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13 Colum. J. Tax L. 1 (2021-2022)

handle is hein.journals/colujoutl13 and id is 1 raw text is: TAXPAYER CHOICES, ITEMIZED DEDUCTIONS, AND THE RELATIONSHIP BETWEEN THE FEDERAL & STATE TAX SYSTEMS Heather M. Field* Abstract Almost 30 million taxpayers who itemized their federal deductions for the 2017 tax year switched to the standard deduction for 2018. The provisions of the Tax Cuts & Jobs Act (TCJA) that led to this shift were intended to simplify the individual income tax system. This Article's empirical study offederal and state tax filing data, however, demonstrates that the TCJA 's simphfying effect varied state- to-state depending on whether a state obligated its taxpayers to make the same choice for state tax purposes (i.e., to itemize deductions or take the standard deduction) as the taxpayer made for federal purposes. In states that obligated taxpayers to make the same choice, taxpayers experienced at least some simplification, and tax administration by the IRS and state tax authorities became materially easier, although the IRS's simphfication benefit was dampened to some degree. In states that allowed taxpayers to make state tax choices that differed from their federal choices, the TCJA 's simplifying effect for many taxpayers was largely illusory, state income tax administration actually became more complex, and some tax enforcement costs were, in effect, shifted from the IRS to state tax authorities. Thus, this Article's study reveals that state-level rules about tax choices undermined the federal policy goal motivating the TCJA's itemization-related changes. A taxpayer's choice whether to itemize is just one of many tax elections explicitly provided to taxpayers. Accordingly, this Article's study of taxpayers' itemization choices also serves as an example that illustrates a broader point state-level rules about whether taxpayers must make uniform federal and state tax elections create important, but previously underappreciated, interactions between the federal and state tax systems. Policymakers cannot fully understand the policy implications of many federal tax law changes unless they appreciate these federal/state interactions. This Article helps policymakers do so. * Stephen A. Lind Professor of Law, University of California, Hastings College of the Law. I am grateful for the opportunity to present this Article at the 2020 Association of Mid-Career Tax Professors Zoomposium, the University of Florida Levin College of Law Tax Colloquium, the Florida State University Law School Tax Speaker Series, and the 2021 Law & Society Annual Meeting. Thanks to Yariv Brauner, Neil Buchanan, David Hasen, Steve Johnson, Jeff Kahn, Katie Pratt, Jim Repetti, Darien Shanske, Adam Thimmesch, and Manoj Viswanathan, among others, for their comments and input.

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