Much has been said about the new $10,000 cap on the federal deduction for payments of state and local taxes (“SALT”), but the commentary generally focuses on the state-level impacts and responses. My colleague Manoj Viswanathan, in his recent essay, “Hyperlocal Responses to the SALT Deduction Limitation,” published in the Stanford Law Review Online, argues that this state-level focus obscures the heterogeneity of taxpayers within states and causes commentators and policymakers to overlook local-level opportunities for mitigating the impact of the SALT deduction cap.

To analyze the local-level effects of the SALT deduction limitation, Professor Viswanathan used ZIP code data from the IRS Statistics on Income to create a model that estimates the number of taxpayers affected by the SALT deduction cap by ZIP code. This model confirms the traditional wisdom that the states with the highest percentage of affected taxpayers are blue states. However, Professor Viswanathan’s model also (and perhaps surprisingly) reveals that many highly affected ZIP codes are in reliably Republican states, while many minimally affected ZIP codes are in reliably Democratic states.

The insights provided by Professor Viswanathan’s model are valuable for several reasons. The data clearly illustrate that the SALT deduction-cap debate is not just a red-state-versus-blue-state issue, as it has so often been portrayed in the media. That insight alone should alter the discourse about the extent to which state and local taxes should be deductible for federal purposes. In addition, Professor Viswanathan offers affected taxpayers, particularly those in red states, a way forward when seeking workarounds. Even if these taxpayers are likely to be unsuccessful in pushing for state-wide responses to the SALT deduction cap, they may find more success at the local level. Further, by helping localities appreciate how the tax profiles of their residents may differ from the tax profiles of taxpayers throughout the states, Professor Viswanathan’s analysis empowers localities to be more responsive to the needs and preferences of the localities’ voters.

To illustrate, Professor Viswanathan discusses one option for a locally-sponsored SALT workaround strategy that would maintain the deductibility of local property taxes. As Professor Viswanathan explains, this local-level strategy is less likely than proposed state-level workarounds to be stymied by recent regulations. This strategy may also be more politically feasible than suggested state-level workarounds because, as the model demonstrates, it would benefit middle-class taxpayers more than wealthier taxpayers.

Ultimately, Professor Viswanathan injects much-needed nuance into the fierce and unabating debate about the deduction for state and local taxes. Policymakers, commentators, and taxpayers should now know that the SALT deduction cap is more than a state-level issue—it is also a local issue that can affect concentrated pockets of taxpayers in surprising places and that may merit a local-level response.