Thursday, February 27, 2014

The State and Local Tax Deduction

Sahil Kapur notes that one of the big fighting points in the Camp bill is the elimination of the deduction for state and local taxes, which benefits people who live in states that have higher taxes than others, also known as "blue states" with Democratic leaning governments.  Yes, this is true.  Here is a map showing a distribution of the benefit of the deduction:


What Democrats should do, of course, is contrast this map with this one:

So the states that benefit from the deduction tend to be those that also pay more in federal taxes than they receive in federal spending.  Those with low state taxes, on the other hand, tend to need more help from the federal government.

Funny how that works, right?  

This is just another way of increasing the subsidies from rich states to poor states, in the name of "equity." 

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