The American Interest highlights an issue that ought to be a big topic, in Rhode Island, related to President Trump’s tax reform proposals: the federal tax deduction for state and local taxes.
The deduction overwhelmingly benefits six-figure earners. The benefit is largest for affluent people living in states that impose high income tax rates, which are much bluer than average. …
Some SALT opponents will claim that the measure would create a system of “double-taxation,” and they aren’t entirely wrong. But if this were really the concern, states could address it by making federal tax deductible from state tax bills. Of course, that would impose new costs on states, just as SALT imposes costs on the federal government. This is at its core a fight over resources, and it’s one that the working class deserves to win more than coastal high-flyers.
Rhode Island would take a hit if this proposal were to pass, but it’d be deserved. More importantly, it has the easy remedy of lowering spending and local taxes. Ta-da! Problem solved!
The post makes another significant point: The deduction takes the pressure off of relatively wealthy Rhode Islanders to get involved and hold their government accountable. After all, the additional taxes that result are deductible on their federal taxes. If it were not, such folks would have more incentive to take an interest in how things really run around here.