Just a Pinch of SALT is Not Enough
Volume 92, No. 2, Winter 2020
By Emily Berg [PDF]

This Comment provides a comprehensive assessment of the approaches various states have taken to mitigate the SALT deductions their citizens lost as a result of the $10,000 deduction cap. Section II provides readers with information on the history of the SALT deduction and how the cap came to be. Section III explores the reactions of some states to the enactment of the $10,000 cap on SALT deductions, and the Treasury’s subsequent responses. Some states—mainly high tax, traditionally democratic states—have enacted legislative “workarounds.” These efforts will provide their citizens with a means of satisfying their state and local tax obligations while maintaining the same, or a similar, level of deductions taken in previous years. Four states have also sued the federal government, arguing that the SALT deduction cap is unconstitutional. Section IV synthesizes this information and suggests that states pursue the employee payroll and pass-through entity tax workarounds in the short term. The Section also suggests that states should consider longer-term solutions to provide their taxpayers with relief from the SALT deduction cap by reviewing their own tax systems and focusing their efforts on strategies to amend the Code, not work around it.

Emily Berg is a J.D. Candidate, Temple University Beasley School of Law, 2020.