Fight On SALT Deductions: Who Will Be Black And Blue?

By Leah Robinson and Amy Nogid (January 29, 2018, 2:11 PM EST) -- The newly enacted $10,000 cap on the state and local tax deduction has pitted the federal government against many of the blue states whose citizens generally pay more state — and local — income and property taxes and who will more keenly feel the pinch of the limitation on that deduction than citizens of the red states. Many blue state politicians have bristled at what has been called a federal tax rip-off and an economic civil war, and have vowed to provide relief to their citizens. On the other hand, Treasury Secretary Steven Mnuchin has threatened to sic the IRS on blue state citizens whose states have devised ways to end run around the federal SALT deduction limitation, which he has included in the "bad" evasion bucket rather than the "acceptable" minimization bucket. As tax wonks know, minimizing tax is acceptable and is one of our beloved national pastimes, while evasion is unacceptable and could land one in an unfashionable orange jumpsuit. So, with the battle lines drawn, will it be the federal government or blue states' governments that will end up black and blue?...

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