Under Section 164 of the Internal Revenue Code, taxpayers are allowed to itemize and deduct the cost of their state and local taxes – income, property, and sales taxes.The accepted theory of this deduction is to effect a shift in federalism -giving more power to the states to regulate and tax.

In the article, the author argues that this deduction actually can serve an opposite purpose; rather than shifting regulation and power to the states and promoting federalism, it can actually undermine state governments. The author argues in this article that the deduction plays a large role in the way that state and local governments are structured. The author does not advocate the abolishment of Section 164, but rather a more complete understanding of how it actually functions and changes politics at the state and local levels.