This issue is currently in flux. Prior to 1986 you *could* deduct
state sales taxes for exactly the reason that Bryan indicates - a
state's choice of tax policy should not be made on the basis of the
federal deduction. The changes in 1986 reduced marginal rates at the
expense of increasing the base which included no longer allowing sales
taxes to be deducted.
States that have no income tax, like Florida and Texas, are
particularly upset about this change because it means that their
citizens pay more in Federal taxes than identical citizens in states
with an income tax.
A number of bills have been put forward in Congress since 1986 to
change this but none have yet passed. But recall that Florida and Texas
(among others) are penalized by the non-deductibility of sales taxes
hmmmm... Florida and Texas. Perhaps it is time for a change - remember,
you heard it here first.
Alex
--
Dr. Alexander Tabarrok
Vice President and Director of Research
The Independent Institute
100 Swan Way
Oakland, CA, 94621-1428
Tel. 510-632-1366, FAX: 510-568-6040
Email: [EMAIL PROTECTED]
