Quote:
Originally posted by bilmore
Argh. Why not? State A taxes high, provides high services, by the choice of its voters, while State B has no state income tax, and few services. Why should fed tax policy favor State A's choice over State B's choice?
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Because the principal of comity requires that one sovereign not impinge on another sovereign's more direct claim to taxes. In the foreign arena, this is accomplished through both tax treaties and the foreign tax credit. In the U.S., it's accomlished by the federal government not laying claim to tax on dollars already claimed as tax by the several States.
It's federalism at work. Federal tax policy doesn't favor one state's choices over another's. Federal tax policy recognizes that it cannot claim as taxable income money that has already been claimed as tax by the state. The Peoples' right to choose not to favor higher tax rates is preserved through their power to either vote or move.
