Because they've moved to Miami?
Joking aside, I wonder if there is any other nation with as much tax variation between regions as the US? (Excluding special economic zones.)
Joking aside, I wonder if there is any other nation with as much tax variation between regions as the US? (Excluding special economic zones.)
In most countries, the states get their power from the delegation of powers dictated by the union/federal constitution. In US, The union gets their power from the few matters that were delegated to them from the states.
For example, India used to have such disparity in consumption taxes (not income tax) which was recently removed and simplified. The federal govt collects all consumption and income taxes and devolves the receipts to states based on pre-defined formulae enshrined in law.
Edit: In an ideal world, instead of filing separate state and federal tax returns US should move to a common system where tax can be collected/enforced by one entity and the receipts devolved to states as per certain rules. This will remove income tax disparity between states and equalise business/opportunity costs (No more Delaware tax havens for companies to skirt taxation). This will simplify a lot of things. Most countries including mine have such a singular system.
The federal government also has the ability to regulate state and local taxes using the interstate commerce clause. After the provision in the Articles of Confederation limiting the federal government to collecting direct taxes in proportion to state land values was abandoned, the supporters of direct taxation influenced by the French Physiocrats lobbied for the interstate commerce clause in order to ban state and local governments from collecting excise and sales taxes on goods sold across state lines, so that state and local governments would be forced to rely more heavily on property tax.
You just don't like it because it's clear that low tax is a better and more democratically supported policy.
The richest man in the world - Jeff Bezos - did exactly this to try and shift the taxation burden away from him and on to the rest of America with his HQ2 stunt.
This is indeed better for a limited class of people.
If you don’t like the policies of a state enough, you can move to another one! It’s extremely rare that someone can move between regions with different laws if they don’t like the laws of their state. You get to choose your government by changing where you live, if you think one of the governments is wrong or bad somehow.
Sure, there are consequences. And inefficiencies. But if you’re French, you can’t just decide to live somewhere with different laws. It’s challenging to move to another country. Even though the EU has laws that make it easier to move and work in other countries, it’s nowhere near as easy as the USA. Forget it entirely if you live in a less progressive or allied country.
This forces the states of the USA to stay appealing - they compete with each other for population. This works because the Union of states allows people to leave if one becomes oppressive, else that state goes to war with the entire rest of the Union. So the states are forced to be accountable to each other and their people.
Each state is supposed to be independent for this reason, and it’s why I’m a big fan of limiting Federal government power and instead pushing changes at a state level
“How much is it?” would seem a simple question.
This opinion is most clearly expressed by Joel Barlow in "Letters Addressed to the Yeomanry of the United States: Showing the Necessity of Confining the Public Revenue to a Fixed Proportion of the Net Produce of the Land; and the Bad Policy and Injustice of Every Species of Indirect Taxation and Commercial Regulation" (1791).
That an interesting history, thanks.
The policy sort of misses the point when you are at the till and the item doesn’t cost what you thought it did. There is no way of telling if you have been hit by a broad-based sales tax, a targeted one or both.
I wonder if this was originally intentional, to prevent taxes from invisibly rising without the people being aware of the impact of the price.
It also makes it much harder for national brands if they like to have nice round numbers as the cost of things (which they seem to) - they can’t charge $1.00 for a soda everywhere, or their margins would be crazy wonky depending on region
Of course, depending on where you are, your 2.16 coke could also jump up to 2.21 or 2.26 because of the bottle deposit. And then another 2.34-2.42 if there's a sugar tax. It could even go up to 2.46 - 2.54 depending on if you buy that coke in a store vs a restaurant.
There's some hyperbole there, but the cities and states get to tack on their own taxes for whatever reason and the public largely doesn't care.
Then there was New York Soda size cap that was almost immediate overturned in court challenges before it could even take affect.
Taxes make a pack of cigarettes $12 in NY but this was done slowly over time. And the loud protests have turned into teeny grumbles.
Though it also helped that Mike Bloomberg is not a man Big Tobacco can buy, given the fact that he is one of the richest men in town already, in a very wealthy town.
I live in a conservative area right now and can't remember a local sales tax ever being voted down. The only case I can think of was when I lived in the middle of a large city (very left leaning) and the local sales tax was voted down because the politicians pushing for it had not said exactly what it would be spent on other than "special projects". They had previously diverted a good chunk of property tax revenues to building a new sport stadium because the billionaire owner was threatening to move the team to another state. The public wasn't given an opportunity to vote on that gift of their taxes to a billionaire so there probably was both mistrust and a degree of blowback. Other than that case, local sales taxes, dedicated to a local purpose or project list, are popular here.
If the sales taxes all went to DC to be piled together and subject to the whims of whatever party was in charge at the time, they'd be far less popular. Asking locals to pay an extra 1% to renovate and expand the local schools is pretty easy. Asking the entire country to pay an extra 1% to "Make American Schools Great Again" is a much more difficult sell.
It's really hard to figure out how many more dollars I'm going to pay in taxes if the sales tax goes up 1%. I have to figure out how much money I spend on goods that have sales tax. Okay, so I put $X in my savings account which isn't taxed, and I pay $Y in rent, which means I'm spending $Z on other stuff. Oh right, but not all of that has sales tax, so I have to take that stuff out. It gets complicated, fast, and the best you're going to get is an estimate. If any of those numbers change, my sales tax burden changes.
Plus sales tax is deferred until you spend the money, so there's no immediate obvious impact. It's not like you have less money than you did last year, although your spending power does go down every so slightly.
Income taxes are unpopular to adjust because it's easy to see how much you're losing, and it directly impacts your paychecks, which people don't like.
Tax variation like this is generally a side effect of federalized systems of government.
PWC's summary on Swiss tax system includes 2 of the cantonal tax systems: https://taxsummaries.pwc.com/switzerland/individual/taxes-on...
India does not have state income taxes, but they had wide variation with respect to state indirect taxes (which was eliminated in 2017 and replaced with a standardized federally-run GST), and the states are still free to impose more than a dozen other taxes, including land-use taxes, including a number of taxes not levied anywhere else in the world, such as agricultural estate taxes.
Canada's provinces have their own property tax and income tax rates (for example, compare Alberta, Sasketchewan, Quebec, and British Columbia rates), and generally also set their own PST rates (provincial sales tax, when combined with federal GST it is referred to as HST).
The income tax is also devolved as per law.