Income Tax curse:
Discard one item of your choice. Every other player must now discard an item or items, totaling at least as much value as the item you discarded. If they don't have enough to pay the full tax, they must discard all their items and lose a level.
The Halfling ability:
You may sell one item each turn for double price (other items are at normal price).
So the question is:
When the Income Tax curse is played, can a halfling use its 'double price' ability when discarding?