by Countable | Updated on 1.25.19
A bipartisan group of lawmakers representing districts with relatively high state and local tax burdens have offered a bill that’d eliminate the cap on the state and local tax (SALT) deduction.
Lowey offered the following statement when introducing the SALT Deductibility Act:
“Repealing the SALT deduction was a callous move designed to target New York taxpayers, who are taxed enough as is. That’s why I’m proud to reintroduce my bill. Protecting this deduction is more important than ever with the Trump Administration’s continued assault on the middle class. Our bill ensures that New York families see tax relief, not more tax burdens.”
Critics of efforts to lift the cap argue that a higher (or non-existent) cap on the SALT deduction encourages states and localities to impose higher taxes on their constituents, because the deduction takes the financial sting out of higher state and local taxes through a reduced federal tax liability. As Rachel Greszler, senior policy analyst in economics at the Heritage Foundation, wrote:
“Instead of having to pay the full cost of their taxes, state and local taxpayers who itemize their deductions can force taxpayers in lower-tax states to pick up a big portion — up to 40 percent — of their taxes. As a result, state and local lawmakers are quicker to raise taxes beyond the level that is needed to finance their essential services… If removing the property tax deduction (and other state and local tax deductions) would create a big burden for taxpayers in high-tax states, that’s a problem for state governments to address by lowering their tax burdens.”
The state and local tax deduction can only be claimed by taxpayers who itemize their returns, so it generally benefits higher earning taxpayers. According to data from our partners at USAFacts, a non-partisan civic data initiative, the average tax savings from claiming the deduction per return in 2015 for taxpayers making less than $61,000 was $144; whereas taxpayers making more than $113,000 saved $1,569 on average and the top 1% of taxpayers saved an average of $21,723.
In recent years, the aggregate amount of potential federal tax revenue foregone due to the SALT deduction has typically fluctuated between $42 billion and $75 billion per year ― reaching a peak of $104 billion in 2017 before dropping to just under $38 billion in 2018 (the first year in which the cap was in effect).
— Eric Revell
(Photo Credit: iStock.com / Nunthawut Somsuk)
Written by Countable
This is a good start to give the Regular taxpayers back some of the tax deductions the Republican Tax cut bill from them. What a SHAME THAT REGULAR TAXPAYERS DID NOT GET ANYTHING out of that bill. In fact they were stabbed in the back back the republicans. ONLY THE UBER RICH GOT TAX RELIEF AND OUR COUNTRY IS PAYING FOR IT IN A DEBIT OUT IF CONTROL. Now - ROLL BACK THE TOP 1%s tax burden to the 1950s & 60s. They will pay more, the US will get out of debt & we’ll get the infrastructure and take care of our environment again.
I thought democrats wanted to raise taxes on rich people. Get your local government to cut spending and lower your taxes. The rest of the country should not have to subsidize high tax states.
Absolutely. This was an arbitrary cap anyway from which so many of our lawmakers are exempt due to their property investments. If it’s good enough for them, it’s good enough for the rest of us.
As an Illinois resident who lives in a community with high property taxes (not to mention income taxes and absurdly high sales tax), it is imperative that we return to the SALT deductions. Being double taxed to fund states that do not have high taxes is absurd. Our property values are declining so people can afford to purchase homes in good school districts. Our property taxes are not going down. I have a very hard time being bilked by red states. My state gets back well less than a dollar for every dollar we send to the federal government. In my view, this is not equitable. The new tax law exacerbates this phenomenon. Lastly, my state is losing population because while we generally don’t mind paying taxes for services, we do resent the federal government double taxing us to funnel money to “taker” states.
The cap is actually a tool to reduce income inequality, and I support it, despite the fact that it is also a political attack against mostly coastal--often Dem-leaning --states. Income inequality is a huge and growing cancer on our country, and I support policies that can reduce it.
I thought Democrats wanted to increase taxes? I thought they were upset about reduced tax revenues associated with the new tax law? For the record, I live in CA, and am affected by the new limitations.
This was a vindictive limit aimed at blue state voters. Raise progressive tax rates on the ultra rich to make up for the difference. This amounted to a tax increase on working professionals and small businesses that provide jobs.
The answer is so very simple New Yorkers........ VOTE THE DEMOCRATS OUT OF OFFICE, WHO’RE, TAXING YOU. SneakyPete .......... 👍🏻🤭😂🤭👍🏻. 1*26*19..........
From the start, this cap was a naked political attack on economically successful states, success that is well correlated with being a blue state. It is legal, but sleazy......this administration usually doesn’t really even worry about the “legal” part.
Not being able to deduct taxes already paid is double taxation, and property taxes are often some if not usually some of the highest taxes paid by middle income folks. While there already is an allowance for deducting property taxes up to $10,000, which means lower middle class folks are already ok, where property is high valuation, the tax payment on top of mortgage payments can be deal breakers for property sales, and discourage even the higher earners from purchasing. I live in a coastal community in downeast Maine, and not a fancy one like Bar Harbor. We have a lot of those higher-end summer homes for sale, often on the market for quite a while.
If you don’t like the tax burden in your state stop the cycle of voting for the same political ideology. Don’t California our Texas or New York our Florida!
Just a way for high tax states to embezzle from from the federal coffers. States and feds should both get their separate houses in order.
States should be cutting their taxes, and their spending. The federal tax should not be subsidizing for the states ripping off their citizens. I noticed they said Trumps tax cuts were hurting the middle class, that’s funny I’m what would be considered middle class, they are completely wrong I’m taxed less by federal and make more than ever. I really cannot stand the whole marxist class thing but society has fallen for it.
Blue states need to get their taxes under control. Taxing and spending are why you are in this position. You let it happen now live with it. it is not the responsibility of lower tax states to subsidize the out-of-control states.
Please support the elimination of the $10,000 cap on the SALT deduction.
Yes, please! We live in the high property tax state of New Jersey. This cap of $10,000 does not begin to cover our local property taxes plus state income taxes, so our taxes will be going up in 2018. The idea that states and local governments would raise taxes if they were deductible is ludicrous; they would be voted out of office. Plus! We have a farm in Pennsylvania where we pay very high property taxes also. This is just a small family farm where we raise goats and are trying to make a living making goat cheese, and the land is even in “forrest reserve.” So, we are going to be severely taxes without a deduction for property taxes. Please end the cap of $10,000. Christine Henry 729 Mill St. Moorestown, NJ. 08057
The tax cuts that the Republicans passed was skewed to benefit the rich and to burden our children. Eliminating the cap on the SALT deduction makes it fairer. Truth be known, the entire tax bill should be thrown out and redone.
Lift caps on SALT tax deductions.
Removing SALT helps people in state that have income taxes and other taxes. Trump put this in to punish blue state that did vote for him. The bill ensures that New York, CA, AZ and others see tax relief, not more tax burdens which is what Trump did to the middle class. He shifted the tax burden to the people in state to pay for the tax cut for the rich, by not let people deduct all of their taxes. The tax burden went up because you could not declare all your taxes even though you paid local taxes. This put more money back in the state. Taxes keep the economy running. Blue states put in more than they get back any way.
The SALT deduction is designed for high tax states (I live in one), to benefit at the expense of the rest of the country's taxpayers. It should be eliminated altogether. No citizen should have to help pay state and local taxes for other citizens. Eliminate it, to put pressure on those states (nearly all Democrat) citizens to get their taxes lowered.