Over the last few weeks we have witnessed the federal legislative process at its worst. The tax “reform” bill is nothing more than an ill-conceived, and ill-advised attempt to accomplish something in the current administration’s first year in office. The most egregious element in the bill is to eliminate state and local tax deductions, otherwise known as SALT.
Since the federal income tax was adopted in the early 20th century, it has been recognized that state and local government taxes should be respected. The deduction of state and local taxes has contributed to the stability of state and local tax revenues that are essential for providing public services. Any change that disrupts the stability of their tax structure will harm their ability to fund essential services. States that do not have income taxes are licking their chops over the likely pilgrimage to their borders of well-to-do execs who will finally say, enough is enough, pepper on the wound.