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> The deductibility of state taxes (still kinda weird to me how this works) Well, the idea is that the federal government is only taxing your income, and money
by zeveb 11y ago
> The deductibility of state taxes (still kinda weird to me how this works)
Well, the idea is that the federal government is only taxing your income, and money that your state has taken away doesn't is your income. It's not a bad idea, but the problem is that it means that no-or-low-income-tax states end up subsidising high-income-tax states. Moreover, there's no easy way to itemise other forms of state taxes, e.g. sales or property taxes.
It really should be done away with.
- harryh 11y agoYa, I get the reasoning. And I agree with your analysis about the negative consequences. But the part I actually think is weird/complex is the way it ties tax returns together from adjacent years. For my 2015 federal return I don't deduct my state taxes on my 2015 income, I deduct state taxes I paid in 2015. Those can be two different things. I just find that a bit weird.