me off how so many people criticize CA for our supposedly "low" property taxes (yeah right) while other states get away without having any income tax or sales tax at all. If they don't need the money badly enough to tax their own citizens then they must not really need any federal tax dollars from the rest of us right?

[pnwmom]

29. You don't understand.

Washington, for example, doesn't have a state income tax. But we have a high sales tax, high property taxes, and many other fees and taxes. We are one of the states that gets back LESS in Federal dollars than we pay in Federal taxes.

[endarkenment]

37. I am taxed plenty thanks.

My high property taxes are equivalent to your sales and income taxes and low property taxes. I am not complaining about your tax burden or lack thereof, so stop assuming that just because I don't pay a state income tax I don't pay my fair share of taxes.

[paulsby]

43. they DO tax their citizens

what part of sales tax don't you understand?

why is it ok to have a lower sales tax and an income tax, but not a higher sales tax and no income tax.

as shown in the chart, pletny of states WITHOUT income tax contribute more to the feds than they receive, and more than many states WITH income tax.

[Still Sensible]

15. No. The states that don't have income tax typically make

up the difference in sales, excise and property taxes. If you look at the TOTAL tax burden state-to-state, it's not very different. I've always got a kick out of the folks that consider it such a big deal on the no income tax. It really only matters to folks who make a LOT of money and who make a lot of capital gains type money... In those states, the regular folks are virtually subsidizing their wealthy counterparts (the middle and lower class have to have higher rates for the state to make up what it is not getting from the wealthier folks in income tax revenues). After all, every state has the same kind of infrastructure, services, etc. to pay for (but I know some, like Texas, really skimp in many areas)... For regular folks, there is not much difference in the overall tax burden state-to-state.

[pnwmom]

33. Right. The only thing I'd add is that residents with income taxes benefit

from the fact that those taxes are deductible from Federal income taxes, while state income taxes are not.

[slackmaster]

38. Property taxes, and state and local sales taxes, are deductible from federal income tax

You can deduct either state income tax or sales taxes, but not both. Which means I get screwed as a Californian (we have the highest income tax AND the highest sales taxes).

The problem is, it's extremely burdensome to document sales taxes. However, IRS provides a way of estimating them.

http://www.irs.gov/taxtopics/tc503.html

[paulsby]

45. it makes a difference to me

because if i choose to work overtime, i am not double penalized (state AND federal income tax), at progressively higher rates.

i pay a consumption tax (sales tax) and of course big property taxes, but i can choose to increase my income and not get penalized UNLESS i spend it.

for those of us in jobs that offer overtime, a no state income tax system is far preferable because it creates no disincentive for more work.

heck, once i get over a certain # in income i don't even pay SS tax on that money.

not that i necessarily agree with the SS tax cutoff being as low as it is, but i work to maximize my disposable income, as well as free time and other issues

[lumberjack_jeff]

16. Whaa?

I think there should be a limit in federal funds to states that demonstrate a disproportionately low ability to express logical views.

Setting aside for the moment the indisputably shitty tax system in my state, how does the manner in which we collect taxes affect whether or not we deserve the benefit of the federal tax dollars we pay?

[endarkenment]

20. Huh?

Every state has the same basic costs and meets those costs through a variety of taxes. Some states do not use income tax, but as they have the same basic costs, they have substituted other taxes to raise revenue. For example New Hampshire has relatively huge property taxes, business income taxes, and other assorted taxes, but no retail sales tax and no personal income tax.

[pnwmom]

21. Why? If a state like Washington raises the same percent of state/Federal funds

as other states, why should it be penalized?

[endarkenment]

23. The OP is suffering from some misperception about taxation

that results in thinking that if a state doesn't have a personal income tax then the residents of that state are not paying their fair share of taxes.

[pnwmom]

34. Clearly. And other posters share the same misconception. n/t

[kiva]

22. Should states that receive more federal money back

than they pay to the feds (non-donor states) be limited in the amount of federal funds? After all (according to your logic) those states aren't solving their financial problems with their own money either.

The 10 largest recipient states/districts between 1981-2005 (not necessarily in order) are: Washington D.C., Alaska, Kentucky, Louisiana, Maryland, Mississippi, Missouri, New Mexico, Virginia, and Tennessee.
http://www.scribd.com/doc/8229012/Tax-Donor-or-Contrib-States

According to a quick google only one of these states--Alaska--doesn't have a state income tax, yet all of these states are receiving more than they pay in to the federal government. By your standards, they're doing a poor job of managing their money.

IMO, federal funds should go where they are needed, not dispersed according to a formula that shows recipients are 'worthy poor' states.

[Lost in CT]

64. And that list is misleading as well.. Alaska for example has tons of federal land

and not a lot of people so it is no surprise that they receive more per capita than a wealthy state like Ct... Washington DC is another obvious example.

Now you could argue that the government should give extra money to poor states like New Mexico and Mississipi... I would love to hear why the rich need the money more...

[Waiting For Everyman]

27. If the state government needs a bailout, yes. n/t

[slackmaster]

28. Why?

States that have no personal income tax invariably make up for it by having high sales taxes, property taxes, corporate taxes, etc.

[mitchum]

32. Yes

[Dreamer Tatum]

39. If my state has higher income taxes than yours, do I get more money than you?

Didn't think so.

[Abq_Sarah]

44. Where do you think that money is gong to come from?

Washington doesn't have any money that first isn't collected from the states and from the taxpayers.

[dysfunctional press]

54. washington collects federal taxes...

i was talking about state taxes. my point being that while states that might get stimulus dollars to pay for things that other states would generally pay for out of their own 'state' funds.

[Thothmes]

46. Last time I checked, the 10th amendment to the Constitution

pretty much guarantees the citizens of each state right to determine the tax policies of that state. Don't see anything wrong with that principal.

[dysfunctional press]

53. that's true- and they're also free to set speed limits and decide if they want seatbelt laws

but certain decisions can mean less federal money.

[Thothmes]

65. Thats their decision to make

They can opt out if the desire. All that means is less or no federal money. States bitched like hell about NCLB. They were free to ignore the whole issue. They took the money and bitched anyway.

[dysfunctional press]

68. it would/could be the same way with a sate income tax.

states would be free to opt out and accept less federal money.

[Nevernose]

56. The stimulus funding is based off money spent, not money earned.

So Nevada, which spends less per person of its tax revenue than any other state (or, depending on how you do the math), will actually receive less than almost any other state. California, which spends more than most on her citizens, will receive more than most other states. It's not a flat formula, nor is it based on population.

I live in Nevada, and am mad as hell at the situation. Not at Obama or Washington, but at the Republicans and Blue Dogs who have had this state locked up so long that we're at the bottom of every good list and the top of every bad list. When it comes to social spending, Mississippi is really quite progressive in comparison.

[Fire_Medic_Dave]

59. Aren't the states allowed to decide how they raise funds?

[BlooInBloo]

62. Gawd this is so fucking stupid.

[Still Sensible]

70. Absolutely not. Absurd.

While there are variances, states all have similar needs and all collect revenue to pay for those needs through taxes and fees. Stares with no income tax make up for it though other means.