Monday, October 2, 2017

Too much SALT in our tax diet?

The biggest talk in the Trumpsters tax pla is state and local tax deduction.  Should income tax payers be able to deduct taxes paid locally?

The consensus is that this is an anti-blue state measure since California New York and Illinois would lose big time, having high state and local taxes. This view misses the point.  Texas is just below average and California is only a point and a half above.  So the difference is at most two points of extra deductability.

The real problem is large state vs small state. The large have the economies of scale to deliver government goods which the small states can only match with federal cooperation.  Removing salt seriously hampers the ability of large states to act like independent nations, relative to the small ones. But, any three of the large five could easily veto that idea, while the Senate would readily agree..

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