November 13, 2011

BLUE-STATE POLITICOS: Raise taxes, but not on our constituents:

Jerrold Nadler, a Democratic representative whose district includes parts of the West Side and other affluent sections of Manhattan, introduced the Tax Equity Act in 2009, which proposed “to amend the Internal Revenue Code of 1986 to provide for adjustments in the individual income tax rates to reflect regional differences in the cost of living.”

The bill mustered eight co-sponsors, all from New York except for Representative Jim Himes, who represents Fairfield County, Conn. It went nowhere.

In September, Senator Charles E. Schumer, Democrat of New York, said that “$250,000 makes you really rich in Mississippi, but it doesn’t make you rich at all in New York, and there ought to be some kind of scale based on the cost of living on how much you pay.”

Living in New York is a consumption decision.

UPDATE: Reader Jeff Brown writes:

Perhaps someone should ask the good Congressmen why their districts have such high cost of living.

I had a friend who, while working for Matson in Hawaii, calculated how much shipping a container of toilet paper to Hawaii added to the price. It was 2 cents per 4-pack. But it as 30-50% more costly in Hawaii than the mainland. The cost came from warehousing, etc. But NYC doesn’t have the warehousing problem, they can keep all they need in Pennsylvania until it is just-in-time.

Real Estate costs? That does impose a threshold of entry higher than Mississippi, but there are already home price-based tax deductions. And the real estate cost is held high by difficulty and cost of building new housing.

So what could drive this COL difference? Labor costs in service industries, which are driven more by regulation than market? What about taxes and regulatory takings? But they already get a tax deduction of state and local taxes paid.

So the people in these districts deserve a cost of living tax break because they impose higher cost of living on themselves through their regional, state and local governance?

What should we call this tax break? The “Too stupid to govern themselves locally” adjustment?

I think we should end the deductibility of state and local taxes. Why subsidize inefficient governance?

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