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Resolutions & Amendments

27th International Convention - Chicago, IL (1986)

Preserving the Deductibility of State and Local Taxes

Resolution No. 58
27th International Convention
June 23-27, 1986
Chicago, IL


Every since the federal income tax was established in 1913, Congress has allowed individual taxpayers to deduct all of their payments for the major state and local taxes. Taxing state and local taxes would be a fundamental violation of the ability-to-pay principle upon which our federal income tax is based, because income that must be devoted to paying state and local taxes is not available for payment of federal taxes; and


The state and local tax deduction is not a narrow special interest loophole manipulated by sophisticated accountants on behalf of a wealthy few; it is a broad and necessary adjustment to income that is available to everyone and is taken by more than 35 million taxpayers, even more than claim the deduction for mortgage interest or charitable gifts. Efforts to portray deductibility as being of benefit only to "a handful of high-income taxpayers in a few high-tax states" are hypocritical, since deductibility opponents would use the revenues gained by eliminating it to cut tax rates for the wealthy and to preserve corporate loopholes like accelerated depreciation and benefits for oil companies; and


Deductibility helps state and local governments to provide an adequate level of public services, because taxpayers receive a partially offsetting savings on their federal taxes and are thus less resistant to the level of state and local taxation needed to finance them. Deductibility especially helps cushion the blow of tax increases needed by state and local governments during times of fiscal stress. Public finance experts estimate that elimination of deductibility could lead to cuts in state and local services financed from deductible taxes on the order of 10 percent, as taxpayers react to their higher effective cost; and


The Reagan Administration knows full well that ending deductibility will create tremendous pressure to cut state and local services; that is why it supports doing so. Just as the Administration pushed its 1981 tax cuts through to starve the federal government of the financial resources needed to maintain domestic programs, it hopes to starve state and local governments of their revenues by eliminating deductibility; and


By helping state and local governments to raise adequate revenues, deductibility contributes to the fiscal stability they need to fulfill their responsibilities within our federal system of government.


That AFSCME will vigorously oppose all attempts to eliminate or to reduce in any way the current deduction for state and local taxes.


Al Diop, President
Linda Feldman, Corresponding Secretary
Local 1549, Council 37
New York, New York