Oh, John Carney

Filed in Delaware by on April 8, 2017

John Carney has a tax plan and it’s as bad you think it will be.

Carney has called for raising income taxes, corporate franchise taxes and tobacco taxes to fill half that gap. The remainder could come from budget cuts.

Carney’s idea is to spread the income tax pain by raising every bracket’s rate, eliminate itemized deductions and increase the standard deduction by more than half.

Even those in the lowest income bracket — whose taxable income is between $2,001 and $5,000 — would see rates go up, though that increase would be blunted in many cases by the changes to deductions.

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A Dad, a husband and a data guru

Comments (24)

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  1. Alby says:

    Link?

  2. It’s there. I wish our links were still blue, don’t know why they aren’t. For now, they’re grey.

    Reading Geisenberger’s and Heffron’s comments rile me up.

    Hey, Jellyfish John… how about giving them a choice, higher taxes brackets for the wealthy or an end to corporate welfare?

  3. gary myers says:

    What seems to get glossed over in all the discussions about Rep. Kowalko’s tax bill is that the new $125K and $250K “tax brackets” are only marginal tax rates. An individual with taxable income of $135K will not pay the new rate of 7.05 per cent on the entire $135K. Instead, the new rate applies only to the $10K amt. that exceeds the $125K bracket. The rest of his income will be taxed at the escalating lower marginal rates, including Kowalko’s lower bracket for taxable income above $60K to $125K. The same marginal rate scheme applies to taxable incomes above $250K. It will only be the taxable income above that threshold that will be subject to the 7.80 percent.

    Particularly, as to those individuals in the $125K to $250K range of taxable income, I am not sure whether the new marginal rate will bring in any significant new revenue. Indeed, the only ones who really should be scared by the new marginal rates are the super-rich who have high marginal income way beyond the $250K threshold.

    Also, what about the ability of two wage earner families to file separate but joint returns. I know many folks with higher “family income” who avoid the higher marginal rates by choosing to file separate but joint and have their individual income top out below the higher marginal rate. How does that play in the estimates of new income or supposed “middle class burdens” from HB 109.

    Again, I am not sure how much new revenue Rep. Kowalko’s bill bring inolks

  4. Aurochs says:

    This bill would have to be scored before an actual estimate could be made. But don’t neglect that it also phases out itemized deductions, eliminating them altogether at $250k.

    Oh, and yeah, we all know how tax brackets work. It’s $705 versus $655, to use your $135k AGI example. Multiply that by the number of people who would be in this bracket, and you will have a not insignificant amount of new revenue. Again, it would need to be scored, but I don’t doubt that HB109 will do a lot to cover the deficit. It’s at least a starting point.

  5. RE Vanella says:

    The weak spot in Carney dumb argument is that the wealthy will pick up and move out of state over $250, $500 or even $1,000 more dollars. It’s a fucking stupid argument for which there is zero evidence.

    Nobody making a quarter million annually is picking up and leaving over that amount of marginally increased income tax. It is not happening. Doesn’t happen. Never happened on any scale to measure.

    (Anecdotes about your neighbor have no impact on me. I will not respond to hypotheticals.)

  6. Alby says:

    @REV: I haven’t looked into it, but I suspect the DEFAC numbers would back it up. The numbers involved aren’t huge, but there’s a reason income tax revenues keep falling short of projections.

    I’ll give you anecdotal evidence: I know of three people who in the past year have purchased property in Florida for purposes of legal residence. I asked one guy how much he’s saving. The answer: Enough to pay for the condo in Florida. He lives and works in Wilmington, but he can do enough of it online from Florida to make it happen.

    This is the reason reassessments and a property tax are needed. You can change your residence, but you can’t move your land.

    The Republicans are dead set against it because of the huge tracts of ag land owned by Sussex GOP bigwigs. Shifting revenue to property taxes will hit hard for people who own tens of thousands of agricultural acres, so there’s no chance of getting them on board without a large break for farmers. Coming up with a formula they would approve could take years. Remember, any tax increase needs a two-thirds vote to pass.

    The next two months could be really ugly in Dover.

  7. RE Vanella says:

    I actually know a bit about Florida residency and establishing domicile for tax purposes. It’s not that easy. Minimum you need to live there 6 months out of the year, register you car/insurance & get a FL driver’s license. and register to vote. This doesn’t account for attorneys fees, increased travel, etc.

    On top of which if your Florida residence is purchased and it’s significantly less in value that a 2nd home elsewhere you could be investigated. The state tax people usually look for you to have made large purchases as well like furniture and appliances.

    I’m not questioning you story. I’m simply noting that it isn’t not a straightforward proposition. It’s expensive, time-consuming and nowhere near feasible for almost all DE residents who would be impacted by this increase.

  8. anon says:

    Delaware has the 2nd highest foreclosure rate in the country with 1 in every 654 homes in Delaware facing foreclosure so the answer to filling the budget gap is to tax home owners more?

    When did Snidley Whiplash become the spokesperson for progressives on property taxes?

  9. meatball says:

    I left DE partially for tax reasons. My bride and I are both registered nurses and our salaries placed us both in the highest tax bracket in DE after less than six month’s work. Yet, when we struggled working two jobs each and school full time with two young children the state could do nothing for us….unless we lied, or hid our real financial situation. That’s all fine, people persevere, but don’t piss down my back and tell me its raining. Fuck you Delaware.

  10. Alby says:

    “the answer to filling the budget gap is to tax home owners more?”

    No, that’s the answer to fixing the long-term structural problem with the state’s revenue profile.

    Thanks for asking. Or were you just whining, as opposed to knowing what the fuck you’re talking about?

  11. anon says:

    I know exactly what I’m talking about. Delaware’s foreclosure rate is #2 in the country. Wages are stagnant if not negative. Job growth is non existent. What’s left of the middle class is struggling. Raising property taxes is going to do two things, 1) it’s going to increase our already high foreclosure rate and, 2) it’s going to make passing school referendums much harder.

    I don’t see how more abandoned houses and underfunded schools are going to help Delaware’s already dismal situation.

    Initiate a progressive income tax well beyond what Kowalko has proposed, means test all senior tax breaks, stop corporate hand outs.

  12. Tom Kline says:

    Increased Income Taxes won’t work long term. After all this is Delaware not California.

    How about a 3% sales tax?

  13. RE Vanella says:

    Tom – That’s a very good effort. Although all sales taxes are in fact regressive, I like that you’re trying to think about things. Sincerely. But why should an office manager making $45k pay the same 3% on a pair of jeans that the engineer making $165k pays. It’s just not fair. (If you choose to engage this point with some economic theory you learned in graduate school, please know I don’t care and won’t read it. Tell Steve Forbes…)

    I prefer the people who have the money to pay their share. The idea that people need to abandon the state over $500 more in taxes is absurd. (My wife’s also an RN, FYI.) For the people in this possibly largest segment (not Al’s millionaire neighbors, haha…) the amounts are not substantial enough to drive people out. I’ll never believe it until I see real evidence.

    So for the professional class (lawyers, IT people, scientists, banking folks), say total household income of between $100,000 and $250,000, what’s the incremental increase under Kowalko’s proposal? It’s it more or less than $1,200? That’s what we spend on beer and yoga pants annually. I think my cable bill’s over $200 a month, and the fact that I don’t really know what it is (and I pay it) should tell you something.

    Please remember I personally wouldn’t support any new tax on anybody earning under $75k. So were talking about people who spend $125 on exercise pants and can differentiate Malbec and Cabernet. If it’s somehow an obscene insult to working people or a communist plot to ask me to kick in a bit more cover schools and roads and services for poor people, we’re all simply fucked and hopeless.

  14. Alby says:

    @anon: If you think banning corporate handouts will close the budget gap, no, you don’t know what you’re talking about.

    The foreclosure rate has nothing to do with property taxes in Delaware, which has the fourth-lowest property tax rate in the nation.

    https://wallethub.com/edu/states-with-the-highest-and-lowest-property-taxes/11585/

    You have a completely mistaken idea of how much a middle-class person’s property taxes would actually increase. A big chunk of the burden would fall on commercial properties — and if it’s done statewide, places like the Delaware City refinery wouldn’t get the huge tax break they negotiated on property taxes at the local levels.

    You really don’t know what you’re talking about when it comes to the government’s revenue, or where it comes from.

    As for school referendums, again, our property tax rates are among the nation’s lowest in part because the state foots more than 50% of the school funding bill, among the highest rates in the nation.

    The upshot: We are paying for schools through income taxes rather than property taxes.

    The long-term solution: Stop raising the income tax, which in Delaware is nearly ungraduated and therefore not particularly progressive. Raise taxes on property, which cannot flee as capital, earnings and domicile can.

  15. SussexWatcher says:

    “The Republicans are dead set against it because of the huge tracts of ag land owned by Sussex GOP bigwigs.”

    Really? Who are these bigwig farmers?

  16. Alby says:

    Dunno. This is just what upstate GOP people tell me. You can look it up with the county, I assume. Remember, a “farmer” doesn’t have to live on what you or I might consider a farm. Granogue, for example, is considered farmland because much of the acreage is in crops.

    How much land does Christian Hudson own?

  17. Alby says:

    @meatball: What kind of help from the state were you seeking?

  18. Tom Kline says:

    First of all you do not need a grad degree (or undergrad for that matter) in econ to know we operate in a free market economy. SO if the guy making $45K doesn’t want to, s/he doesn’t have to BUY the supposed jeans, saving both on the cost of the jeans AND the 3%! (To be fair the thrifty gal making $145K in your scenario can CHOOSE to save his $$ too and not buy those jeans)! Aha and there’s the rub for you communists disguised as democrats – you do not want “the rich” you seem to abhor to have any choice in the matter. You LOVE to tell them “you’re not giving your fair share! so we are taking more”. Listen up Robin Hood – you may not see a flood gate, but mark my words there will be a steady drip of folks heading north and south to escape you and your merry men.

    In addition, you will lose any new businesses looking to start up in DE as they will not want to subject their hard working high EARNERS – yes earners – not takers from paying into your ridiculous system. It is like a bottomless pit. When your uncontrolled, flagrant spending continues to create more debits than credits, you will continue to raise the “fair share” – where will it end?? Insidiously, an exodus happening right under your pompous nose. Good luck with that.

    Tom – That’s a very good effort. Although all sales taxes are in fact regressive, I like that you’re trying to think about things. Sincerely. But why should an office manager making $45k pay the same 3% on a pair of jeans that the engineer making $165k pays. It’s just not fair. (If you choose to engage this point with some economic theory you learned in graduate school, please know I don’t care and won’t read it. Tell Steve Forbes…)

    I prefer the people who have the money to pay their share. The idea that people need to abandon the state over $500 more in taxes is absurd. (My wife’s also an RN, FYI.) For the people in this possibly largest segment (not Al’s millionaire neighbors, haha…) the amounts are not substantial enough to drive people out. I’ll never believe it until I see real evidence.

    So for the professional class (lawyers, IT people, scientists, banking folks), say total household income of between $100,000 and $250,000, what’s the incremental increase under Kowalko’s proposal? It’s it more or less than $1,200? That’s what we spend on beer and yoga pants annually. I think my cable bill’s over $200 a month, and the fact that I don’t really know what it is (and I pay it) should tell you something.

    Please remember I personally wouldn’t support any new tax on anybody earning under $75k. So were talking about people who spend $125 on exercise pants and can differentiate Malbec and Cabernet. If it’s somehow an obscene insult to working people or a communist plot to ask me to kick in a bit more cover schools and roads and services for poor people, we’re all simply fucked and hopeless.

  19. RE Vanella says:

    Don’t buy those jeans!

    You missed the point… You’re terribly confused. We’re done.

  20. Blackflyer says:

    What’s wrong with Tom Kline? Something’s got him riled up.

  21. Hey, we survived Pornstache. We always seem to attract these content-less drones.

    Thankfully, usually only one at a time.

    Say-y-y, whatever happened to Protack anyway?

  22. Alby says:

    “mark my words there will be a steady drip of folks heading north and south to escape you and your merry men.”

    Except that the data show the exact opposite. From a 2015 TNJ article, the most recent I could find:

    “Delaware grew faster than neighboring states and the country as a whole from 2010 to 2015. A total of 945,934 people lived in the First State in 2015, up 5.3 percent from 897,936 in 2010.”

    If you had a brain instead of just a mouth, you might consider questioning your own highly biased assumption. Just do a little research. It’s not that hard. If you have time to voice your opinion, you have time to base it on something beyond your own feeble experience.

  23. Alby says:

    @El Som: Either he or his acolyte posted something a couple of weeks back, touting his tax plan and condemning Delaware lawmakers for ignoring it.

    Once he ran through the money he claimed was donated — it was $85,000, I recall, supposedly all in small donations not one of which he produced records on — he finally gave up, or entered hibernation.

  24. Steve Newton says:

    Alby is 100% correct on the need to reassess property values and transfer at least part of the burden of school costs out of income taxes. (In the case even Carney is correct in his assertion that our too-low property taxes are serving as an attractor for too many retirees who, per capita, drain more in social services than they contribute to our economy.)

    And Alby is also 100% correct that ending corporate welfare won’t balance our budget–even though it’s still not a bad idea at all. A better idea would actually be enforcing pollution laws against both corporate interests, big farm, and local governments to make them foot their portion of the bill for cleaning up the rivers and groundwater they’ve rendered poisonous (especially since the days of the EPA giving a shit about that are done).

    As for roads and infrastructure, I’ve reluctantly come to the conclusion that an indexed gas tax is necessary, primarily because it is much easier to set that up so that the funds are actually safeguarded for that use. Most studies have determined that gas taxes are not actually as regressive as popular belief, and certainly not as regressive as a sales tax.

    But I’m still here to say that there’s plenty of pork in the state budget, and most . of this current year’s deficit could have been covered by–

    1). Reducing the State share of the funding for the Delaware Information Analysis Center of Homeland Security by $15 million.

    2) Eliminating several entire branches DE DOE and all the RTTT State back-filled positions, which would result in a savings of about $20 million.

    3) Paroling and/or pardoning non-violent drug offenders, thereby saving something like $16 million in direct housing costs, and eliminating the need for 75 new Corrections officers and another $4.5 million in overtime because our prison population would shrink to manageable proportions.

    4) Lengthening the allowed life of school buses by at least 2-3 years–an average savings of about $4 million/year lengthened. (If you think this is unsafe, you don’t understand why the allowable life is kept so low; it’s there because that allows our private schools to purchase their own reliable bus fleets at pennies on the dollar and receive effectively state-subsidized transportation.)

    5) I really hate to admit this one has wheels, but here it is: contract out (privatize) our Medicaid management system. The system we have now is seriously non-functional and way too costly. I’ve seen some of the documents on internal waste there (I’m NOT talking about cutting benefits; I am literally talking about eligibility and claims management, which are handled horribly.) One insurance industry expert I’ve talked to has suggested that we could save at least $8-12 million per year and not leave people in constant danger of being cut off from their benefits by contracting this out. And there are several smaller, Delaware-owned medical processing companies that could do the job if allowing mega-corps like Highmark into the field.

    Point being: I just eliminated most of the current deficit without raising taxes.

    Yeah, I know they aren’t going to do any of this, just as well as you do, but I’m pretty tired of having to delimit this discussion to one side saying, “We can’t make any more budget cuts without affecting critical services” and the other side saying, “We can’t raise any more revenue or everybody will leave the state.”