No, those are user fees.
> We don't deduct prices of other goods & services (food, clothing, rent, transportation) from our salaries before paying taxes on them, do we?
Yes, we do, with a choice to take a simplified default amount.
But with SALT, I think the better argument is that the absence of the deductions (or limitations on them, which work the same way at some point) causes federal taxation to artificially incentivize low-tax state policy since it can switch policies from net expected positive to net expected negative value before to after consideration of federal taxation, whereas with SALT deeuctibility federal income taxation does not have any effect on the direction, only the magnitude, of expected value of state tax and spending policy.
Pre-tax benefits for transportation are also not universal, and the State governments can deduct Federal taxes in their calculations if they want to follow that model.
With a deduction for state tax, it's a lot more cut and dried "hey I don't have this money anymore because the state whose laws you officially sanction by virtue of their being part of your union is going to throw me in jail if I don't pay them".
I'm not sure if that's more or less cut and dried than "hey I don't have this money anymore because I had to pay money to not be literally homeless".
Deductions are an approach to reducing tax burden, but ultimately we have to decide if more taxes or less taxes are the way to operate our societies. The federalized tax system allows different states to experiment with different approaches, and these kinds of deductions incentivize behavior in one direction.
Should someone living in a luxury penthouse suite at 15K+ a month get to deduct his rent at 100%, as well as closet-sized studio apartment? If not, where is the line drawn?
This is what I mean when I talk about value-based judgements based on variable rates.
Should I be able to deduct only what is literally the cheapest rent in my city? What if the cheapest apartment is full, and there's no way I could possibly get that rate? Should it be the cheapest AVAILABLE rate? Would this then impact prices knowing that the lowest rate drives tax-deductibility for all citizens?
This is the labyrinthine decision tree that opens up when deducting things like rent, food, clothing, etc.
Also, if SALT deductions truly incentivized punitive state taxes, why are so many states still charging 0% tax rates?
Edit: it's not really on the income taxed, it's on the money already spent to pay a seperate income tax.
Overall I believe the wealthy are not taxed enough, but I think that even though SALT deductions benefit the wealthy, a taxable base should still be calculated rationally and fairly. It's more of a principle-based than result-based argument.
Other OECD countries are able to fund more progressive spending by (counterintuitively) taxing more regressively via broad-tax-base middle class taxes and VAT.
In contrast, taxing the middle class raises more money, which allows the government to spend more progressively.
High federal brackets make sense.
A county (or city) pays for things, and they decide to setup a property tax, taxing some arbitrary "assessed" value of your property. It doesn't mean anything to me to say your same income is being taxed twice, thrice, or 4 times. You're just paying for services to n different organizations, in this case, government agencies.
If the taxes are too high, then they simply need to be lowered. But not via deductions or any other game. Let the true prices be easily visible. No one forces a state government to implement a % of income tax, and if it's too high, then voters in that state should demand the the percentage be reduced, or implement a flat amount. Same for federal, same for city.
Because states and cities provide services that federal government doesn't have to, so it benefits the federal government as well. If federal government would provide these services there wouldn't be need for SALT or local government taxes.
Anyway without SALT this is basically stealing from citizens. It's taxing money that citizens never see instead of taxing the money that they actually receive.
Say my tax rate is 10%. 10 = 5+5. Is that second 5% taxing money I never see?
My health insurance premium is deducted from my paycheck. Is that money I'm taxed on but never see?
I also get some employer paid health insurance. Is that unfair that I'm NOT taxes on that despite it helping me?
What if my rate is 51% + 51% = 102%? (Unrealistic, yes, but gets to the heart of the "fairness" argument)
How am I suppposed to pay 102% of my income? Is that sustainable?
But if my state taxes me 51% of 100k, and there is SALT deduction, my federal taxable base is 49K instead of 100K, and I am now actually paying 24.9K instead of an impossible 102K.
Taxes are NOT service payments, they are a legal obligation, a good portion of which (rightly) pays for things you may not directly benefit from. It's in a completely different category than for-service healthcare, at least in my opinion.
Its amount is not also directly tied to how much money you make. If you know your income you could theoretically budget for such expenses.
Also, I believe healthcare premiums are in some (most?) cases tax-deductible, though this is somewhat besides the point.