Patrick Driessen, A Progressive Case for a Federal SALT Deduction, 183 Tax Notes Fed. 1591 (May 27, 2024):

Much of the debate about the Tax Cuts and Jobs Act’s cap on federal deductibility of state and local taxes has been reduced to income distribution tables that show cap repeal as very regressive. These federal-tax-centered tables are narrowly framed: State and local taxes and most outlays themselves aren’t distributed, and states are assumed not to respond to federal tax changes.

This article relaxes these distributional assumptions in a stylized example that controls for pretax income distribution as well as state and local outlays.

This is a more realistic approach: At one level, federal deductibility of SALT is mostly about redistribution between high-income people in progressive-tax states and those in regressive-tax states, without much direct effect on others. At another level, low- and middle-income people are affected as states change their tax structures in response to the availability or absence of federal deductibility of SALT.

A federal tax deduction for SALT paired with revenue-neutral top-end tax increases is shown to encourage overall progressivity. A “super-Pease” pay-for for federal deductibility is also explored.