The following article by Prof. Bruce J. Schulman was posted on the Washington Post website October 30, 2017:
As congressional Republicans prepare their tax-cut bill (and President Trump negotiates provisions on Twitter), the deduction for state and local taxes (SALT) has become a flash point. Last week, the Senate approved an amendment to abolish the deduction, which especially would benefit residents of states with stiffer state tax bills and higher property values.
Hailing elimination as tool to offset some of the huge rate cuts Republicans seek on corporate incomes and high earners, House Speaker Paul D. Ryan (Wis.) asserted that SALT unfairly subsidizes “big government states” and creates a situation in which “states that actually got their act together pay for states that didn’t.”
Defenders of the deduction, including Republicans from states such as New York and New Jersey, counter that even after the deduction, their states pay far more in federal taxes than they receive in federal spending. By that standard, wealthy populous blue states such as California subsidize less developed mostly red states. South Carolina, for example, despite its long history of opposition to the federal government, takes nearly $4 in federal spending for every dollar its citizens pay in federal taxes. Continue reading “Blue states already subsidize red states. Now red states want even more.”