Taxpayers who choose to itemize their deductions are allowed to deduct taxes paid to state and local governments from their federal taxable income. One rationale for this tax expenditure is that paying state and local taxes reduces an individualâs ability to pay federal taxes. Provide an argument against the federal deductibility of state and local taxes on the grounds of

A. economic efficiency

B. horizontal equity

C. vertical equity

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Tod ThielLv2

6 Jul 2019

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Related questions

1 a. Construct a numerical example to show that the exclusion of municipal bond interest from income taxation is equivalent to a government subsidy of state and local capital spending.

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2a. Explain what economists mean when they classify taxes as being progressive, proportional or regressive.

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d. How would you classify a tax in which every person paid 8% of their income? Explain

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b. How much is a tax credit of $1000 worth to someone with a taxable income of $40,000?

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d. How much would a $1000 deduction be worth to someone with a taxable income of $40,000?

e. How much would a $1000 deduction be worth to someone with a taxable income of $60,000?

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