This Article examines the state and local tax deduction as a mechanism of fiscal federalism, by analyzing the effect of … the deduction, calculated as tax expenditures by state, on the imbalance of federal expenditures. It argues that, on the … the 2017 tax legislation. TCJA’s limit on the SALT deduction vastly undermined this effectiveness, while underscoring the …

actually raise federal tax receipts. The analysis also implies that deductibility is likely to be a more cost-effective way … tax return data in the NBER TAXSIM model to calculate federal tax prices for itemizers and other taxpayers in each state …. The econometric analysis recognizes that the federal tax price is endogenous (because it reflects the state-local spending …