On the Disparate Treatment of Business and Personal SALT Payments

7 Pages Posted: 16 Nov 2017 Last revised: 12 Feb 2018

Michael S. Knoll

University of Pennsylvania Law School; University of Pennsylvania Wharton School -- Real Estate Department

Date Written: January 15, 2018

Abstract

The Tax Cuts and Jobs Act, H.R. 1, would eliminate the federal income tax deduction for nonbusiness state and local taxes while maintaining the deduction for business state and local taxes. That disparate treatment has generated a storm of negative commentary. In this short essay, I consider whether the federal tax law should allow a deduction for business state and local taxes assuming that there is no deduction for nonbusiness state and local taxes. I argue that investors and businesses, including pass-through businesses, should be allowed to deduct state and local property and sales taxes, but not general income taxes.

Keywords: Tax Law and Policy, Law and Economics, SALT Deduction, Real & Personal Property Taxes, Wage & General Income Taxes, Public Benefits

JEL Classification: H21, H24, H25, K34

Suggested Citation

Knoll, Michael S., On the Disparate Treatment of Business and Personal SALT Payments (January 15, 2018). Tax Notes, Vol. 158, p. 331, 2018; U of Penn, Inst for Law & Econ Research Paper No. 18-5. Available at SSRN: https://ssrn.com/abstract=3070973

Michael S. Knoll (Contact Author)

University of Pennsylvania Wharton School -- Real Estate Department ( email )

Philadelphia, PA 19104-6330
United States

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-898-6190 (Phone)
215-573-2025 (Fax)

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