I.R.S. Warns States Not to Circumvent S&L Tax Cap

"New York recently began allowing taxpayers to convert local property taxes into charitable contributions, which are fully deductible from federal taxes. Other states, like New Jersey and Connecticut, have been moving forward with similar plans to reclassify state taxes as charitable contributions. New York is also establishing a new system that allows taxpayers to convert their state income tax to a payroll tax, which companies would pay on their behalf and then deduct from their federal tax bill."

The charitable tax concept is likely dangerous, could see it lose in court.

The employer-based state income tax is trickier because it already exists in certain areas. Going to be really complicated for them to untangle this one without significant changes to legislation and even then you may get into a states-rights issue.

This is based on my discussion with my accountants. Anyone else have any knowledge of this?