so the feds can tell states how large a state deduction can be?? what are the advantages/disadvantages for the feds??
thanks all replies
This is not a state deduction. It is a federal deduction. It simply says that people can deduct up to $10K of their state and local taxes (SALT) from their federal tax obligation. The federal government isn't telling state governments anything. If states like Maryland don't like the new cap on the SALT deduction, then they should reduce their income taxes and property taxes so that no one but the very rich have to pay more than $10K in SALT.
Capping the SALT deduction at $10K was a brilliant move that puts pressure on high-tax states to stop taxing the hide off their citizens. Furthermore, why should people in low-tax states subsidize the state taxes of people in high-tax states? $10K is a very reasonable cap. Even in a high-tax state, you have to be in the top 10% of income earners to be affected by the new SALT cap.