Why it Makes Sense that State and Local Taxes are Deductible
Stan Veuger | Newsweek
State and local taxing power should precede federal taxing power; and, logically, state and local taxes paid should thus be excluded from the federal tax base. The central, federal authority should play a subsidiary role in our society, only to be activated when local communities cannot solve their collective-action problems independently. Our tax code should reflect this idea both as an expression of our values, and to ensure that local governments do not see their ability to raise revenue crowded out by federal legislators.
On the other hand, the SALT deduction incentivizes higher state and local spending and doesn’t have the great distributional implications, as my colleague Alex Brill carefully explains here. I could probably go either way on this one.