The idea: The state would impose a new entity-level tax on partnerships, limited liability corporations, and other pass-through businesses and give their owners an offsetting individual income tax credit in return. Connecticut tax officials argue that the SALT deduction cap of $10,000 does not apply to businesses. Thus, pass-throughs could deduct their state tax from federal taxable income as an ordinary business expense while their owners would receive a credit based on the tax. PaybackIf the theory holds, the SALT cap would be partially defeated at no cost to anyone—except the federal government. New York wants to replace its (now partially-deductible) individual income tax with a new (fully deductible) business payroll tax.

Source: Forbes February 27, 2018 16:30 UTC