The Death and Life of the State and Local Tax Deduction

40 Pages Posted: 19 Oct 2018

Date Written: September 27, 2018


This article considers the state and local tax deduction's history and its future. It casts the new $10,000 cap on the state and local tax deduction as the culmination of a seven-decade trend of successive SALT limitations, which even before 2017 had put the deduction effectively out of reach for more than two-thirds of the taxpaying public. It then evaluates the normative arguments against the deduction and in favor. The article goes on to examine the strategies that states are pursuing to ensure that their residents can pay for public goods and services with federally deductible dollars. Some of these strategies stand a strong chance of succeeding; others will likely flounder. What the ongoing SALT battles most certainly have done is to mobilize a constituency in support of a provision that, just a few years ago, looked like it had few friends. Ironically, the attack on the SALT deduction as part of the partisan December 2017 tax law might well have saved the provision from the dustbin of tax history.

Keywords: state and local tax deduction, SALT

JEL Classification: K34

Suggested Citation

Hemel, Daniel Jacob, The Death and Life of the State and Local Tax Deduction (September 27, 2018). 72 Tax Law Review 2018-2019, (Forthcoming); University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 860; U of Chicago, Public Law Working Paper No. 686. Available at SSRN:

Daniel Jacob Hemel (Contact Author)

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

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