Assessing the Federal Deduction for State and Local Tax Payments

Gilbert Metcalf

National Tax Journal, 2011, vol. 64, issue 2, 565-90

Abstract: This paper examines the distributional and behavioral impacts of ending the deductibility of state and local taxes against the federal individual income tax. I carry out a number of distributional analyses — considering both variation across income and across states — of the subsidy from deductibility as well as the distributional impact of potential partial reforms. I also consider how behavioral responses affect the distributional analysis. Using a large panel of data on state and local governments, I find that deductibility increases reliance on deductible taxes and increases state and local spending out of own-source revenue.

Date: 2011
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Related works:
Chapter: Assessing the Federal Deduction for State and Local Tax Payments (2008)
Working Paper: Assessing the Federal Deduction for State and Local Tax Payments (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:64:y:2011:i:2:p:565-90

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