Deductibility Discrimination!
I highly recommend Daniel Gross's takedown of Greg Mankiw's prescriptions for what economically ails us. I'd add that in addition to endorsing the blue-state penalization plan that ends the deductibility of state and local taxes, it's worth noting that another idea from the President's tax commission, ending the deductibility of employer-based health insurance, is curiously absent from Mankiw's op-ed. Strange, a the rationale is precisely the same for both tax changes. Mankiw writes that "[u]nder current law, if one town enacts high local taxes to finance a municipal pool while a neighboring town does not, the first town gets a federal subsidy at the expense of the second. That outcome is neither efficient nor equitable." Meanwhile, under current law, if an employer purchases health insurance, he gets a federal subsidy at the expense of an individual purchasing health insurance. It's not clear why subsidizing employer-based health insurance at the expense of individuals is equitable or efficient, but it a) cuts against corporations and b) is politically popular in places Republicans need votes, so Mankiw doesn't mention it.
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