Regressive Deductions

While 30 million taxpayers benefit by taking the deduction for state and local taxes paid, half of all the benefits go to just three million taxpayers with AGIs over $200,000. Worse, the loophole encourages state and local governments to be profligate and provide more and fancier services than they otherwise would. Eliminating this deduction would make the tax code more progressive and raise about $700 billion over the next decade.