Abstract
The Tax Cuts and Jobs Act of 2017 (TCJA) significantly changed federal income taxation, including limiting SALT (state and local property, income, and sales taxes) deductibility to $10,000. We estimate the TCJA’s differential effect on red- and blue-state taxpayers and the SALT limitation’s contribution to this differential. We find an average increase in remaining lifetime spending of 1.6 percent in red states versus 1.3 percent in blue states. Among the richest 10 percent of households, red states enjoyed a 2 percent increase compared to 1.2 percent in blue states, with the gap driven almost entirely by the SALT deduction limitation.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
