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Showing posts from October, 2017

You Need to Ask the Right Question

If you ask the wrong questions, the answers will probably also always be wrong, and even irrelevant.  This might seem obvious, but I’ve noticed that this truth is often completely overlooked, and even by the world’s most intelligent. While I’m certain this is so in every facet of life, for the purpose of this short paper I will focus on the investment/finance world.

Pull The State Income Tax Subsidy

The Trump Administration’s recent tax reform proclamation included an elimination of the deductibility of state income taxes on federal tax returns.  This would be painful for high-income earners who reside in states with higher tax rates, such as California, where I live. Here in California, the top end rate is 13.3%. For high-end earners, the Federal income tax rate is 39.6%. The combination of those two facts, along with a California taxpayer’s ability to deduct his state income tax payments from their federal income tax liability means that the effective state tax burden falls to 8%. The remaining state tax burden of 5.3% is borne evenly by all federal taxpayers, which is to say that citizens of other states pay about 40% of my personal California income tax burden.

While I am genuinely grateful to all of you fine Americans living in other states, and there is surely a part of me that would like to continue to have you subsidize my tax burden, I am wholly supportive of the idea to…