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Tax Reform



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I’d been hearing, even before the election, that the administration was looking at getting rid of the deduction for state and local taxes as part of its tax-reform package. I’m all for the policy: Why should low-tax states subsidize high-tax ones? Why should the federal government encourage states to have high taxes? But didn’t tax reformers get their heads handed to them over this precise issue in 1985-86? Of course, there were more New York Republicans then to worry about.

The administration is also apparently looking at taxing employer-provided health insurance. Again, a good policy: that tax break has done a lot of damage to health-care markets over the years. And anyone who wants to get rid of the alternative minimum tax without swelling the deficit has to look at taxing health insurance: It’s one of the few tax breaks that can generate the necessary funds. But again, there are obvious political risks here.



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