$2.$ Until $2017,$ taxpayers who itemize their deductions are allowed to fully deduct taxes paid to state and local governments from their federal taxable income. One rationale for this tax expenditure is that paying state and local taxes reduces an individual$$s ability to pay federal taxes. Provide arguments against the federal deductibility of state and local $2.$ Until $2017,$ taxpayers who itemize their deductions are allowed to fully deduct taxes paid to state and local governments from their federal taxable income. One rationale for this tax expenditure is that paying state and local taxes reduces an individual$$s ability to pay federal taxes. Provide arguments against the federal deductibility of state and local taxes on the grounds of horizontal and vertical equity. on the grounds of horizontal and vertical equity.