The effects of tax deductibility on American education are discussed in this report, which is based on the premise that alteration by the Federal Government of the deduction for state and local taxes will exacerbate taxpayer resistance and increase cuts in public services, ultimately undercutting public support for education. The discussion offers the following assertions: (1) any restriction of income tax deduction reduces a major source of state revenue for education; (2) curtailing the property tax deduction increases tax resistance and may precipitate tax revolts, leading to a backlash against school spending; (3) income tax deductions affect higher education, which is largely funded at the state level; and (4) restrictions on income or property tax deductions would disproportionately penalize various states. The conclusion is that all states will be adversely affected in some way over the long run. Nine tables and two figures are included. (LMI)