Working Paper: NBER ID: w1768
Authors: Daniel R. Feenberg; Harvey S. Rosen
Abstract: This paper provides careful estimates of the impact of removing the deductibility of state and local taxes by state andby income class. We show how deductibility affects marginal and average tax rates for both state and federal tax systems. One striking result is that combined federal income tax and state tax burdens would generally fall under the President's tax reform proposal, even for high income people in high tax states.
Keywords: tax reform; state and local taxes; deductibility
JEL Codes: H24; H71
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| state tax laws (H71) | federal tax liabilities (H20) |
| removal of state and local tax deductibility (H71) | federal tax liabilities (H20) |
| removal of state and local tax deductibility (H71) | average federal tax rates (H29) |
| removal of state and local tax deductibility (H71) | combined federal income tax and state tax burdens (H79) |
| itemization in federal returns (H20) | effective state tax burden (H79) |
| state net marginal tax rates (H79) | gross marginal rates (H29) |