Comments on: State Taxes and the Tax Debate

By: Jared Bernstein

Jared Bernstein — Sat, 21 Jul 2012 23:47:27 +0000

Well said.

By: davesnyd

davesnyd — Sat, 21 Jul 2012 23:45:21 +0000

I think you’re misunderstanding the complaints.

When people say “we’re overtaxed” you think they mean “we’re overtaxed”.

They don’t. What they mean is “we’re under-disposable-incomed”.

You know– better than me or anyone else reading your blog– why that is: incomes have stagnated, structural expenses (“healthcare”) have risen dramatically, and the employment picture has gone sour.

But one way to increase the disposable income is to decrease the taxes.

Hence: “we’re overtaxed”.

By: pjr

pjr — Sat, 21 Jul 2012 15:39:42 +0000

Just a question regarding the table. Federal taxes here include FICA, to include the employer contribution. This would be nearly 12 percent of income for most wage-earners, but the table shows that the lowest 20 percent and second 20 percent are paying less than this. Is this outcome caused by a large number of people in these categories who are living off Social Security benefits–non-wage income–or what? (I am curious because the use of averages may be masking the high federal tax rates paid by working stiffs, until they retire and pay much lower federal tax rates.)

By: Ted Boettner

Ted Boettner — Sat, 21 Jul 2012 01:38:28 +0000

How much of the growth in state personal income tax collections is due to the rise of S corporations? This could certainly skew the results. That said, I agree the economy has shifted from goods to services and the state tax code has yet to catch up.