Professor Shanske comments for National Journal, CALmatters on tax 'workarounds'

Professor Darien Shanske spoke to the National Journal and CALmatters about plans for states to circumvent the new federal cap of $10,000 on state and local tax deductions.

New York, New Jersey and Connecticut already have passed “workaround” laws in response to the new deductions limit, and two bills before the California Legislature would let taxpayers who exceed the $10,000 cap work around it via designated state funds and charities.

The IRS has said it would issue new regulations in response to work-around laws.

“The IRS, I presume, understands it’s under some pressure to do something about these programs but at the same time understands that there’s no simple solution,” Shanske told the National Journal, in a story about how some charities worry the IRS will conflate charitable contributions via workarounds with existing relationships between charities and governmental agencies.

Shanske, who consulted on the two California bills, told CALmatters that the California Legislature should go forward with its bills despite the threat of new IRS regulations.

“It seems like a tax break for the wealthy, but actually it enables California to fund its services progressively,” Shanske said. “There’s no reason why the government shouldn’t be able to fund programs through charitable contributions.”

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.