Senators Attack Plan to End Local Tax Deduction

Senators from the nation’s two largest states today charged that a Treasury Department proposal to eliminate the federal deduction for local taxes will hurt a host of local services and hike the cost of education.

At a joint news conference, Sens. Alan Cranston and Pete Wilson of California and Daniel Patrick Moynihan and Alfonse M. D’Amato of New York announced plans to push a resolution calling on the Senate to reject any reform plan that would eliminate the federal deduction for state and local taxes.

All four charged that eliminating the deduction was a form of double-taxation. Republican Wilson said the loss of the deduction would “create a pressure” on local governments to cut local taxes, thereby also cutting services such as police and fire protection.

“People can deduct taxes they pay to foreign governments,” added Cranston, a Democrat. “But under the Treasury proposal they can’t deduct taxes they pay to their own state or city.”