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Sunday, August 2, 2020 | History

4 edition of The deductibility of state and local taxes found in the catalog.

The deductibility of state and local taxes

Robert Jay Dilger

The deductibility of state and local taxes

implications of proposed policy changes

by Robert Jay Dilger

  • 56 Want to read
  • 39 Currently reading

Published by National League of Cities in Washington, D.C .
Written in English

    Places:
  • United States.
    • Subjects:
    • Income tax deductions for taxes -- United States.,
    • Intergovernmental tax relations -- United States.

    • Edition Notes

      Includes bibliographies.

      StatementRobert Jay Dilger.
      SeriesPolicy working paper / National League of Cities, Policy working paper of the National League of Cities.
      Classifications
      LC ClassificationsHJ4653.D4 D55 1985
      The Physical Object
      Pagination1 v. (various pagings) ;
      ID Numbers
      Open LibraryOL2599278M
      ISBN 100933729022
      LC Control Number85155605
      OCLC/WorldCa12551263

        The thinking is if filers can't deduct the state and local taxes they pay in excess of $10, on their federal returns, states like New York, .   Taxpayers deducted more than $ billion in state and local taxes in , according to the Government Finance Officers Association — 75 percent of which was claimed by people with incomes over Author: Linda Qiu.

        "Eliminating or capping [the deductibility of state and local taxes] would represent double taxation, as these taxes are mandatory payments for .   And States could then credit up to percent of the gifts made to the state and local government against individual taxes owed. In that way, deductibility of Author: David Kamin.

      The tax overhaul caps the deduction for state and local taxes at $10, per return.   Via this relatively simple set up, states and localities could probably achieve full deductibility of state and local income taxes for business owners, Author: David Kamin.


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The deductibility of state and local taxes by Robert Jay Dilger Download PDF EPUB FB2

Indeductible taxes were limited to state and local property (real and personal property), income, general sales, and motor fuels taxes.

Congress eliminated the deduction for taxes on motor fuels inand eliminated the deduction for general sales tax in the amount of state and local taxes paid, and the reduc-tion in federal income taxes for each dollar of state and local taxes deducted all increase with income.

The state and local tax deduction reduced federal reve-nues by an estimated $50 billion in fiscal year Over the next several years, scheduled changes to tax law and. Unfortunately, the deduction for state and local taxes is no longer unlimited. It used to be that you could deduct as much as you paid in taxes, but TCJA now limits the SALT deduction to $10, ($5, if married filing separately).

And this cap applies to state income taxes, local income taxes, and property taxes combined.  . President Reagan's tax reform proposals of May recommended eliminating the deduction of state and local taxes in computing federal taxable income. Arguments for and against deductibility appeal to equity for taxpayers facing levies from multiple governments and to concern for the roles and responsibilities of governments in a federal by: In addition, taxpayers may elect to deduct state and local general salestaxes in lieu of deducting state and local income taxes [IRC section (b)(5)(A)].

The sales tax deduction, which had been repealed in the TRA ’86, was temporarily reinstated in with varying expiration dates; Congress made sales tax deductibility permanent beginning. State and local taxes are involuntary outflows. The debate over whether state and local taxes should be deductible at the federal level largely misses the mark.

Discussions guided by concerns about some taxpayers subsidizing others or states being encouraged to tax more heavily, in addition to being unsound on their own terms, fail to consider. “The Deductibility of State and Local Taxes.” Washington, DC: Congressional Budget Office. Rueben, Kim. "The Impact of Repealing State and Local Tax Deductibility." State Tax Notes, August Tannenwald, Robert.

"The Subsidy from State and Local Tax Deductibility: Trends, Methodological Issues, and Its Value after Federal Tax File Size: KB. Enter your keywords. Sort by. Relevancy. The deductibility of state and local taxes is a significant feature of fiscal federalism.

Had deductibility of personal state and local taxes- retail sales, personal income, and residential property taxes-been eliminated infederal income taxes would have been $ billion higher. By contrast, total federal grants-in-aid to state and Cited by: 8. Add tags for "The deductibility of state and local taxes: implications of proposed policy changes".

Be the first. Get this from a library. Federal deductibility of state and local taxes. [Steven Maguire; Library of Congress. Congressional Research Service.] -- Under current law, taxpayers who itemize deductions can deduct state and local real and personal property taxes, and either income or sales taxes from federal income when calculating taxable income.

The changes affect certain elements of tax reporting, including deferred taxes, state and local taxes, interest expense deductions, transfer pricing, and foreign income taxes. Deferred Taxes The new standard changes the way entities account for operating leases on a statement of financial position, which may create differences in methods of.

History of the Deductibility of State and Local Taxes3 State and local taxes have been deductible from the federal income tax since the inception of the federal income tax in Originally all taxes (including federal, state, and local taxes not directly tied to a benefit) were deductible against federal income.

Over time the number and. State And Local Tax Deduction or SALT Does SALT Apply To You. Since the standard deduction for your Tax Return increased, (from $12, to $12, for single and Married Filing Separately filers, $24, to $24, for married filing jointly and widow filers, and $18, to $18, for Heads of Household), it will not be beneficial for most taxpayers to itemize on their.

State and local, and foreign, real property taxes. State and local personal property taxes. State and local, and foreign, income, war profits, and excess profits taxes. The GST tax imposed on income distributions. In addition, there shall be allowed as a deduction State and local, and foreign, taxes not described in the preceding sentence which.

Federal Deductibility of State and Local Taxes: A Test of Public Choice by Representative Government Lawrence Lindsey. Chapter in NBER book Fiscal Federalism: Quantitative Studies (), Harvey S.

Rosen, editor (p. - ) Published in by University of Chicago PressCited by: 8. For many taxpayers in high-tax states, the $10, limitation for deductions for state and local property, income, and sales taxes will represent a substantial tax cost in and beyond.

Nondeductible Tax Deductions, Expenses. It is frequently unclear whether a certain tax expense might qualify as a tax deduction or not. And if you deduct an expense that doesn't qualify, you might be faced with a tax notice or tax audit.

Fortunately, there are many deductible tax expenses that exist, so you may be surprised that your tax expense of choice qualifies for a tax deduction. The deduction for state and local taxes is effectively a federal subsidy to state and local governments; that means the federal government essentially pays a share of people’s state and local taxes.

Therefore, the deduction indirectly finances spending by those governments at the expense of other uses of federal revenues. CBO released a report today on the deductibility of state and local taxes on federal income tax returns, which provides an indirect federal subsidy to the state and local governments that levy deductible taxes.

The state and local tax deduction reduced federal revenues by an estimated $50 billion in fiscal year CBO's report, which was prepared at the request of the Ranking. The state and local tax (SALT) deduction allows taxpayers of high-tax states to deduct local tax payments on their federal tax new tax plan signed by President Trump, called the Tax Cuts and Jobs Act, instituted a cap on the SALT deduction.

Starting with the tax year, the maximum SALT deduction available was $10,Author: Amelia Josephson. The total elimination of the deductibility of state and local taxes in the Senate Republican tax plan will cost me money, as I live in the high tax state of Illinois.

Nevertheless, I strongly favor this proposal. It is rare that a change in tax law can reinforce the basic structure of our Constitution, but this one does. state and local retail sales taxes SALT deductions are now limited to a combined $10, from all three sources.

While some argue (incorrectly) that this is a political issue, the purpose was to make certain that across all states, despite their local and state and taxes, everyone earning the same income would have an identical federal income.