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Tuesday, December 07, 2004

Uncounted consequences  

Someone has noticed that tax reform that limits or removes the deduction for state and local income taxes paid would disproportionately impact taxpayers in blue states. (This makes it extra-attractive to certain congressional Republicans, who think victory means having the means to not only reward your friends but punish your enemies. Wonder where they got that idea?) Well, fair enough, but beside the point; that's a predictable (possibly unintended) consequence, not reason in itself to argue one way or another.

But my question is this: we heard a lot recently how blue states are net taxpayers while red states are net federal beneficiaries. But this particular blue state subsidy isn't counted as a transfer payment, because no cash actually changes hands. In fact it reduces the amount of money moving to and from Washington. What do the comparative numbers look like with this invisible little kickback from Schedule A included in the blue-benefit column? Hmm?

posted by Kelly | 1:02 AM link