It's bad because it creates an incentive for the state to tax in a particular way that may not be optimal. Income taxes are cheaper for states to levy than all other forms of tax because of this backdoor. That is bad.
> It's bad because it creates an incentive for the state to tax in a particular way that may not be optimal. Income taxes...
But SALT isn't limited to income taxes, it includes sales taxes (which you can more easily track with credit card purchases [than you could in the past]), property taxes, car registration taxes, etc.
They're encouraging them to use a specific form of taxation. Income tax is not especially optimal for a number of reasons, but that's not the point. The federal government simply shouldn't be pushing the states into preferring one style of taxation over another unless it has a good reason to - which they don't.
This applies equally to anything though. You're arguing against taxation as a form of incentive towards rational actors, which is to say that you're arguing against taxation.
> which they don't.
I provided at least one: self sufficient state governments that don't need federal aid.
> This applies equally to anything though. You're arguing against taxation as a form of incentive towards rational actors, which is to say that you're arguing against taxation.
That argument is contingent on certain linear utility curves that are probably not empirically borne out.
> I provided at least one: self sufficient state governments that don't need federal aid.
And how are those things related to deducting state tax?
Giving states the ability to tax more without an additional burden on their population shifts the onus of supporting that population from the federal to the state government.
The state can have a higher tax rate without an overwhelmingly high tax rate on its citizens, and can thereby have enough revenue to provide services without federal aid (that the same revenue would have paid for, just indirectly through the federal government first).
>That argument is contingent on certain linear utility curves that are probably not empirically borne out.
Just because price elasticity isn't linear doesn't mean that price changes have no effect on demand.
