March 2008 Vol. 106 No. 5 THE REVIEW

Federal Fairness to State Taxpayers: Irrationality, Unfunded Mandates, and the "SALT" Deduction

Brian Galle

By sheer dollars alone, the largest impact of the Alternative Minimum Tax is to deny many taxpayers the deduction for the taxes they paid to their state and local governments under § 164 of the Internal Revenue Code. This Article provides a fine-grained analysis of the overall fairness of the state-and-local-tax deduction—and, by implication, the fairness of its partial repeal through the Alternative Minimum Tax. I offer for the first time a close examination of how newly understood limits on taxpayer mobility and rationality might affect individuals’ choices of bundles of local taxes and local-government services, which in turn informs our assessment of the “fairness” of those exchanges. Many of these lessons can be generalized to consumer choices more generally. In addition, I track the reciprocal benefits and burdens that flow between the national government and local governments—again, although the influx or outgo of billions of dollars surely affects how the federal tax system should account for the outputs of local government, scholars have neglected that question. Finally, I note that § 164, and therefore the Alternative Minimum Tax, can have serious effects on federal–state relations, such that the debate over both provisions is in many ways a debate not only over fairness but also about federalism.

   //  VIEW PDF
& Other Current Events

Foreword: What Books on Law Should Be

I have thought it might be useful to our profession, and appropriate to a foreword to a collection of...

A Pragmatic Republic, If You Can Keep It

Creating the Administrative Constitution: The Lost One Hundred Years of American Administrative Law....

Classic Revisited – Frost for Lawyers: "The Best Thing That We're Put Here For's to See"

The Poetry of Robert Frost: The Collected Poems. Edited by Edward Connery Lathem....

Racial Templates

A Wicked War: Polk, Clay, Lincoln, and the 1846 U.S. Invasion of Mexico. By Amy S. Greenberg....

Book Notice - Some Kind of Judge: Henry Friendly and the Law of Federal Courts

Henry Friendly, Greatest Judge of His Era. By David M. Dorsen. Foreword by Richard A....
MAILING LIST
Sign Up to Join Our Mailing List