UPDATE (10/20/19): After the passage of Trump’s tax cuts for the wealthy, which included the elimination of the SALT deduction, many states developed workarounds to the federal law in order to restore the middle class deduction. In retaliation, Trump’s Treasury Department issued new federal rules that forbade the state workarounds. To restore the SALT deduction workarounds, Senate Democrats are now planning to use a Congressional Review Act (CRA), which allows Congress to overturn recently finalized regulations or rules. With a CRA, only 30 Senators need to demand a vote to get it placed on the Senate Calendar. Demand your Senator support a CRA to restore the SALT deduction to middle class Americans.
The elimination of the state and local tax deduction (SALT) is a central component of House Republicans’ Tax Cut and Jobs Act. The SALT deduction allows filers to deduct both property taxes and either state income taxes or sales taxes, whichever is higher. Under the proposed law, taxpayers will only be able to deduct up to $10,000 for property taxes and will get no deduction for state or sales tax payments. By eliminating SALT and capping property tax deductions, filers in high-tax states, like New Jersey, New York, and California, will likely pay higher taxes. Republican lawmakers who represent high-tax states (which also happen to be bluer states) have strongly opposed this provision its profound impact on their constituents. However, millions of taxpayers in all states could end up paying higher taxes because of the dramatic curtailing of this deduction. It should also be noted that elimination of the SALT is double taxation and may not even be legal.
While proponents of SALT’s elimination note that countries like Canada do not allow SALT deductions, revenue generated by Canada’s higher federal taxes is used to “equalize” services across the nation, i.e. to help poorer provinces. However, the Tax Cut and Jobs Act contains no provisions to redistribute tax revenue to lower-income states; instead, this revenue increase will fund the bill’s tax cuts for corporations and the ultra-wealthy. However, even the $1.25 trillion in revenue from eliminating the SALT deduction can’t cover the revenue losses caused by the bill’s tax shelters for the wealthy. The bill is still predicted to create a deficit of about $1.5 trillion over the next decade.
Demand that your representative join with legislators resisting the elimination of the SALT deduction. Paying for the tax cuts for the wealthiest Americans and corporations should not be the reason that Americans pay higher taxes and face a massive increase to the federal deficit.