IRS plan to block tax work-arounds not foolproof, Professor Shanske tells Mercury News

Newly proposed Internal Revenue Service regulations might thwart California legislators’ attempt to circumvent a federal cap of $10,000 on state and local tax (SALT) deductions. But California’s work-around plan still has a shot, Professor Darien Shanske told the San Jose Mercury News.

“Even though it’s an uphill battle, it’s not necessarily an impossible battle,” Shanske said.

The SALT cap will have the most impact on high-tax blue states, but the IRS’ proposed new regulations cover all states, including red states like Alabama and Florida that have existing school-voucher programs involving tax credits. Were the IRS to make exceptions for those states, it could have a hard time defending its new rules in court, Shanske told the Mercury News.

Darien Shanske is a professor of law at UC Davis. His academic interests include taxation, particularly state and local taxation, local government law, public finance, and political theory, particularly jurisprudence.