My effective tax rate for 2018 compared to 2017 is 10.8 vs 12.4 and when I ran my 2017 numbers through 2018’s new tax law brackets the difference is greater, 10.4 vs 12.4. This is the only real comparison, effective tax rate for 2018 compared to the effective tax rate from last year using this year’s tax law.
In my opinion(s) there shouldn’t be any tax deductions for SALT. There is no reason why the states that choose to tax their residents higher should be subsidized by the other states. The only reason why the federal government sends money to states is because of federal mandates. On average, state legislatures only control about 35% of their budget. The rest is just strings attached to programs that the federal government mandates.
If the federal government only appropriated money on what the constitution allows it to, article one section eight, we wouldn’t have the massive spending issue we have. We don’t have a tax revenue issue, we have a spending issue.
The best progressive tax system would be the FairTax. This would eliminate federal income, payroll, corporate (this is just a tax on people anyway), capital gains, gift, estate, all federal taxes except for excise taxes and replace it with a consumption tax on new food and services with a prebate up to that family’s poverty level. The tax rate would from from negative (for those who are below the poverty level or who only buy used goods) up to the rate set. Those 1% would pay more because they buy more and they buy new. The poor and middle class would pay less because they spend less and would buy used. So not only does the rate one pays go up as you spend more but the amount you pay in taxes also goes up the more you spend. Perfect regressivity. The tax base would be larger because you are taxing spending instead of income (those 1% without income would now pay when they spend), you include underground economies (illegal activities like drugs, theft, pimps, working under the table, etc). Compliance costs go way down (about $600 billion annually) because only business would have to file, and evasion goes down because most transactions are from big retailers whose clerk isn’t going to be handing out goods without charging sales tax, if that’s even possible with current point of sales machines. It certainly will be less evasion compared to the complete honor system we have now. As for company to company sales, those are never taxed anyway. Only the final point of sale is taxed when sold to a consumer. So there wouldn’t be much evasion there either. All tax loopholes would go away. If politicians wanted to decrease the amount of tax, the only way would be to decrease the rate. No more favors to industries or companies for their lobbying efforts to help the re-election fund of the politician. And therein lies the only problem with the FairTax. The FairTax would be the biggest transfer of power to the people in history, which means politicians are not going to pass this willingly.
As for the cost of healthcare, you have to take into account that currently, the consumer’s cost disincentive is almost completely taken away. The consumer doesn’t care about costs when they are on any kind of government provided healthcare system and because of that, the medical professionals are incentivized to increase their prices. And even though company subsidized health insurance is a form of capitalistic health care plan, unless you are in a high deductible health plan, your costs (premiums) stay the same regardless of the cost of your service or procedure.
In two areas where this isn’t the case (because it’s not normally covered by current health insurance schemes) is laser eye surgery and cosmetic surgery. In those two examples where the consumer has a cost disincentive, the price of the procedures has gone down while at the same time the medical professionals have made more money and also improved the procedures through innovation.
Many other costs are simply because of government mandates on the insurance industry to include certain things in their plans, or anti-competitive regulations not allowing insurance companies to offer what their customers demand across state lines. Next time you watch tv, take notice on the amount of auto insurance companies that advertise. There are literally a dozen auto insurance companies that are competing vehemently to provide you the best insurance for the lowest cost as possible in order to take you away from your current insurance. Then notice that there are exactly ZERO health insurance companies doing this at tenth of the level that auto insurance companies do.